1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 REPORTER'S TRANSCRIPT 8 JANUARY 22, 2009 9 10 ITEM P3 DEPUTY DIRECTOR'S REPORT 11 ITEM P3c2 BUDGET UPDATE 2008/2009 12 13 14 15 16 17 18 19 20 21 22 Reported by: Juli Price Jackson 23 No. CSR 5214 24 25 26 27 28 1 1 2 P R E S E N T 3 4 For the Board Betty T. Yee of Equalization: Chair 5 6 Judy Chu Vice-Chair 7 Bill Leonard 8 Member 9 Michelle Steel Member 10 Marcy Jo Mandel 11 Appearing for John Chiang, State Controller 12 (per Government Code Section 7.9) 13 Diane G. Olson 14 Chief, Board Proceedings Division 15 Ramon J. Hirsig 16 Executive Director 17 Elizabeth Houser Deputy Director 18 Administration 19 20 21 ---oOo--- 22 23 24 25 26 27 28 2 1 2 INDEX OF SPEAKERS 3 4 Name Page 5 6 Bobbi Smith, SEIU Local 1000 7 7 8 ---o0o--- 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 JANUARY 22, 2009 4 ---oOo--- 5 MS. HOUSER: My next item is an update on the 6 furlough proposal as outlined in the Governor's 7 Executive Order S 1608. 8 On January 9th BOE received a letter from the 9 Department of Personnel Administration advising us that 10 they plan to implement a furlough program that is 11 scheduled to begin on February 6th, 2009. 12 This program will result in the closing of 13 general State government operations on the first and 14 third Fridays of each month through June 2010. 15 BOE staff has estimated that our participation 16 in the furlough program will result in a net revenue 17 delay for approximately $213 million, of which 18 128 million is general fund. This loss is after taking 19 into account the estimated salary savings of 20 approximately $33 million over the 17 month furlough 21 period, of which 19 million is general fund. 22 As a constitutional office, BOE has the option 23 to decline to participate in the furlough program. 24 Based on these facts, our Executive Director, 25 Mr. Hirsig, is here to explain his intended course of 26 action regarding the furlough. 27 MR. HIRSIG: Madam Chair, Members, as Executive 28 Director, it's my recommendation that we respectfully 4 1 decline to participate in the Governor's program since 2 it will adversely impact our ability to generate 3 revenue, which the State is in such critical need of. 4 In these tough budget times, BOE can be part of 5 the solution as a revenue agency. I have asked the 6 staff to immediately identify ways in which to 7 alternatively achieve the cost savings and revenue 8 engendering solutions which will meet or exceed those 9 related to furlough or possible layoff of BOE employees. 10 Unless the Board directs otherwise, I will 11 proceed in this fashion and so inform the Department of 12 Personnel Administration. 13 MS. YEE: Thank you, Mr. Hirsig. 14 Let me just say I wholeheartedly concur with 15 your recommendation. And I would hope that by the end 16 of this Board meeting today that communication can be 17 made back to the Department of Personnel Administration. 18 I also concur with your -- the portion of the 19 recommendation that seeks to achieve the savings in 20 other ways. I do believe this agency has to be part of 21 the effort to tighten our belts at this point in time, 22 but I am definitely, adamantly opposed to doing it on 23 the backs of our employees. 24 And I would also ask that as you engage the 25 staff, I really like the model that we used when 26 Ms. Henry went out with our members of the Collections 27 Task Force to really engage input all of the way out in 28 the field. Our employees have a lot of ideas. 5 1 And I really trust the employees that do this 2 job day in and day out with the public about how to 3 continue to do the jobs well in this really constrained 4 fiscal environment. 5 So, I hope that a solicitation is extended all 6 of the way down to that level. 7 Okay, we have one speaker on this particular 8 item. 9 Please introduce yourself for the record and 10 you have three minutes. 11 ---O0O--- 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 1 BOBBI SMITH 2 ---o0o--- 3 MS. SMITH: Good morning -- or afternoon. 4 Board Members, for the record, my name is Bobbi 5 Smith. I'm here representing SEIU Loca 1000 and all BOE 6 employees. 7 I'm respectfully requesting that you, as 8 constitutional officers of the State, join the seven 9 other constitutional officers in declining to adopt the 10 Governor's approach to solving the budget deficit by 11 furloughing BOE employees and, therefore, reducing their 12 salaries by 10 percent. 13 First and foremost, BOE employees are dedicated 14 to providing businesses in this state with services to 15 assist them in complying with the laws of the state. 16 Businesses in California depend upon sufficient 17 BOE employees being available to assist them in a timely 18 fashion. BOE employees are also charged with the 19 responsibility of collecting and processing payments to 20 the State that go into the general fund, which is the 21 resource for a divergent number of State programs. 22 If the furloughs are imposed, BOE would stand 23 to lose millions of dollars in revenue instead of saving 24 money due to the delay in processing payments, 25 completing audits, initiating billings and collection of 26 monies owed to the Board. 27 Furloughs would directly impact the ability of 28 BOE employees to conduct taxpayer business in a timely 7 1 fashion. 2 For the period December 7th through December of 3 '08, BOE has collected 6 percent in increased revenue 4 compared to the same period a year prior. Even in a 5 weakened economy, BOE is able to generate more funds. 6 We understand that it would not be feasible to 7 close BOE offices two days a month, instead the 8 employees would need to be furloughed on a rotational 9 basis. This would be an extremely difficult and 10 sensitive responsibility placed on supervisors to 11 determine who would be furloughed and on what days. 12 In addition, furloughs would also have a direct 13 impact on employee morale. Alternate work schedules 14 would need to be adjusted, causing nightmares with 15 regard to transportation issues, babysitting 16 arrangements and the ability of employees to pay their 17 bills. 18 Some State employee families would be having 19 their incomes reduced by 20 percent as both incomes are 20 State employee incomes. 21 Furloughs would do more harm than good. 22 Economists state that putting money into people's 23 pockets, thereby, allowing them to spend more is the 24 course needed to improve the economy. The furlough 25 proposal is in direct opposition to this theory. The 26 negative impact -- economic impact on the Sacramento 27 area alone is projected to be in the neighborhood of 28 $1 billion. 8 1 As SEIU and BOE employees have already shown 2 their willingness to work with management to improve 3 procedures here at BOE, we feel -- 4 MS. OLSON: Time has expired. 5 MS. YEE: Please finish your thought, Bobbi. 6 MS. SMITH: We feel working together, cost 7 savings could be found that would, in essence, comply 8 with the Governor's expense reductions without 9 furloughs. Staff are part of the solution, not the 10 problem. 11 Please direct management to decline to 12 participate in the furloughs and instead focus their 13 energies on finding budget solutions to meet these 14 fiscal targets. 15 Thank you. 16 MS. YEE: Thank you very much. 17 Questions or comments, Members? 18 Okay. 19 MS. SMITH: Thank you. 20 MS. YEE: Very well. 21 MR. HIRSIG: We'll move forward then. 22 MS. YEE: Thank you very much. 23 ---o0o--- 24 25 26 27 28 9 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, JULI PRICE JACKSON Hearing Reporter for the 8 California State Board of Equalization certify that on 9 JANUARY 22, 2009 I recorded verbatim, in shorthand, to 10 the best of my ability, the proceedings in the 11 above-entitled hearing; that I transcribed the shorthand 12 writing into typewriting; and that the preceding pages 1 13 through 9 constitute a complete and accurate 14 transcription of the shorthand writing. 15 16 Dated: {Date} 17 18 19 ____________________________ 20 JULI PRICE JACKSON 21 Hearing Reporter 22 23 24 25 26 27 28 10