Gov.'s Revised Budget Plan Would Hurt Jobs, Economy, Study Finds

Gov. Arnold Schwarzenegger's (R) proposed budget plan would result in the loss of 331,000 full-time jobs and raise California's unemployment rate by 1.8 percentage points, according to a study released Thursday by UC-Berkeley's Center for Labor Research and Education, the San Francisco Chronicle reports (Buchanan, San Francisco Chronicle, 5/28).

Proposed Health, Social Service Cuts

The governor has proposed cutting:

  • $750 million from the state's In-Home Supportive Services program;
  • $532 million from Medi-Cal, California's Medicaid program; and
  • $15 million from Healthy Families, California's Children's Health Insurance Program.

Schwarzenegger's budget plan also calls for the elimination of CalWorks, California's welfare program (California Healthline, 5/26).

Study Details

The UC-Berkeley study -- funded by the Service Employees International Union -- found that Schwarzenegger's proposed cuts would lead to more than $36 billion in lost economic output and $1.9 billion in lost state and local tax revenue.

According to the study, of the 330,000 full-time-equivalent jobs that would be lost under Schwarzenegger's plan, 261,000 would be the result of the $5.4 billion in cuts to health and human service programs. The study also found that almost a quarter of the budget savings from those cuts would be negated by lost local and state tax revenue.

The researchers said a more balanced approach that includes $5.4 billion in targeted revenue increases from upper-income households, corporations and a new oil severance tax would save nearly 250,000 jobs and $18 billion in lost economic output.


Study co-author Ken Jacobs said, "Cuts to CalWorks, In-Home Supportive Services and health services for low-income populations hurt the economy more than the equivalent amount of revenue increases ... because these cuts would result in the loss of billions of dollars in federal matching funds and take dollars out of the pockets of low-income residents, who are most likely to put them back into the economy immediately" (Maclay, UC-Berkeley release, 5/27).

Creditability of Study?

Schwarzenegger spokesperson Aaron McLear questioned the credibility of the study because it was funded by SEIU.

Jacobs said that researchers used established methodology and that their results were in no way influenced by the union (Russ, Capital Public Radio, 5/27).

Juan Moore
“The UC-Berkeley study -- funded by the Service Employees International Union”, the same union that represents the workers would be shut down if the program was not funded. I am sure they had no vested interest in the study. I work in the HHS industry and know the system. Of the “330,000 full-time-equivalent jobs” about 293,000 of them are IHSS providers. The industry average is 2.6 hours per day per client, so you are really talking about 901,538 part-time workers. Most of these providers (40%) in my county are family who have full time jobs and also provide assistance as IHSS workers before or after work. Another 20% or so are family members who live with (off) the client. My county completed an audit some 15 years ago of the system. They audited 10% of the cases and found $300,000.00 in fraud. The conclusion was, they know fraud exists but do not have the man power to investigate all cases.
Terri Haworth
This is just one of many studies conducted on the Governor’s budget that emphasizes cuts to social programs will not work as the cost do shift. The Governor’s budget only “balances” on paper and will not in the real world. The state should not continue to supply “welfare” to the huge corporations with taxation loop-holes at the expense of the taxpayers and the frail, low-income elderly.
Earl Richards
Chevron gouged $24 billions in excessive profits in 2008, as per Schwarzenegger should put an excessive profits tax on these profits, instead of protecting the oil corporations from fair taxation, then, there would be sufficient public funds for all the vulnerable, people programs. Big business lost the fight to eliminate domestic violence funding, so now they are coming back with a vengeance. There is no funding provision for battered women shelters in the May Revise. Schwarzee picks on the most vulnerable, and not on corporate tax "deadbeats."

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