Election Section

The City of Berkeley projects budget deficits into 2007. Some argue that these deficits are due to excessive compensation received by city workers. While workers certainly receive fair compensation for their work, this compensation is not the source of the problem and is far from excessive. 

Salaries, for example, afford workers a decent standard of living. But given the immense wealth in California, workers’ salaries are hardly excessive. California’s economy is the fifth largest in the world, but wealth is distributed mainly to the richest in the state. There are approximately 350,000 California households with a net worth of more than $1 million. Corporate executives in California typically earn up to 400 times as much as their average employee and those working for large corporations are compensated at an average rate of more than $12 million annually. Take the case of Disney’s Michael Eisner who, despite earning close to $100 million annually throughout the 1990s, awarded himself an historic $565 million stock option payday in 1997.  

Turning to healthcare, the city pays the cost of health insurance premiums for workers and their dependents. And while the cost of insurance premiums is certainly fueling the city’s deficit, worker demands for affordable health insurance are not the problem. Instead, it is the skyrocketing cost of health insurance that makes it increasingly difficult for employers, such as the City of Berkeley, to provide workers with affordable healthcare.  

Since 1999, premiums paid to health insurers in the U.S. have risen, on average, more than 10 percent each year. And while access to affordable healthcare is prohibitive for millions of Americans due to spiraling costs, profits for health insurance companies are the highest they’ve been since the early 1990s. Blue Cross-Blue Shield, which covers one of every three people with health insurance in the U.S., doubled its profits in 2003 with premium increases ranging from 10 to 16 percent. 

With respect to retirement, the city pays into CALPERS (California Public Employees Retirement System) for workers. CALPERS is the last of a dying breed: a retirement system that guarantees a pension, or defined benefit. 

CALPERS has come under fire at the local and state levels. In Berkeley, BASTA argues that workers, instead of the city, should pay into CALPERS. What BASTA doesn’t mention is that the city began paying into CALPERS only after workers agreed to forgo one time salary increases. 

At the state level, our governor suggests that the costs associated with CALPERS are too much for the state to bear, and that workers with public pensions are a greedy special interest group. Is it greedy for workers to demand a secure retirement? Or is greed that which compels the governor to privatize public pensions so that he can line the pockets of his allies on Wall Street, even if such a move could threaten the retirement security of working people across the state? Furthermore, the governor’s pension privatization plan would likely cost California taxpayers more money, despite his claims to the contrary. 

Additionally, the city’s deficits are due, in part, to government policies that have resulted in deep cuts to federal and state funding that municipalities depend on. 

The cost of the Iraq war has now reached more than $200 billion. This reckless spending has meant ballooning federal deficits and President Bush has used these deficits to slash funding that goes to the states for programs that serve low income children and families, the elderly, and the disabled. It is estimated that the war has cost California $26.2 billion.  

And while Bush pours more and more money into the war, he is bankrupting the country further by cutting taxes for the richest Americans. Bush’s latest round of tax cuts will give millionaires a raise that amounts to approximately 13.5 percent of their income (compared to about 1 percent for the majority of Americans). In addition, corporate taxes are at their lowest level in 20 years. Nearly 95 percent of U.S. corporations now pay less than 5 percent of their income in taxes. This despite a corporate tax rate that officially stands at 35 percent. 

To make matters worse, our governor, facing sharp cuts in federal funds, vows to balance the budget wholly on the backs of the poor and working class Californians (by cutting services) while leaving in place a regressive tax structure in which the poor pay 12 percent of their income in state taxes while the wealthiest Californians pay 7 percent. And with California’s deficit surging, the governor has taken monies away from Cities and Counties across the state. According to the California State Association of Counties, California’s cities and counties agreed to give back a combined $2.6 billion to help the governor address the state’s budget deficit. Cities across California, including Berkeley, will likely face more of the same: sharp decreases in state funding and a shifting of local revenues from cities and counties to the state.  

While much of the responsibility for local budget problems rests squarely on the shoulders of Bush, Schwarzenegger and their corporate backers, there is still the matter of Berkeley’s budget deficit. So what is to be done? We can begin with a few basic assumptions.  

First, all working people are deserving of a decent wage, affordable healthcare, and a secure retirement. Secondly, the city’s deficits are due, in large part, to a health care system that values profit over people; to the war on and occupation of Iraq; to a regressive tax system; and to state and federal policy makers who insist that budgets are best balanced by cutting services for the poor, as opposed to taxing the rich. It behooves all of us to focus on the true source of the problem. In this way, we might wake up one day to find that everyone has access to quality affordable healthcare, that our tax dollars go toward human needs instead of war, and that the burden of taxation does not fall most heavily on those who are least able to afford it. In short, we might just wake up to a better world. 

Michael Marchant is a social worker and union member living in Albany.