The nation’s state governments are facing their worst fiscal crises since World War II. During the past three fiscal years (FY 2001–FY 2003, which ended June 30), state governments have scrambled to find $200 billion to close record budget gaps. Despite drastic cost cutting at every level of every state government, the future looks grim: 41 states are facing a cumulative budget gap of $85 billion for the upcoming fiscal year, according to estimates by the National Conference of State Legislatures.

Barely three years ago, states were awash in surpluses generated when the nation’s economy grew in the eight years of the Clinton White House. Following the 2000 elections, the economy began its nosedive into recession and stagnation. State tax receipts dwindled as workers lost their jobs—some 8.8 million by May 2003, with unofficial estimates placing that figure closer to 15 million—and businesses merged, went bankrupt or moved overseas.

Because most states’ tax laws are tied to federal tax regulations, states lost even more revenue when they were forced to match the Bush administration’s 2001 $1.35 trillion tax cut for millionaires. States also will be forced to match much of Bush’s $350 billion tax cut bill he signed into law in May. However, because of efforts by unions such as AFSCME, SEIU and others, lawmakers realized that the states’ fiscal hemorrhaging had to be treated and included $20 billion in state aid.

“Twenty billion dollars is a good idea...but it’s not nearly big enough to fill an $85 billion budget gap,” Alice Rivlin, former director of the federal Office of Management and Budget told a National League of Cities conference in late May.

At the same time, states were required to implement new federal mandates for homeland security and other initiatives—programs the Bush administration has refused to fund adequately. In 2002, the Bush administration cut $869 million in state aid for homeland security, the National Governors Association reports.

Unlike the federal government, which legally can run up deficits—including the record-breaking $385 billion projected under President George W. Bush’s FY 2004 federal budget—49 of 50 states by law must balance their budgets each year.

“Our state governments are in their worst crises in generations, which means that mass transit and schools and Medicaid and police and firefighting are in big danger of being slashed,” says AFL-CIO Executive Vice President Linda Chavez-Thompson.

To pay their bills in the past three years, states gutted critical health services for low-income children, slashed education funding, laid off state employees and reduced Medicaid for the elderly:

• Some 51 million low-income families or residents with disabilities in 49 states—including a fifth of all the children in the nation and two-thirds of nursing home residents—are seeing their Medicaid health care assistance slashed with limits on prescription drug use, eligibility restrictions and cuts in payments to providers, according to the Kaiser Commission on Medicaid and the Uninsured.
• Up to 1.7 million people could lose their Medicaid coverage completely this year under current state budget proposals and enacted legislation, according to the Center on Budget and Policy Priorities.
• Children and university students are losing out on education, with some 20 states cutting public-school funding from kindergarten through grade 12 and many state universities and colleges raising tuition and fees. Massachusetts state universities boosted tuition by 24 percent in 2002 and Iowa, Missouri and Texas were close behind with 20 percent tuition hikes.
• Workers are being laid off, including 3,000 in Connecticut. The National Conference of State Legislators says at least half the states are looking to reduce state employee costs. In April, 13,000 state workers in Maine were forced to take unpaid leave for the third time in three years. In Portland, Ore., teachers agreed to work two weeks without pay—a 5 percent pay cut or $1,400 for a $28,000-a-year, first-year teacher. State employees from Texas to Maine are facing hikes in health insurance premiums.
• Missouri is unscrewing every third light bulb to save money, Oklahoma teachers are doubling as janitors, Kentucky is releasing prisoners early and Pleasant Ridge, Mich., police are considering letting companies advertise on the sides of patrol cars in exchange for cheap vehicle leases, according to a New York Times report.

As states cut to the bone, here’s a look at how unions and their community allies around the nation are mobilizing to ensure the budget slashing pain is equally shared, explore ways to raise revenues and protect important working family programs and services.

New York: Joining with allies to protect working families

	A Better Choice: New York unions and their allies joined forces and successfully fought devastating budget cuts that would have harmed education, health care and other vital services.

In January, New York Gov. George Pataki (R) submitted a state budget that slashed $1.7 billion in state aid to local schools and $2 billion in health care, while closing hospitals and cutting Medicare, Medicaid, home care and other programs and services.

By late May, 1.9 billion of those cuts been restored, including more than $1 billion for education and $1.1 billion in health spending—and the state’s unions had convinced lawmakers to raise the needed revenue by closing corporate tax loopholes and ensuring the state’s wealthiest taxpayers shared the burden.  

Denis Hughes, New York State AFL-CIO president, says the budget success was no accident: New York unions mapped out their strategy months in advance and, by late last fall, joined together with community allies under the campaign slogan Better Choices for New York.

 “We brought people together early, developed a message and met with financial experts to identify the most practical and fair ways to raise revenue to offset the cuts we knew were coming,” says Hughes.

From there, the Better Choices Coalition for New York went to work selling its revenue-raising proposal. Individual private- and public-sector unions mobilized their members, coming together in dozens of rallies, including more than 30,000 at an education mobilization in Albany. The Public Employees Federation (PEF), an AFT and SEIU affiliate, and the New York State United Teachers sponsored radio, television and print ads. Working families contacted lawmakers through tens of thousands of Better Choice postcards and with phone calls and e-mails.

The campaign’s efforts were so successful, the state legislature restored the funds—and had sufficient votes to override Pataki’s vetoes.

“State lawmakers chose a budget that protects mental health, education and New York’s hospital system. They made the better choice,” says PEF President Roger Benson.

Minnesota: Putting a face on budget cuts

	Eyes on the budget: Union activists rallied at the state capitol in May to let lawmakers know “Minnesota’s Watching” whether they give working families a fair shake.

Minnesota Gov. Tim Pawlenty (R) has received an earful of protests from the state’s working families over his proposals to cut public services—from Meals on Wheels to special education—in an effort to close the state’s $4.2 billion budget gap.

In April, the Minnesota AFL-CIO and dozens of other statewide organizations mobilized a phone-in to Pawlenty’s office, jamming the switchboards. In addition, the state federation provides union members with tips and pointers for calling in to the governor’s weekly Friday radio show. Union members are urged to practice their message, talk about how the budget cuts hurts workers—and keep their messages short.

“The budget hits ordinary working people and their communities—and it hits them hard,” says Minnesota AFL-CIO President Ray Waldron. “The governor talks about shared sacrifice, but I’m still looking for the sacrifices that corporations and the wealthy will share.”

Together with unions and other allied groups, the state federation also took to the airwaves with radio and television ads featuring real families talking about the concrete consequences they will experience because of the proposed cuts. One ad showed parents speaking about their six-year-old son, Andres, whose speech problems are improving because of extra help from an educational assistant whose job would be lost under the budget plans.

“If his assistant is taken away now,” Andres’s father says, “our son will not have an opportunity to succeed. All of his hard work will be lost. If we don’t help my son—and kids like him—now, what will the cost be later?”

During the legislature’s final session in mid-May, the state federation, affiliated unions, central labor councils and a wide range of nonprofit, religious and community groups mobilized as Minnesota’s Watching, a coalition to ensure legislators knew the public was closely watching their actions. Kicking off with a rally of a 201-member symbolic citizen’s legislature, coalition members dispatched watchers to monitor floor and committee sessions. They concluded with a huge demonstration on the last day of the session.

“We wanted to let the legislators know that Minnesotans were watching as they voted for or against those harmful cuts,” Waldron says.

Massachusetts: Getting out the message

“This crisis is about not having enough revenue,” says Massachusetts AFL-CIO President Robert Haynes. “For a decade now, we have given away billions of dollars in ill-advised tax cuts, while promised by Republican governors that there would be no consequences. Well, now the bill has come due and this state is cutting police officers, firefighters and teachers.”

Bay State unions, the state federation and community allies have waged rallies, marches, demonstrations and lobby days to protest Gov. Mitt Romney’s (R) deep service and job cut proposals and his refusal to consider increasing revenue.

To ensure the public could see behind Romney’s rhetoric and his highly orchestrated town hall meetings and campaign-style events to sell his plan while shutting critics out of the debate, the state federation began the Romney Watch—Beyond the Headlines website that thoroughly examines and rebuts the governor’s actions. The site highlights the budget’s impact on workers, civil service protections, collective bargaining, higher education, state pensions and more and includes downloadable materials for local unions, central labor councils and others, including trainer and participant materials to allow local unions to stage the United for a Fair Economy presentation, “The Massachusetts Budget Crisis: Who Hurts? Who Pays?” @