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Philly Budget Wars

category north america / mexico | community struggles | opinion / analysis author Saturday May 02, 2009 01:42author by Sean West (NEFAC) and Scott Pinkelman (Budget Crunchers) - NEFAC-Philly and Budget Crunchers-Phillyauthor email seanwestwispy at gmail dot com Report this post to the editors

We Won't Pay For Your Crisis Tax The Rich, Not Us!

Since November 4th of last year regular folks from Philly have been involved in a mass struggle against Mayor Nutter's plan to cut social services and attack unions in order to make up for nearly $2 billion budget shortfall brought on by the economic crisis. Here is the latest dispatch from the "Philly Budget Wars."


PHILLY BUDGET WARS 2.0: WE WON'T PAY FOR YOUR CRISIS TAX THE RICH, NOT US!


By Sean West (NEFAC-Philly) and Scott Pinkelman (Philly Budget Crunchers)

It would be an understatement to call the recent struggle against Mayor Michael Nutter’s proposed service cuts anything but amazing. Under the banner called the Coalition for Essential Services, a movement of neighborhood groups, most of the cities major unions, health care activists, students, clergy, block captains, seniors and many more essentially put such a fire under our Mayor’s rear that he was forced to abandon many of his plans to balance the budget by cutting services to working people and poor neighborhoods. After witnessing many lively protests of The Coalition to Save the Libraries such as the “People’s Indictment of Mayor Nutter” and a “People’s Contempt of Court Citation”, it was surreal to see the movement’s slogans co-opted by Nutter as he announced his FY 2010 budget on March 19th in City Hall chambers as “The People’s Budget.”

We have won amazing victories because we challenged Mayor Nutter’s budget. Last year, Mayor Nutter stated that he would remain steadfast in his decision to close the libraries, vowing to appeal the court ruling that forced him to keep them open. Now, in no small part due to the determined and creative action of the Coalition to Save the Libraries, we have a budget that keeps all library branches open. The Mayor wanted to shut down 68 of the city’s 81 pools, where kids cool off in the hot summer months. Now that number has now been drastically reduced, with 46 remaining open. No health center will be closed. No more fire stations, engines or ladder companies will be closed. So can we now declare, “Victory is ours!” Hardly.

We must celebrate and acknowledge that we have power, that our efforts as regular Philadelphians from all sorts of backgrounds were able to fight back—and stop—serious attacks on our communities. With the announcement of the new budget, however, we must now survey the battlefield from a new vantage point. With open eyes we must understand where services have been decreased and where the Nutter administration’s attacks lie in the future. We can say one thing for certain; this budget war has spared certain interests in Philadelphia. The wealthy, out of state real estate developers, large corporations and the rich in general have all been given a pass. While we have won much, Nutter still plans to balance the budget on the backs of working people, albeit with a different approach. He will institute taxes that hit the pockets of the poor more than the Rittenhouse Square crowd. He is ready to wage a war against the unions and take money out of the pockets of hardworking Philly city workers which will dramatically lower the standard for traditionally well-paying city jobs and jobs in the private sector alike. Instead of continuing on his crusade to severely cut city services he will now cut the wages, benefits and working conditions of the very people who provide those services.

MEMORY AGAINST FORGETTING: WE STILL HAVE CUTS TO STRUGGLE AGAINST

While we were successful in fighting back most cuts we didn’t win on all fronts. The libraries are still understaffed from layoffs that occurred January 1st and the policy change that required minimum 4 staff people to keep a branch library open. We foresee rolling closures of branch libraries even though they are ‘open’. We’ve braved the winter, but a policy is still in effect which does not require the city to plow many streets after a snow storm unless there is a foot of snow. (Full disclosure: one of the authors of this article almost crashed his car because a street wasn’t adequately plowed.) While 46 pools will remain open, many kids will not go to other neighborhoods to swim, because of neighborhood rivalries, the walk and the possibility of getting in a scuffle.

Notably, while the Health Centers will remain open they will now be charging a sliding scale fee for basic health care and prescriptions . Additionally, they will be charging for over-the-counter medications. This will hit the senior who has to make a choice about whether to eat or get medicine; the poor person who is HIV-positive and desperately needs treatment to stay healthy. In short, the new policy will hurt the city’s most vulnerable.

It goes without saying: we must fight to restore our services to their previous level.

NUTTER SAYS TAX THE POOR!

When Mayor Nutter first announced his budget cuts back in November he said there weren’t going to be broad, across-the-board cuts to every city department. He claimed cuts would be done with a scalpel, not an axe.

Apparently he doesn’t feel that way about taxes. The city needs revenue and Mayor Nutter’s budget calls for new taxes to fill the gaps. It’s worth mentioning where the taxes won’t be coming from. Will he get rid of the ten-year tax abatement that mainly benefits out of state developers, wealthy condo owners and large corporations? No. Will he institute progressive wage and business taxes that would require companies and individuals who make over 250,000 a year to pay more? Nope. And hey, what about getting gigantic “non-profits” like The University of Pennsylvania and Jefferson University Hospital who DO NOT pay property taxes to kick down more Payment in Lieu of Tax (PiLoT) money for the city services they receive? Forget about it.

Nutter’s got a different tax plan: one that uses a broad axe and not a scalpel. It’s an axe that’ll hit the poor hard and leave the rich with little more than a scrape. He’ll ask the state to allow the city to increase sales tax by 1 %. Sales taxes are generally—as economists say—regressive. This means that someone who makes very little money pays a higher percentage of their income in sales taxes than someone who makes a lot of money. To use an example: a financial analyst who wants to grab a meal with his colleague in Center City will pay 8% of the meal the same as a security guard who picks up a sausage, egg and cheese from the vendor down the street before hustling back to work. Sounds fair, right? Wrong. Adding up all of the money spent over the year on items that the sales tax applies to, someone with a six-figure income will spend a lower proportion of their of their income on sales taxes than a family with an annual income of 25,000 dollars.

What’s worse is real estate tax would rise by 19 percent in the coming year, and by 14.5 percent from current levels in the fiscal year 2011. While these payments are based on a home’s value, the city has done a terrible job at correctly assessing property values, the Inquirer reports that only 3 percent of properties are assessed correctly. Not surprisingly, the poorest homeowners often end up paying a higher tax rate.(1) By enacting property taxes with such an unequal, ineffective system over wage and business taxes, Nutter has chosen to once again to place the burden and those least able to pay.

Daily News columnist, Jill Porter asked Nutter why Nutter’s tax cuts weren’t broad based. She wrote:

“After all, it seems the wrong moment to put the hurt on rowhouse dwellers who are gagging on AIG and GM. Perhaps spreading the pain around by raising wage and business taxes a little and property taxes a little less, was a legitimate course to consider…‘I don't understand,’ Nutter said in response to my question, furrowing his brow in mock confusion. The hikes are "broad-based" because they affect every property owner in the city, including commercial property owners, he said - speaking with the exaggerated tolerance of an exasperated parent as we walked from Council chambers on the fourth floor of City Hall to his office on the second floor.” (2)

If Jill Porter, a veteran Daily News reporter, is getting that kind of treatment we can expect that kind of paternalism and more. Our response must be firm and loud. “We won’t pay for your crisis…tax the rich, not us!” We agree with The Coalition of Essential Services who brought coffee cups filled with pocket change to rattle that read, “No Cuts In Services, Fair Taxes.”

UNIONS IN THE CROSS HAIRS: NUTTER'S ATTACK ON UNIONS AND THE MEMORY OF '86

During Nutter’s Budget address one thing stood out: Nutter demanded concessions from the city union workers. Instead of continuing to balance the budget on the backs of the neighborhoods, he has now declared he’ll do it on the backs of workers in the city unions. Nutter’s new budget game plan: leave the rich alone, some service cuts (to start with), and put good city jobs in the cross-hairs. This will greatly affect all workers in the city; union and non-union alike.

Union jobs pay more and offer greater benefits. A 2008 paper by The Center for Economic and Policy Research on unions and women workers points out that, “on average, unionization raised women’s wages by 11.2 percent – about $2.00 per hour – compared to non-union women.” It continues to point out that unionized women workers are more likely to have employer-provided health insurance and pension plans (3). This is an incentive for all of us to unionize at work and at the very least value unions.

Union jobs set a benchmark for wages; if Nutter can get away with lowering standards in the highly unionized public sector, business can pay the rest of us even less. Corporations and business elites aren’t dumb—they sense an advantage to pay less and make more.

If Nutter is successful in his goal in getting major wage and benefit concessions from union workers this will carry over to those of us in the non-unionized private sector—most of us. Don’t take our word for it. According to a 2003 briefing paper by The Economic Policy Institute, “Strong unions set a pay standard that nonunion employers follow. For example, a high school graduate whose workplace is not unionized but whose industry is 25% unionized is paid 5% more than similar workers in less unionized industries.” (4)

With that in mind let’s take a look at the ‘give backs’ and concessions Mayor Nutter is asking of the city’s unions:

* Reduce the benefits of all new city workers by moving them into a hybrid pensions plan that gives them less guaranteed retirement benefits and supplements it with a 401 (K). 401(K) plans are highly unstable because they are retirement plans invested in the stock market and subject to the whims of the financial markets(5). Many people who contributed for years to 401(Ks) lost huge chunks of their retirement as the economy collapsed—Fidelity Financial reports that 27% of 401k assets were lost in 2008. Additionally, the plan splits city workers into a two-tier plan. Actually, the plan is already two-tiered so it will now be three-tiered. There will be three classes of workers in a union: older workers who have good pension plans and newer workers who get much less. This creates a division within the union that can be exploited; future city administrations might demand cuts from to the old timers’ pension plan in years to come and the newer workers will see no need to fight for a good pension plan they don’t get. A classic divide and conquer strategy.

* Require all city workers who have the good pension plan to increase their contributions out of their weekly paycheck by asking the State to declare the pension plan “Severely Distressed,” which would then require the city to contribute less to the plan. Never mind that the city has been underfunding the pension fund for year, relying on bond market sales to delay the issue. A report on Philadelphia’s pension plan, “Philadelphia’s Quiet Crisis,” notes that the pension plan is on par with other cities, but has been mismanaged by the city for years. Now, Nutter is asking city workers to pick up the tab. (6)

* FREEZE WAGES FOR FIVE YEARS Not only will this hurt municipal workers, it will also lower tax revenues by giving working folks less money to spend.

* LOWER CITY CONTRIBUTIONS TO HEALTHCARE, SO WORKERS HAVE TO PAY MORE FOR THEIR HEALTH INSURANCE PLAN. As we have mentioned before, this influences all of us. Business people will pick up on this and make us pay even more for our health care plans. That is if we have one to begin with and aren’t dependent on the Health Centers where we’ll now being paying a sliding scale fee!

* Nutter is asking union workers to volunteer to take unpaid ‘furlough’ days, basically days off to save the city money. So workers are strapped for cash from all of these concessions and their asked to take an unpaid day off when many now can’t afford it.

Upon hearing Mayor Nutter’s proposal Brian McBride, President of the Firefighter Union (IAFF Local 22) put it accurately and simply when he stated “It’s war.” Correct sir, this is class war. Philadelphia’s budget crisis is a result of the international financial crisis—a crisis engineered by the super-rich through speculation, deregulation and the need to turn every aspect of life over to the whim of financial markets. The city’s crisis is one of many being felt across the globe as countries, states and cities struggle to meet people’s needs as banks receive public bailout after public bailout. From Wall Street bankers making mega bucks on speculation, to this economic crisis, to Nutter’s announcement of cuts to essential services and to the present regressive taxes and war on organized city workers.

We need to recognize Nutter’s new divide and conquer strategy: union workers vs. neighborhoods—all while leaving the rich high and dry. We need to support union struggles just as we defended essential services—with the ultimate goal of making the rich pay for their crisis. We’ll venture to make a few predictions as to messages that you’ll hear from the Nutter Administration, Philly’s business elite and the media. A few propositions in response:

* Their Message: You make $8.00 an hour working in the service industry slinging coffee or working retail at the Gallery while these fat cat union workers make way more. It’s only fair that they give up a little to pay for the services in your neighborhoods for the libraries, trash pick up, the rec centers, etc?

* Our Response: City union workers do make more than other Philly workers in comparable positions in the private sector. This is because they have been organized into unions for a long time and have fought for decent wages, benefits and working conditions through taking collective action on the job: picketing, holding rallies, striking, and getting their co-workers involved in action to put pressure on the city administration. This wasn’t easy work. Meanwhile there are plenty of wealthy companies and individuals who pay their workers low wages in the private sector. So who do you think should shoulder the burden for services? City workers who have good jobs or the wealthy companies and individuals who make money by paying sub standard wages to their workers?

* Their Message: City workers in other regions don’t have such a good deal. Philly city workers should realize how good they have it and need to give up their ‘high’ standards for the common good?

* Our Response: Yes, city workers elsewhere don’t make as much, because business communities in other cities have been better organized to influence politics. They have put pressure on city governments to keep city workers unorganized, with low wages and benefits. Why should we as Philadelphians lower our standards and let the business community dictate all of the terms? Business people are in the business of making a profit. Why can’t they give up some of their profit through progressive taxes for THE COMMON GOOD?

* Their Message: The unions are entrenched and powerful. They’re holding the city hostage and negatively effecting the budget and services by not giving into the mayor’s demands:

* Our Response: It’s true the unions have some measure of power. That’s because they’re organized and if worse comes to worse some of them can play the trump card of withholding their labor (i.e striking.) But the elite business community of Philadelphia is by far more powerful. So powerful that during this whole budget crisis they have not been asked to give up a single thing, except a tax break they were going to receive. They are truly holding the city hostage and we need to put pressure on the mayor and demand concessions from them, not other working Philadelphians.

Bill Rubin, a representative of AFSCME District Council 33, the union that represents blue-collar workers and also the largest union in the city, said, "It's a fairy tale. It's predicated on givebacks. None of this is in stone." Mr. Rubin is stating the obvious. City workers have a contract and because of that all of this will have to be negotiated when their contract expires this year.

This brings to mind the militant strike led by city workers in 1986 under Mayor Wilson Goode. Goode played hardball with the city unions and, backs up against the wall, the unions did what they had to do: they stopped working and went out on strike. Garbage piled up on the streets, libraries and pools closed with no workers to run them and all because Goode wouldn’t negotiate in good faith with union workers. City workers make our city run, if they are threatened they can and will shut it down…as they should and as they have. However if they do go on strike we propose to the unions that they enact a social strike. Let garbage pile up in the neighborhoods of the rich while pick up continues in regular Philadelphia neighborhoods. Let the stench surround city hall.

By going after the unions, Nutter is playing a dangerous game that could bring 1986 into 2009. If so, he’ll try to whip up sentiment in the neighborhoods against the unions. Let’s not fall into that trap. The more we stand in solidarity- knowing that the neighborhoods and the unions are in this together, the better the chance we have at stopping the attacks on unions and making the rich and wealthy business community pay. We should attend union rallies and pickets and organize our neighbors and friends to put pressure on city council and the mayor to tax the rich.

We recognize that unions are complicated organizations. In the best case, unions are run and managed democratically by workers themselves—the most democratic and militant labor activism in the U.S. has occurred when union members take matters into their own hands. In the worse case, union bureaucrats collaborate with management against workers or with the broader racist and imperialist politics that are the political ‘status quo’ in the U.S. At present, unions are struggling against declining membership brought by Reagen-era attacks on organized labor and deindustrialization. Union leaders often make ‘strategic’ decision that sometimes sell their members short and discourage militant, or even effective, action. We see the current budget struggle as a defensive one; city attacks on the unions won’t make them more progressive or democratic institutions. What will, however, are broader connections among movements and an understanding of how elites attack different kinds of working class power in different ways.

We see no present indication that the city unions are planning on selling out their members. The best way to prevent this, however, is the power of rank-and-file city workers to push their leadership to take to meet their needs as workers. We encourage them to self-organize and take any action that is appropriate and sufficient to win, be it slow downs, sick outs or work stoppages. Solidarity is needed among other ‘non-city’ unions and non-union workers as well. All of us as workers –not just city workers—make Philadelphia work. If we were organized and wished to do so we could shut this entire city down, threatening the accumulation of profits, and make the wealthy interests quickly concede to our demands.

In the end it is completely unacceptable for the budget to be balanced on the backs of working people –either by cutting essential services or attacking good city jobs. The mayor doesn’t want to ask his rich buddies to pay up to resolve our budget crisis. Just a short while ago it seemed impossible that we’d be able to stop so many cuts to essential services, but by organizing, protesting and raising a ruckus we did. Now it’s time that we force him, city council and the business community at large make the rich pay.

WE WON'T PAY FOR YOUR CRISIS

Wall Street gambled, and lost. Bankers have been all over the news as they run to the government for handouts, asking taxpayers to pay for their losses. Many people are furious at this upward transfer of wealth--and rightly so. While it's easy to see the excesses of the super rich in the case of AIG, it's harder to see how the current financial crisis affects something like a city budget. But Philly's initial budget shortfalls were due to a bursting housing market bubble, a Wall Street-induced economic recession and a tougher market for municipal bonds. To use the last example: for years, investors have been invited to make a profit on the operations of the city of Philadelphia. Now they're less willing to do so.

To make up for the shortfalls Nutter is asking us to pay. People across the world struggling to maintain services call this tactic "austerity." When the rich use the financial market to gamble on the basics of life--food, housing, the right to city services--the poor are asked to pay. When they organize and say "no!" the rich are forced to cough up the money.

Ultimately, as anti-capitalists we envision a world where the rich don’t simply ‘pay what they owe,’ but where we—as common people—dispose of the power and privilege of the wealthy entirely. The production and distribution of society's wealth should be decided democratically, by people, and not by the elite, city hall or the machinations of the so-called ‘free market’. We believe in a ‘movement of movements’ that can bring revolutionary change and create a world in which regular people make decisions about their workplaces, their communities and their cities through direct democracy, self-management and people’s assemblies.

Across the world people are mobilizing—just like the people of Philadelphia—to defend their rights to the basics of life. From Indonesia to France to Chile people are demanding that the rich pay for this crisis. While organizing to defend essential services we must be clear that we won’t pay for the losses of the rich. With this in mind, we can build a world where human rights aren't abstract commodities to be gambled with.

Endnotes

(1) “Real Estate Roulette,” Philadelphia Inquirer, June 22, 2008.

(2 “How the mayor deftly complied with the People’s wishes,”) Jill Porter, Philadelphia Daily News, March 20, 2008

(3) “Unions and Upward Mobility for Workers,” John Schmitt, Center for Economic and Policy Research, December 2008

(www.cepr.net/documents/publications/unions_and_upward_mobility_for_women_workers_2008_12.pdf)

(4) “How Unions Help All Workers,” Lawrence Mishel with Matthew Walters, Economic Policy Institute Briefing Paper, August 2003 (www.epi.org/briefingpapers/143/bp143.pdf)

(5) http://www.huffingtonpost.com/mark-miller/state-of-the-....html

(6) “Philadelphia’s Quiet Crisis,” Pew Charitable Foundation. http://www.pewtrusts.org/news_room_detail.aspx?id=38598


For some background on the fight to save essential services check out:

**" Wall Street Get's Bailed Out Philly Get's Thrown Out"**
By Sean West (NEFAC-Philly)
http://www.nefac.net/en/node/2463

**"The Defenestrator: Philly's Newspaper for Hope and Refusal"**
A local rag which contains some great reporting on our struggle against the Mayor's budget schemes as well as many other local struggles.
http://www.defenestrator.org

Related Link: http://www.nefac.net

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