State budget hangover
Most of the politicians and pundits took the week off after the passing of the sham of a state budget. Sunday, the Sacramento Bee was back in the business of focusing lots of energy on the budget. They supplied an op-ed piece, a Dan Walters column and a straight news story. For good measure, they also put together a searchable database which was a compiliation of the hits taken by area cities.
Here are some excerpts from the articles. We'll start with Dan Walters' column:
Gov. Arnold Schwarzenegger assumes the recession will hit bottom late this year with a slow recovery next year. "This is a very uncertain period," Mike Genest, Schwarzenegger's budget chief, said in Fresno last week.
"We think an economic recovery starts in the fourth quarter. If not, we'll be back in a budget crisis."
This recession is not only unusually deep, but unusually wide.
When the housing industry meltdown, centered in California, transmogrified into a full-blown global banking crisis, it affected every segment of the economy, unlike past recessions.
Thus, California has not only seen unemployment skyrocket to levels not seen since the Great Depression – 11.6 percent most recently – but there's been a massive loss of consumer confidence, which has clobbered retail sales. New car sales, for instance, are half of what they were just a few years ago.
"The recovery … depends on the strength and speed of the federal stimulus package and the pace of worldwide economic recovery," said Steve Levy of the Center for the Continuing Study of the California Economy. "There are no indications that private sector activity will turn up soon in the absence of aggressive stimulus efforts or worldwide growth."
Christopher Thornberg of Beacon Economics noted that income taxpayers will be carrying over stock market losses to offset any income gains, and retail sales will be re-benchmarked downward as wary consumers – loaded with debt – divert income, when possible, into debt repayment and savings. Ominously, 10 percent of California's home mortgages are delinquent or worse.
Even were the recession to bottom out statistically in a few months, employment and consumer spending, economists agree, are destined to remain stalled for at least another year. And that probably will mean continuing budget woes for state and local governments, especially the former, whose revenues come primarily from income and sales taxes.
The state Department of Finance is projecting an initial deficit of $7 billion to $8 billion for the 2010-11 fiscal year that begins in 11 months. Even as it continues to struggle with the current year's budget, the department soon will begin drafting its 2010-11 version for the governor to unveil in January.
Click here for the entire Dan Walters column.
Here's the Op-ed piece from SEIU:
As the largest state employee union, SEIU Local 1000 has always advocated for a state government that is effective and efficient while providing quality public services.
But "government efficiency" should not become a code word for frantically decimating services to California residents and throwing money at well- connected private contractors. In the name of increased efficiency, The Bee's editorial accepts as fact the governor's dubious assumptions about privatization, furloughs and the services we provide.
Since January 2008, we have offered plans – largely ignored by the governor – to save hundreds of millions of dollars by reorganizing the state lottery, collecting taxes more efficiently and cutting waste in the state's $34.7 billion contracting process.
Click here for the entire editorial.
There was really no new ground in the news article:
Local governments coping with the shift of billions of dollars to the state of California are eyeing ways to do what consumers have done for years.
They're considering ways to borrow. In the Sacramento region, the state budget's toll on cities and counties is $125 million, a new Bee database shows. That's more than the general fund for the city of Roseville.
Click here for entire article and click here for the searchable database.
Here are some excerpts from the articles. We'll start with Dan Walters' column:
Gov. Arnold Schwarzenegger assumes the recession will hit bottom late this year with a slow recovery next year. "This is a very uncertain period," Mike Genest, Schwarzenegger's budget chief, said in Fresno last week.
"We think an economic recovery starts in the fourth quarter. If not, we'll be back in a budget crisis."
This recession is not only unusually deep, but unusually wide.
When the housing industry meltdown, centered in California, transmogrified into a full-blown global banking crisis, it affected every segment of the economy, unlike past recessions.
Thus, California has not only seen unemployment skyrocket to levels not seen since the Great Depression – 11.6 percent most recently – but there's been a massive loss of consumer confidence, which has clobbered retail sales. New car sales, for instance, are half of what they were just a few years ago.
"The recovery … depends on the strength and speed of the federal stimulus package and the pace of worldwide economic recovery," said Steve Levy of the Center for the Continuing Study of the California Economy. "There are no indications that private sector activity will turn up soon in the absence of aggressive stimulus efforts or worldwide growth."
Christopher Thornberg of Beacon Economics noted that income taxpayers will be carrying over stock market losses to offset any income gains, and retail sales will be re-benchmarked downward as wary consumers – loaded with debt – divert income, when possible, into debt repayment and savings. Ominously, 10 percent of California's home mortgages are delinquent or worse.
Even were the recession to bottom out statistically in a few months, employment and consumer spending, economists agree, are destined to remain stalled for at least another year. And that probably will mean continuing budget woes for state and local governments, especially the former, whose revenues come primarily from income and sales taxes.
The state Department of Finance is projecting an initial deficit of $7 billion to $8 billion for the 2010-11 fiscal year that begins in 11 months. Even as it continues to struggle with the current year's budget, the department soon will begin drafting its 2010-11 version for the governor to unveil in January.
Click here for the entire Dan Walters column.
Here's the Op-ed piece from SEIU:
As the largest state employee union, SEIU Local 1000 has always advocated for a state government that is effective and efficient while providing quality public services.
But "government efficiency" should not become a code word for frantically decimating services to California residents and throwing money at well- connected private contractors. In the name of increased efficiency, The Bee's editorial accepts as fact the governor's dubious assumptions about privatization, furloughs and the services we provide.
Since January 2008, we have offered plans – largely ignored by the governor – to save hundreds of millions of dollars by reorganizing the state lottery, collecting taxes more efficiently and cutting waste in the state's $34.7 billion contracting process.
Click here for the entire editorial.
There was really no new ground in the news article:
Local governments coping with the shift of billions of dollars to the state of California are eyeing ways to do what consumers have done for years.
They're considering ways to borrow. In the Sacramento region, the state budget's toll on cities and counties is $125 million, a new Bee database shows. That's more than the general fund for the city of Roseville.
Click here for entire article and click here for the searchable database.
posted by City Manager @ 6:50 AM
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