States can’t fund the plan, and would have to strip every other measure to do so

We have heard a lot about the recent couple of difficult years. Back in the years 2002 to 2005, we were seeing a fiscal crisis in state and local governments that, at that time, was the worst that I had seen in my years at AFSCME. And, little did we know then, it would be nothing compared to what we are seeing now. In the last couple of years, our members have experienced layoffs, furloughs, wage freezes, wage cuts, and we expect more fiscal trouble in the next 2 fiscal years. This certainly puts a strain on our members, but also puts serious strains on the public services and the people that they work for. The demand for food stamps, unemployment insurance, employment services, TANF, Medicaid, the need for child-welfare services, have all increased dramatically in this downturn. And systems that were stretched before this crisis have reached a breaking point. And the role of other public services in a bad economy may not be quite as obvious, but they are just as important--public safety, parks and recreation; libraries have become a place where people search for jobs. And they are closing and shortening hours and putting a lot of people at real hardship. So when we talk about taxes, I think it is important to remember what those taxes pay for. What we are also seeing are major policy changes enacted as a result of the budget crisis. In some states, there are fewer school days. As Governor Douglas mentioned, several states are releasing inmates en mass early, before they serve their sentences. Now, these policies certainly shouldn't be set in stone, and there is room to debate them. But we probably shouldn't just change them because we have run out of money. In addition to making budget cuts, states are biting the bullet and raising taxes by some $32 billion recently. But state and local governments are running out of options for dealing with the continuing budget problems. The American Recovery and Reinvestment Act was tremendously helpful. It closed some 30 percent to 40 percent of the deficits that states expect from 2009 to 2012. And we thank the House and the Senate for passing the $26 billion extension of FMAP, and we urge you to quickly reconcile the two versions of the bill so that these can get to states. We also urge you to continue recovery funding for schools. There was funding included in the Jobs for Main Street Act, passed by the House, and also in representative George Miller's Local Jobs for America Act, which we strongly support as well. And I want to join other speakers in strongly urging you not to restrict state's options at this critical time. There is a temptation in Congress and in states to use state-tax systems to protect particular industries, particular new or emerging industries, so that they can grow and thrive. And while that intention may be good and admirable, the result is many state- tax systems that we're good in the 1930's are completely inadequate for the 21st century. And it means that state-tax systems capture less and less economic activity over time, and those sectors that are taxed foot the bill. So in closing, we urge you to do what only the Federal Government can do, and continue to provide relief so that states and local governments can provide the services we need to get our economy on track. And we also urge you to allow them the flexibility to do what they can do to get their own budgets back on stable footing. And thank you again for calling this hearing, and for inviting me here.