As Bay Area Local Governments Plot COVID-Recession Cutbacks, New Research Suggests They Already Have Better Alternatives
As COVID-19 increases demand for Public Services, they still lag behind Pre-2008 levels
OAKLAND, Calif., June 26, 2020 /PRNewswire/ -- While Bay Area governments have announced plans to slash local public services in response to the COVID-19 recession, new research reveals that these agencies have yet to fully restore cuts enacted in response to the 2008 financial crisis while building up billions of dollars in financial reserves.
Read the Report, "Bay Area Public Services in the Era of COVID-19: Lessons from an Era of Austerity"
"Local government agencies are among the largest employers in every single bay area county," said report co-author and IFPTE Local 21 Research Specialist Timothy Mathews. "As such, these agencies through their policy and budget decisions can help drive a recovery or prolong a recession, all while they face increased demands due to this current economic disruption. Before anyone goes dusting off the same austerity playbook used in response to the 2008 recession, it's important to understand whether that playbook worked, and if not, if there are better alternatives."
Bay area local governments alone shed 17,500 workers in response to the 2008 financial crisis and continue to lag pre-2008 staffing to population ratios by nearly 7%. Prior research has shown state and local government workers represent 13% of total employment and their budgets contribute to 9% of the nation's GDP. Ultimately, it has been found that the 2008-era cuts to local government services, cost the American economy 2.3 million jobs — half of which would have been created in the private sector as a result of increased aggregate demand.
Among other things, the report links deep austerity cuts— in terms of both staff and employee benefits — from the '08 recession to continued challenges related to service delivery, recruitment and retention of public service workers across the bay area. It notes the City of San Jose, which suffered California's first known COVID 19 fatality, currently has the lowest staff to population rate of any major California city. At least one regional government has seen staff vacancy rates as high as 20%, and in Contra Costa County, there were nearly 1,000 vacancies in health services in 2018 alone.
The report also associates bay area local government agencies' inability to restore 2008 service cuts with the failure of the region's largest cities to pursue new revenue measures during the recovery. It notes that the state's GDP growth since 2008 outpaced local government revenues by almost two to one.
"Looking at the data, it would be hard to credibly argue that austerity cuts following the crisis of 2008, and the resistance to new revenue measures during the muted recovery that followed did anything but undermine this region's recovery and its capacity to meet the unplanned spike in demand for services from this pandemic," said report co-author and IFPTE Local 21 Research Specialist Kristen Schumacher. "The good news is that the sacrifices that workers made during the 2008 crisis have left local agencies with billions in reserves that could be deployed alongside additional federal support to avert another round of cutbacks."
Through a combination of layoffs, furloughs, unfilled jobs and benefit cuts borne by employees, Bay Area Governments have accumulated more than $3.6 billion in structural reserves over the past decade—reserves they did not have in 2008. Mathews argues that while reserves can be used to meet the COVID-19 induced economic shock, the longer-term expansion of public services to address emerging pandemic-related needs and ultimately expand staffing and service levels to pre-2008 thresholds will ultimately demand additional revenue.
"The past few months have highlighted the fact that local government budgets—and their reliance on economically sensitive tax revenues in particular--lack the resilience needed to sustain services in a contingency like this pandemic," said Gus Vallejo, IFPTE Local 21 President. "This is a strong argument for progressive revenue measures like the Schools and Communities First Act on the November 2020 ballot because it would protect the working families that have suffered the biggest hardships from the current recession, while create a reliable revenue stream for the housing, education healthcare, and other services our communities need to recover."
Schools and Communities First would close a loophole in Proposition 13 that exempts many of the state's wealthiest corporations from paying taxes on commercial property. Mathews' notes that if the measure were passed in November, Bay Area governments could expect $4.2 billion in new revenue in 2021-2022, and as much as $27 billion in new revenue over the next decade.
Vallejo continued, "At the end of the day, this report shows that Bay Area governments have strong alternatives to austerity that did not exist in 2008, and would likely produce better outcomes both for their workers and the communities they serve."
Read the Report, "Bay Area Public Services in the Era of COVID-19: Lessons from an Era of Austerity"
https://ifpte21.org/sites/ifpte21/files/pictures/COVID%20and%20Public%20Sector_v2004.pdf
The International Federation of Professional and Technical Engineers (IFPTE) Local 21 represents more than 11,000 public service workers across the bay area, including more than 5600 employees of the City and County of San Francisco. Learn more at www.ifpte21.org.
SOURCE IFPTE 21
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