Economist: Furloughs for State Workers Could Cost California $700M
California could reduce spending by $700 million if Gov. Arnold Schwarzenegger (R) ended furloughs for certain agencies that generate revenue for the state, according to UC-Berkeley economist Ken Jacobs, the San Francisco Chronicle reports.
Jacobs, chair of UC-Berkeley's Center for Labor Research and Education, offered his estimates to the Assembly Accountability and Administrative Review Board.
Schwarzenegger's administration has estimated that the mandated three furlough days per month would reduce state spending by $1.2 billion this fiscal year.
However, Jacobs predicted that the actual savings would be aboutÂ half of the governor's estimate and could decline to $254 million during the coming years.
Jacobs attributed the difference in savings to numerous factors, including:
- Lost tax collection;
- Lost income tax from state workers; and
- Delayed pension obligations (Lagos, San Francisco Chronicle, 4/15).
Furloughs Remain in Place as Court Considers Challenges
This week, appeals court judges in California said they will refrain from suspending the furloughs while they considerÂ more than two dozen lawsuits challenging the legality and constitutionality of Schwarzenegger's furloughs, Capitol Weekly reports.
SEIU Local 1000 and the Union of American Physicians and Dentists are among the groups challenging Schwarzenegger's furloughs (Capitol Weekly, 4/15).
In March, the California Medical Association lost a suit claiming Schwarzenegger did not have the power to mandate furloughs for the board and that the furloughs were inhibiting the board's ability to promptly license physicians and investigate claims (California Healthline, 3/5).
Governor Aims To End Furloughs
In his fiscal year 2011 budget plan, Schwarzenegger proposed ending the furlough program and replacing it with pay cuts and increased employee pension contributions (San Francisco Chronicle, 4/15).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.