New research by the International Federation of Professional and Technical Engineers Local 21 is encouraging local Bay Area governments to utilize already existing funds and increase revenue in order to avoid cuts and layoffs during the region’s COVID-19 economic recovery.
The report, “Bay Area Public Services in the Era of COVID-19: Lessons from an Era of Austerity,” used data from the cities of San Jose and Oakland, as well as San Francisco, Santa Clara and Contra Costa counties, during the 2008 Great Recession.
According to the report, which was released Thursday, cuts made to those cities and counties in 2008, like benefit reductions, layoffs, furloughs, and unfilled positions, as well as cuts to public services like housing, education and transit, resulted in more than $3.6 billion in reserves combined over the past decade.
“This time, we know what we did before and it didn’t work, so we need to do things differently…”
Timothy Mathews, report co-author
IFPTE researchers believe the reserves could be used to avoid layoffs to public service workers and absorb any economic shock created by the pandemic, but they said additional revenue will also be needed to expand public services and staffing to pre-2008 levels.
The Bay Area cities and counties included in the study cut some 17,500 public service jobs during the 2008 recession and a portion of those jobs remain unfilled. Collectively, the municipalities remain below pre-2008 staffing to population ratios by nearly 7 percent, according to the report.
“As the quality of these jobs declined because service loads were so high, at the same time, agencies were trying to build reserves so that we could be prepared for the next recession,” said Kristen Schumacher, co-author of the study.
Stagnant pay, more vacancies
As a result, she said, “Wages ended up stagnating, employees ended up paying more for their health care, their take home pay went down and it made it harder to hire people, even when some of the economic recovery started to impact budgets. And that’s where you get these huge (job) vacancy rates, in places like Oakland and Contra Costa.”
“Post-Great Recession, the public sector made a series of policy choices which resulted in a longer and slower recovery. It’s imperative that our decision makers today make a different set of choices, so that public services are maintained, particularly in light of this non-economic shock, which is really a public health emergency, and that public services are funded and available for those who particularly need them at his time,” co-author Timothy Mathews said.
“This time, we know what we did before and it didn’t work, so we need to do things differently, and that means use our reserves; that means raising revenue, that means maintaining services,” he said.
In order to create more revenue for local governments to use to raise staffing levels and funds to support public services, the report recommends changes at the state level that address California’s property tax system, like making corporations pay higher taxes.
The move could recapture $4.2 billion for the entire Bay Area alone, and $11.4 billion statewide, to support economic recovery, according to the report.
Gus Vallejo, IFPTE Local 21 president, said in a statement, “The past few months have highlighted the fact that local government budgets — and their reliance on economically sensitive tax revenues in particular — lack the resilience needed to sustain services in a contingency like this pandemic.”
The full report can be found online.