Good News, Bad News
While most of the economic news is still negative these days, I try and include a pocket of sunshine every once in a while. So, I'll do the good news first.
As the stock market has rebounded from its 50 percent drop to only a 30 percent drop since last summer, CalPERS has benefited as well. In a news release from Dow Jones (click here), CalPERS states that it gained 12.5% over the past quarter, putting the fund back at $180 billion. Now CalPERS is still tens of billions of dollars below its mid 2008 value, but it is at least a nice reversal of the current trend. Unfortunately, CalPERS is going to need a lot more double digit gains to stave off a huge rate increase next year.
Now for the bad news. The latest state budget proposal not only includes a loan of property tax revenues, but another "loan" of $750 million in gas tax funds from local government. That is 75 percent of all the gas tax funds received by local government--and about a $1.6 million hit for Manteca. These cuts would more than wipe out the gain in local funding from the federal stimulus package. As noted in the story you can access here, maintenance and repair of local roads would be virtually eliminated--which would exacerbate the already deteriorating condition of many of our roadways. Delaying repairs only makes things far more expensive in the future, as road overlays now are far less costly than the reconstruction of roads in the future.
Once again, the state has come up with the worst possible solution to their budget problem. They are once again proposing a short term fix that barely makes a dent in their budget gap. A fix that in the long run will cost ten times the short term budget savings. It is this type of short-sighted budgeting that got the state in this mess in the first place.
To learn more about the potential options that the state is looking at to divert gas tax funds, click on the link below.
Transportation_Overview_05_29_09.pdf
As the stock market has rebounded from its 50 percent drop to only a 30 percent drop since last summer, CalPERS has benefited as well. In a news release from Dow Jones (click here), CalPERS states that it gained 12.5% over the past quarter, putting the fund back at $180 billion. Now CalPERS is still tens of billions of dollars below its mid 2008 value, but it is at least a nice reversal of the current trend. Unfortunately, CalPERS is going to need a lot more double digit gains to stave off a huge rate increase next year.
Now for the bad news. The latest state budget proposal not only includes a loan of property tax revenues, but another "loan" of $750 million in gas tax funds from local government. That is 75 percent of all the gas tax funds received by local government--and about a $1.6 million hit for Manteca. These cuts would more than wipe out the gain in local funding from the federal stimulus package. As noted in the story you can access here, maintenance and repair of local roads would be virtually eliminated--which would exacerbate the already deteriorating condition of many of our roadways. Delaying repairs only makes things far more expensive in the future, as road overlays now are far less costly than the reconstruction of roads in the future.
Once again, the state has come up with the worst possible solution to their budget problem. They are once again proposing a short term fix that barely makes a dent in their budget gap. A fix that in the long run will cost ten times the short term budget savings. It is this type of short-sighted budgeting that got the state in this mess in the first place.
To learn more about the potential options that the state is looking at to divert gas tax funds, click on the link below.
Transportation_Overview_05_29_09.pdf
posted by City Manager @ 5:56 AM
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