States Shift to Deep Cuts for Workers to Balance Budgets

First Posted: 06/14/12 10:30 AM ET Updated: 06/14/12 10:33 AM ET

Dire. Drastic. Draconian.

Call them what you will, but the measures being called for in state capitals to deal with record budget shortfalls are harsher than any in memory and have sparked angry protests from public employees most likely to feel the brunt of them.

In Madison, Wis., police were dispatched today when every Democrat in the state Senate failed to show up for a vote on a bill to strip public workers of collective bargaining rights. Thousands of teachers and other state workers have rallied in and around the Capitol, some holding signs comparing the new governor, Republican Scott Walker, to a "Mini-Mubarak" and others chanting "Freedom! Democracy! Unions!" as they protested his anti-labor move and his call that they pay more for their health insurance and pensions.

More than 1,000 Ohio state workers also jammed into the Statehouse in Columbus to protest a bill pushed by their new Republican governor, John Kasich, that would end collective bargaining rights for government employees.

Teachers in Indiana angry over similar proposals have marched in Indianapolis, while public employees in Tennessee and Nevada face similar demands for concessions.

It isn't clear whether the growing backlash will force governors and state officials preparing budgets for 2012 to back down. So far, they seem only to have emboldened fiscal hawks.

On Wednesday, New Jersey Gov. Chris Christie joked to a conservative crowd about being booed by 7,500 firefighters and talked trash about the state's teachers unions. So far, he's shown no regrets about cutting firefighter pensions or canceling a commuter train tunnel under the Hudson River that had been in the works for 20 years.

After several years of one-shot revenue boosts, cuts around the margins and pilfered rainy-day funds, states hit hard by the recession are going where the money is to close a cumulative budget gap that is projected to top $82 billion next year. Nearly every governor is proposing deep cuts in state worker benefits as well as to big-ticket items such as Medicaid and education.

"States are using every tool in their arsenal," said Todd Haggerty, a policy analyst at the National Conference of State Legislatures. "All the easy decisions have long been taken, and now the increasingly difficult decisions remain."

Getting Squeezed

States have been furloughing public employees and asking them to pony up more for their pensions and health care for a few years but have avoided truly deep cuts thanks to the federal stimulus program. Now those funds are drying up.

"Policymakers had been expecting negotiations over the 2012 budget to be difficult, and that's proving to be true," said Michele Mariani Vaughn of the Pew Center on the States. "This is going to be a budget year that is going to be tough in a lot of different ways."

The nation as a whole may be coming out of the recession and tax revenues may be starting to rebound, but state budgets historically lag behind. According to the Pew Center on the States, it may take until 2015 for state finances to return to pre-recession levels.

In the meantime, governors and state legislators have few choices left. Balanced budgets are a statutory or constitutional requirement in every state except Vermont.

There is little appetite to raise taxes. Three Democratic governors are the exception. California's Jerry Brown has taken on his state's long-sacrosanct Proposition 13, which limits property tax hikes, while Connecticut's Dan Malloy and Minnesota's Mark Dayton want to raise taxes on everything from alcohol to income for the wealthiest.

But despite record deficits, governors are more likely to want to cut taxes next year than hike them. Everyone from Republican Rick Scott in Florida to Democrat Andrew Cuomo in New York is proposing plans to reduce taxes.

Many of the 28 newly elected governors, including 18 Republicans, want to cut state work forces and their benefits, as well as safety-net programs like Medicaid, to close their budget gaps.

Cuomo has proposed a budget that would cut billions from health care for the poor and education, bringing howls from unions and New York City Mayor Michael Bloomberg. So far, unlike in Wisconsin, people appear resigned, said longtime Albany watcher Alan Chartock.

"The pain is going to be tremendous, but there is no seeming justifiable alternative to people other than the union-inspired argument, 'Hey, don't screw the people who need it the most -- tax the rich' -- which is going over like a lead balloon," said Chartock, publisher of the New York State Legislative Gazette. "When Mrs. Jones finds there are 50 kids in her son's class instead of 30 she may get angry, but that hasn't happened yet."

The new health care law bars states from stiffening eligibility for Medicaid, but this week Arizona Gov. Jan Brewer got a waiver to cut 250,000 people from her state's Medicaid rolls. The move was just the latest aimed at closing a huge budget shortfall that has included a controversial decision to eliminate lifesaving organ transplants for low-income Arizonans.

But the biggest blows may come to current and retired state employees. Although their middle-class salaries have already been whittled away in recent years by furloughs, pay freezes and increases in contributions to pensions and health insurance, the worst may be yet to come.

Public employee unions, already punching bags for some GOP presidential hopefuls, have become a favorite target of tea party politicians such as Wisconsin's Walker and other Republicans who charge they have too much influence.

Yet the rhetoric may not match the reality.

A Pew Research Center poll released today found the public sympathetic to public employee unions -- 44 percent said their initial instinct is to side with workers in a disagreement versus 38 percent who would side with state and local governments.

As for influence, Edwin Bender of the National Institute on Money in State Politics said that impression is not borne out in campaign contributions. His group's data show that less than 8 percent of political donations to state-level candidates in the 50 states comes from unions. Business interests give four times as much.

"What this means," Bender said, "is that labor groups likely will have a difficult time staving off policy defeats."

This article originally appeared on AOL News on Feb. 17, 2011