In a piece on the California Labor Federation’s website, Martin J. Bennett of the California Federation of Teachers argues that California’s budget crisis cannot be blamed on the compensation and benefits, including retirement benefits, paid to state employees. Mr. Bennett addresses himself to a recent article in the Economist magazine titled “Tough Times for Everyone – Except Public Sector Workers,” which stated that taxpayers are now learning about “the banquet public sector workers have been having at the expense of everyone else” and that many public employees could “retire in their mid-50s on close to full pay.”
Against the arguments of the Economist article, Mr. Bennett points out, among other things, that state employees are not responsible for the economic crisis that has reduced tax revenues, that California ranks near the bottom of all states in the number of state employees per capita; that according to independent research state employees are not overpaid and nor do they receive excessively generous pensions; and that in fact only 14% of pension payments come from taxes (the rest being employee contributions and investment returns).
Mr. Bennett argues that California does not have a spending crisis, but a revenue crisis, caused by ill-advised tax cuts in better times. From the article:
Tax reform and boosting taxes for those most able to pay would make it possible to restore cuts to public services, adequately fund public education, safety, and health care, and fairly compensate public employees. Such a progressive tax policy includes: 1) increasing by a modest 1% the corporate tax rate (returning to the 1981 level); 2) closing corporate tax loopholes such as the failure to reassess commercial real estate at market rates (now protected by Proposition 13); 3) enacting a severance tax on oil extracted and produced in California; 4) restoring the top personal tax rate for the upper 1 percent from 9.3 to 11%; 5) reconsidering and repealing some of the $12 billion in tax cuts by the legislature for individuals and corporations over the last fifteen years.
A healthy and vital public sector is essential for the private sector to flourish.
Corporations and the wealthiest Californians greatly benefit from public investment in infrastructure such as mass transit and affordable workforce housing, high quality education accessible to all, and comprehensive social services, particularly for low-income Californians.
To read the whole article, click here.