Are Furloughs Penny Wise But Pound Foolish ?
As many of my readers know I am an attorney and given the condition of the economy a large amount of my practice is bankruptcy. While my clients come from a variety of places I have recently had a number of state of California employees come in to my office. They are coming to me because due to the furloughs imposed by the state they are looking at 15% pay cuts and as you might imagine this is difficult for them to handle financially.
As often happens in client meetings our discussions range from the business at hand to more general conversational subjects. Obviously with the state employees the topic often turns to the furloughs and the fact that they feel like the budget is being balanced on their backs. The common refrain from those who support the furloughs is that while they are unfortunate the state has few options when the state doesn’t have any money to pay them with.
However in my conversations with various clients I have come to learn something very interesting. Many of the agencies that are facing furloughs are actually money generators. That is to say that they produce more money than they spend and are a net positive to the state budget. But with these cuts that is becoming less and less true.
An example might be found in something like the State Parks system. One of the big income generators for the state is tourism (both from those who live here and from those who come here). The state park system in California is one of the best in the country and produces a net profit to the treasury. But with the furloughs many parks are being closed or on partial schedules and this reduces tourism (especially from those out of state).
Another example is with programs that recieve income from the federal government. In many cases there the state is losing money because there are literally not enough people to fill out the paperwork in order to get the money.
Or when it comes to vital services like the state prisons, we have people working overtime to keep staff in place and this ends up costing more money than it would to just have the regular schedules.
I could tell more specific stories but I want to be cvareful about attorney client privilege issues and while the topics here really don’t fall in to that category I prefer to respect their privacy. Though I’m sure many state employees could chime in with stories of their own.
Obviously there is room for some cutbacks in government spending and it is certainly important to be thrifty when you are dealing with major deficits. At the same time I think that if we can make exceptions for vital services (the prisons are under some budget cuts but not as much as other agencies) then you could also consider the cost/benefit of cuts in other departments.