Governor's Budget Cuts Services, Goes After Public Workers

Governor Schwarzenegger's 2005-06 budget proposes severe cuts in health, education and transportation services for millions in the State. The Governor is also proposing a significant restructuring of the budget process that would give him more power to unilaterally make budget cuts.

Budget Lowlights

Public Employees: The Governor wants to double workers' share of pension contributions, meaning that 11 percent of a worker's monthly pay would go to fund retirement costs. The proposal also cuts CalPERS health benefits. The Governor also proposes to entirely eliminate the state's contribution to the teachers' retirement fund (CalSTRS), shifting responsibility to school districts and employees. IHSS workers also face a cap on the state share of their wages and benefits at minimum wage.

Education: In addition to eliminating the state's contributions to CalSTRS, the Governor's budget proposal promotes charter schools and breaks his promise from last year to grant schools their fair share of state revenue increases under Prop 98.

Transportation: This budget proposal would reduce Prop 42 funds by $1.31 billion but promises to constitutionally prohibit future raids of Prop 42.

Health Policy: Schwarzenegger is proposing to require Medi-Cal recipients to pay out-of-pocket for the first time, and severely cut reimbursements to public and private hospitals. The Governor also proposes a sham drug discount plan that gives low-income, uninsured Californians only the discounts offered voluntarily by drug manufacturers.

Institute for Labor and Employment: Once again, labor research and education at the University of California is being targeted for cuts. Business programs are given millions in funding at UC. The elimination of even the minimal funding allotted to study workers' issues is a political attack on unions. To help save ILE funding, please contact Berkeley Labor Center chair Katie Quan, 510-643-7213.

Budget Highlight

Labor Law Enforcement: The Governor proposed increased funding for EDD, DIR and the Contractors State License Board to boost enforcement efforts against employers that pay their workers under the table and evade state labor laws. The Governor also proposed a new program within the Franchise Tax Board to investigate employers who create abusive tax shelters.

California Performance Review Has First Public Hearing: Governor Schwarzenegger's plan to "blow up the boxes" of state government does more to blow up the rights of workers than anything else. Schwarzenegger's plan would take away the rights of workers to appeal their cases to independent arbiters when they are denied workers' comp or unemployment benefits.

The Governor's California Performance Review - which includes plans to eliminate numerous State boards and commissions - is having its first public review by the state's "Little Hoover Commission" this week. Under the Governor's plan, the workers' comp and unemployment insurance appeals boards would be replaced by a single board staffed by at-will employees handpicked by Governor Schwarzenegger.

Labor Federation leader Art Pulaski testified at the hearing that the plan is a clear violation of the due process rights of workers in California. He noted that in the name of "government efficiency," the Governor is robbing workers of their right to a fair hearing. The Federation is also protesting the elimination of the Industrial Welfare Commission and the Commission on Health and Safety and Workers' Compensation.

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