Calif. Unions, Political Allies Call for Tax Hikes, Not Budget Cuts

Due to dramatic losses suffered during the COVID-19 pandemic, California faces a $54 billion budget shortfall, and steep cuts are likely coming to state and local budgets.

A coalition led by the Service Employees International Union (SEIU) is pushing for politicians to prioritize equity, instead of slashing away at social safety nets. Union leaders outlined their vision in a letter to legislators, and 55 organizations signed on.

“This movement says, ‘All of us together, we refuse to cut our way out of this crisis on the backs of communities of color,’” Rico Mendez, chief elected officer for SEIU Local 521, said Wednesday on a Zoom call with union leaders and politicians. “Our elected leaders must pass a recovery budget for all. … That means not going back to status quo, because that won’t be good enough. We need to make equity our new normal.”

In the midst of a COVID-19 pandemic that is disproportionately harming Hispanic and black Americans, union leaders like Mendez say the state’s proposed social safety net cuts—such as $450 million in cuts to In-Home Supportive Services, and billions of dollars worth of cuts to education—would worsen California’s income and racial disparities.

Gov. Gavin Newsom’s proposed budget outlines what are known as “trigger cuts”—cuts that will take effect unless California gets additional financial support from the federal government. Mendez said that California should not leave its fate in the hands of Senate Republicans and President Donald Trump, especially after U.S. Senate Majority Leader Mitch McConnell (R-Kentucky) suggested that states having a hard time paying their bills might pursue bankruptcy as an option.

“The truth is, trigger cuts are still cuts” Mendez says. “They would hurt black Californians more than any other group if they’re enacted. The truth is, enacting a budget with trigger cuts means leaving the future of racial justice in our state up to someone like Mitch McConnell and his Senate … The truth is that we can do better. Our state is the fifth-largest economy on the planet. We can raise the funds that we need to go forward.”

Politicians such as Ash Kalra (D-San Jose) and Santa Clara County Board of Supervisors President Cindy Chavez have signed on to the effort and spoke to union representatives Wednesday to offer encouragement and support for a shared vision. “We need to invest in housing, in our health systems, in childcare,” Kalra said.

But in order to preserve programs and still balance its budget, the state will need to either find savings somewhere else or create new sources of cash flow.

A budget is a moral document, said Eddie Carmona, director of legislative organizing for PICO California, the largest multi-racial faith-based community-organizing network in the state of California. In order to secure more revenue, he called on leaders to raise taxes, create new taxes, reform commercial property taxes and look at the state’s ability to borrow from special funds and bonds.

In short, Carmona called for a “California New Deal.”

“We need to not only address the inequities that were uncovered by COVID-19,” he said, “but need to double-down and invest in the future of California, a future of California that’s going to be built by and for working families and for communities of color.”

10 Comments

  1. Ash,

    We’re pretty civil with one another, I’d like to invite you to my home sometime to go over the family finances for the last 5 years. I think if you knew how much mortgage, car payments, school, food, gas, insurance, utilities, internet, phone, etc cost for a family of 4 right down the street from you, it might be eye opening.

  2. Hold onto your wallets, folks.
    There will undoubtedly be an attack on Prop 13.
    How about we assess Sara Cody 50% of her net salary for jumping over the cliff with no data and closing down the fifth greatest economy in the world. Same for all the other California county health ofificers; and Newsom, Breed, Garcetti, and Liccardo, all sheep who followed without question. The COVID PANICdemic has exposed self-annointed “experts”for the snake oil salesmen they all are, except to the press, who quote them without question. The computer models were all hopelessly wrong in their predictions. Fauci’s Folly took the damage nationwide. There ought to be a crowd outside his house with torches and pitchforks.
    And the press, protected as no other group so they could be watchdogs against an oppressive government…FAIL! They just followed along like rats following the Pied Piper.

  3. So, the crushing tax burden already imposed on the backs of the middle class is not enough for our rulers in Sacramento?

    Let’s just drive the working class out of the state until only the corpulent unions and our ruling elite can afford to live here.

    Where are the hard hitting and probing questions by our brave journalists regarding this new wrinkle.

    Oh, right. I know the answer to that.

  4. Rico Méndez, SEIU is a piece of sh!t of a union. It supports employers more than the employees discriminated in these local organizations. You guys are just after the money your union receives from pay checks from these employees. Gardner Family Care recently settled a discrimination claim. Your union did nothing on this case. This is the case for many employees. They can only suit an employer if they have the money to do so in a private law suit. Your union is useless for these matters and only good to collect contributions. The state and local government should eliminate non essential workers and services through its own departments and community partners. Cindy and Ash should contribute part of their salary to these organizations. Asking tax payers to pay more taxes in these difficult times will be the greatest social injustice of all. Organization should cut the tech like salary of their CEOs. Check how much Reymundo Espinoza CEO of Gardner Family Care makes in any given year! These are organizations “serving” the most disadvantaged. These CEOs becoming rich at these non-profits is another social injustice. There are lots of useless employees and services this county does not need. Thus these cuts are socially and financially necessary. Gardner’s employees are part of you union, right Rico? Gardner take a percentage of employees’ bimonthly check yo contribute to you union. Most of these organizations engage in discriminatory practices. Gardner is one of the worst. Catholic Charities is number one per former employees’ reviews and word of mouth communication. Unions and community organizations se deben rascar con sus propias uñas! It is time to cut the salaries of your CEOs community partner organizations! Rico, if you need details of cases and people involve in these discriminatory claims, let me cariño. I will be glad to share that here. Raymundo Espinoza was one of the individuals named in a discriminatory matter reported to your union, California Department, so on. It was settled in favor of the former employee. You union used deaf ears on these and other claims favoring the employers. What Social Justice are you, Cindy Chavez, and Ash Kalra? GREEDY!

    • > Asking tax payers to pay more taxes in these difficult times will be the greatest social injustice of all.

      What?

      > There are lots of useless employees and services this county does not need.

      WHAT ? ! ! !

  5. Its never enough. We raise taxes again and guess what, in a few years another “crisis” will hit and the ONLY solution is higher taxes, just like we saw after the great recession, healthcare crisis, homeless crisis, etc.

    Cut government spending. period.

  6. First, I think the Jacob Pierce meant to write $54 billion–not $54 million–as the size of the projected state budget deficit.

    Economic processes that have pushed, and are pushing, a large and growing segment of our community to the edge of insufficiency are the very same that have lavished constantly growing shares of the economic pie on the wealthiest. To give a local example, the average income of the top 1% of Santa Clara County’s households climbed by 83.2% during the crucial Great Recession recovery years of 2009-2013. These households captured 50.9% of total income growth in that period and currently takes more than a quarter of all the income generated by the regional economy (see https://calbudgetcenter.org/resources/inequality-economic-security-silicon-valley/; https://www.paloaltoonline.com/news/2019/02/15/report-inequality-on-the-rise-in-silicon-valley; https://sanjosespotlight.com/growing-inequality-a-look-at-the-2019-silicon-valley-index/).

    The economic and fiscal impact of the COVID-19 crisis will doubtlessly exacerbate these disparities with crushing unemployment, massive small business closings, tax revenue shortfalls and government responses that advantage and prioritize the interests of the largest corporations and banks and the wealthy. Like the Great Recession, the COVID-19 crisis is deepening income and wealth cleavages and social imbalances.

    Should the state and federal governments persist in their failed, four decades-old neoliberal austerity programs to “resolve” fiscal deficits, the consequences this time around could be apocalyptic. In an economic and social system where income and wealth are lopsidedly distributed—where a tiny minority devours the vast bulk of resources—the only way to achieve a modicum of fairness and justice in a fiscally responsible manner is to aggressively and progressively tax wealthy elites.

    Just to roughly estimate what a 1% wealth tax might mean for California, we can start with the $112 trillion in monetized net wealth (assets minus liabilities) owned by U.S. households at end-2019 (https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/table/). Californians are about 12% of all U.S. residents, so I assume California households possessed about $13.5 trillion in household wealth at end-2019. On average in the U.S., about one-third of that wealth is owned by the richest 1% of households while about 70% is owned by the top 10% of households. Applying the same ratios to California suggests the wealthiest 10% of Californian households owned an estimated $9.5 trillion in net wealth at end-2019.

    A modest 1% annual wealth tax on the richest 10% of households alone would yield about $95 billion in revenues for the state, covering the projected $54 billion deficit and then some. Alternatively, a modest 2% wealth tax on the richest 1% of households would yield about $90 billion. These households would never notice the difference in terms of how they live and what they consume, particularly because net wealth tends to grow by an average of 3-5% per years, constantly replenishing itself from the labor power of the underlying working class.

    The extra tax revenues collected from the principal beneficiaries of the economic and social system thus provide the resources needed to address the economic distress and dislocations imposed on the vast majority whose labor produces everything. Tens of millions of Californians would benefit from universal programs serving all working and working poor. Think publicly-financed education from day-care through university; think universal health insurance coverage; think a jobs program that puts unemployed people to work on crumbling infrastructure and alternative energy systems. You know, basic stuff.

    Political leaders–if they are real leaders–should not be sheepish in their demands for increased taxes. I don’t mean income taxes, I mean wealth taxes, where the rubber hits the road.

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