Data of the Decade

Here's a great blog post I found for those of us who love data. I think candidate number four is the one that we all need to consider when projecting how our economy and therefore our city budget will be doing over the next decade. Given the fact we now have a negative savings rate, it may take a while for consumer spending to recover to 2006 levels. In any case, here's the post:

Economic Statistic of the Decade Award:Finalists

Posted in Statistics by Mike Mandel on December 31, 2009

Economic statistics don’t get enough recognition for all of their hard work. So, I’ve decided to offer an “Economic Statistic of the Decade” Award. The three criteria are simple. First, we want to reward the economic statistic that best reflects the decade (both the good and the bad).

Second, we want to recognize the economic statistic that turned in a surprising performance–that is, back in 2000, if someone had shown you a graph of the statistic over the next ten years, you would have said “no way”. Third, we want to reward economic statistics that are reliable and accurate representations of the actual economy.

In the 1990s, for example, the Economic Statistic of the Decade Award would have gone to U.S. productivity growth. The runner-ups would have been Chinese economic growth, followed by global tech spending.

What about this decade? Here are the four finalists (chosen by me):
1) Housing prices
2) Global trade
3) Chinese growth
4) U.S. household borrowing

Here’s a bit about each of the finalists:

1) The boom and bust in housing prices clearly epitomizes the decade. What’s more, in 2000 nobody in their right mind would have predicted that the boom lasted as long as it did. Downside: The gyrations in the housing market may be a symptom of deeper problems, much like a fever is a symptom rather than a disease in its own right .

2) Globalization has been one of the main themes of this decade–and nothing illustrates globalization more than the rise in exports as a share of global GDP. In 1999, global exports were about 22.7% of global GDP, as measured by the International Monetary Fund. By 2008, that number was 32. 3% before plummeting in 2009. Downside: There may be systematic double-counting, as companies break up production into smaller and smaller pieces.

3) Chinese economic growth would have been one of the runner-ups for the Economic Statistics of the Decade for the 1990s. Chinese economy growth averaged an astounding 10% peryear in that decade, and looks like it’s going to get to the same level again in this decade. Downside: No one is really sure whether to trust the Chinese economic statistics or not.

4) Finally, we come to U.S. household borrowing, which probably is the clearest reflection of the financial crisis. In this decade the U.S. household sector amped up its borrowing from $500 billion in 1999 to $1.2 trillion in 2006, before dramatically cutting debt in 2009. Downside: This number from the Federal Reserve includes domestic hedge funds and nonprofit organizations, making it a bit tough to interpret.

Click here for the graph, it is pretty stunning.

Ten Events That Shaped State-Local Budget Relations

The State LAO (Legislative Analyst's Office) recently published a report that chronicled the twisted relationship between state and local revenues. Entitled "The Ten Events that Shaped State-Local Fiscal Relations" (click here) it chronicles all of the ballot measures and other actions that help to bring us to the mess we face today.

Here is the "California Special Districts Association (CSDA)" take on the report and related state committee discussions:

It is no secret that the state and local government have not had the best friendship over the years. Last week, the Senate and Assembly Select Committee on Improving State Government examined the twisted relationship between the state and local government and looked at ways to improve both the relationship and ways the state can contribute to local fiscal stability. CSDA had the chance to attend the committee hearing and testify on behalf of its members.

The Legislative Analyst’s Office (LAO) reported on the history that shaped California’s state and local fiscal relationship. Read the report here.

Meanwhile, a panel of local government experts told the committee that local governments do not have local fiscal stability because the state shifts, takes and borrows local revenues which creates an environment of uncertainty for locals, as evidenced by ongoing ERAF shifts and this year’s suspension of Proposition 1A. This coming year will be no different as the state faces an over $20 billion budget deficit and the governor must produce a balanced budget proposal by January 10, 2010, that will no doubt include more borrowing and accounting gimmicks.

In addition to keeping local revenues local, CSDA asked the committee to give local officials the tools, and the flexibility to decide which tools to use, to be able to get local projects delivered efficiently and effectively, like expanding the use of public private partnerships and giving special districts the authority to use design-build contracting as appropriate.

The Select Committee on Improving State Government plans to hold one last hearing on January 12, 2010, where the committee will look at the suggestions from past hearings and decide what actions, if any, to take.

Latest on Retiree Health

While pension reform is getting most of the press these days, retiree health care is the other huge financial obligation that could saddle local government in the future. Capitol Weekly's Ed Mendel (click here) recently reported on efforts by the City of San Diego to reduce their retiree health obligations:

San Diego officials think a federal court ruling will allow a cut in one of the biggest debts owed by California state and local governments — $118 billion or more promised public employees for retiree health care.

The federal court ruled that San Diego’s retiree health obligation is not a “vested right” like public employee pensions, which are widely believed to be protected by court rulings that allow cuts only if replaced by something of equal value.

San Diego officials think retiree health obligations can be reduced in negotiations with labor unions and, if there is no agreement, that a cut can be imposed through standard “impasse” procedures.

Happy Holidays

City Offices Closed

Just a reminder:

City offices will be closed as a result of upcoming holidays and unpaid furloughs that will be taken by City employees. Offices will be closed from December 24 through January 3. There will be no "starts" or "stops" for water, sewer or garbage service during this time. Solid waste collection will remain on its regular schedule. Remember, routes scheduled for Christmas Day or New Year’s Day will be picked up on the following day.

This is the second round of furloughs this year. City offices were also closed the week of Thanksgiving. The furloughs saved the city nearly $1 million in labor costs in the current budget year as each employee's compensation has been reduced by 3.9 percent. Furloughs will likely continue for the next two budget years as we continue to find ways to cut costs in these tough economic times.

Shadow Inventory - The latest real estate "buzz word"

As we continue to find ways to cut costs and survive through these lean budget times, all of us that worry about city budgets continue to monitor the indicators that let us know when we might expect to see property taxes and sales tax begin to increase. For property taxes, the most important indicator is foreclosures--which don't seem to show any signs of abating.

Foreclosures continue nearly unabated at record levels, with San Joaquin County still ranking in the top five counties nationwide nearly every month (we were 2nd last month). Two current trends demonstrate that we'll be continuing to see high rates for quite some time. The first indicator is the current delinquency rate for mortgages. According to a recent L.A. Times article:

For the first quarter ever, the number of homes in foreclosure with mortgages serviced by U.S. national banks and savings and loans topped the 1-million mark, according to figures released Monday by the Office of Thrift Supervision and the Office of the Comptroller of the Currency...and

The percentage of prime borrowers whose loans were 60 or more days past due doubled from the July-to-September period a year earlier. And more than half of all homeowners whose payments had been lowered through modification plans defaulted again.

Of the mortgages serviced by national banks and thrifts, only 87.2% were current and performing. It was the sixth straight quarter that the quality of those home loan portfolios had slipped.

"Mortgage performance continued to decline as a result of continuing adverse economic conditions including rising unemployment and loss in home values," the report said.

Seriously delinquent mortgages -- loans 60 or more days past due and loans to delinquent borrowers who have filed for bankruptcy -- rose to 6.2% of the servicing portfolio. That's a 16.7% increase over the second quarter and a 73.8% increase from a year earlier, the report said.

Of those seriously delinquent loans, the number of homes in the foreclosure process reached 1.09 million, about 3.2% of all the loans surveyed.

The report highlighted some troubling trends as the housing market continues to struggle despite increasing sales and prices in many areas. Difficulties increased for holders of prime mortgages, with the percentage of those loans that were 60 days or more past due increasing to 3.2%, up almost 20% from the second quarter and more than double the rate of a year earlier.

These numbers are absolutely stunning. Another L.A. Times article adds piles on additional troubling news. It talks about the new banking buzzword "shadow inventory".

Shadow inventory properties are homes that have not been tallied into official inventory numbers tracked by Realtors and other real estate professionals. They include homes taken back by lenders through foreclosures and similar actions, as well as homes whose owners are at least 90 days delinquent on their mortgage payments.

The article notes that one of the reasons that price drops have been less drastic this year is due to the number of homes being held off the market by lenders. The article estimates 1.7 million in shadown inventory -- a 55% percent increase in the last year.

Thus, one would postulate that even after foreclosures finally wane, there will be another 1-2 years worth of shadow inventory to sell off. I find this a good news, bad news scenario. The good news is that the lenders are doing everything they can to keep market values from dropping further. The bad news is that we can expect little or no appreciation in real estate in the middle of the upcoming decade.

More Salary Cuts and Salary Freezes

Merced is one of the cities that mirrors Manteca when it comes to population, services and revenue per capita. Not surprisingly, they are suffering very similar budget woes to us. They have already eliminated 74 staff positions in the recession and expect another tough budget year ahead. While we've been forced to modify existing labor agreements to help bridge our budget gap, Merced's labor agreements are expiring.

Here's more about the agreements from today's Merced Sun-Star:

Due to the uncertainty in the current labor climate, they decided to put together new contracts which expire in a year.

While all sides voiced their general satisfaction with the contracts' outcome, the austerity agreements, which froze wage increases among other things, came at a time when the troubled economy has forced the city to tighten its belt.

"We came to a very good agreement," said Merced City Manager John Bramble, about the contracts. "They understand our financial situation, and we understood their issues."

While the two agreements saw each union give concessions in the form of wage freezes, they were limited in duration and will be renegotiated within a short period.

The Merced Police Officers Association, which represents roughly 100 officers, agreed to a two-year contract with a wage freeze, but received a slight improvement in their medical coverage. The last contract the association signed was in 2006.

"I'm pleased with the outcome because there are a lot of cities faced with layoffs and work furloughs and reductions, and we were able to come to an agreement with the city where we're not losing anything," said Keith Pelowski, president of MPOA.

The Merced Fire Fighters Local 1479 of the International Fire Fighters Association, which represents 62 firefighters in Merced, signed a one-year contract, which also includes a wage freeze. The contract also includes an increase in out-of-pocket medical costs, said Jeremy Franklin, the secretary of the firefighters union.

Aside from minor concessions, the union was happy with the contract, said Franklin, especially with the economic situation as bad as it is. Most of all, they wanted to avoid layoffs, and they did, he said.

The two unions had been in negotiations with the city since late summer.

Here in San Joaquin County, the District Attorney's office was not able to come up with a agreement to save the jobs of seven prosecutors. Here's more from the Stockton Record:

In the deal, the San Joaquin County Board of Supervisors had asked the association to reduce a scheduled raise from 5 percent to 1 percent, covering $380,000 needed to keep the positions for the remainder of the fiscal year.

Spokesman Michael Bullard said in a written statement for the association of attorneys who work in both the prosecutor and public defender's offices that they had no choice but to reject the deal.

"The county's offer to us was dead on arrival with such one-sided demands," Bullard said.

The association voted Tuesday with 70 percent of its members saying they wouldn't agree to the concessions.

The San Joaquin County District Attorney's Office now has to figure out what to do with seven fewer prosecutors. The layoffs wipe out the misdemeanor team, and the office will likely have to close its Tracy branch, among other measures.

Pension Blues

The news media continues to focus on public employee pensions. The Modesto Bee just completed an exhaustive investigative report on pensions in Stanislaus County. The Bee, which had to litigate in order to get some of the information, focused on the cost to taxpayers from spiking provisions that are available in the County's retirement program. As many of you know, County systems have much greater flexibility than CalPERS contracted agencies in developing retirement formulas.

The article highlighted the fact that employees in Stanislaus County are able to include vacation cash outs, deferred comp payments and other forms of add pay to calculate their final year's compensation. Most of these credits are not available in the vast majority of retirement systems, including CalPERS. Unfortunately, the general public is not aware of this, and will cast us all in the same light as Stanislaus County.

It is certainly another expose that the anti-pension foes will use against us in their punitive ballot initiative to limit future pensions.

Click here and here for the articles.

An Editorial in yesterday's Chronicle (click here) discusses San Francisco's skyrocketing pension costs. The article notes:

Mayor Gavin Newsom and Supervisor Sean Elsbernd deserve praise for taking on the politically delicate - but fiscally responsible - issue of pension reform. There were years when San Francisco's leaders had the luxury of avoiding the topic. In 1999-2000, investment income was rolling in at such a pace that the city had to contribute just $300,000 to keep the system fiscally sound. Those days are long gone. This fiscal year's bill exceeded $200 million - and growing. By 2013-14, the city's annual liability is expected to approach $500 million.

The reformers are proposing a series of measures to ensure that funds are deposited every year, even in good years for the retirement portfolio, and they are taking measures to curb spiking of pensions.

I think we'll continue to see more of these measures as time passes, including lots of other agencies looking at the two-tier pension system many of us are advocating for CalPERS cities.

Latest from Sacramento

It is deja vu all over again in Sacramento as noted in today's Bee (link here):

Sure enough, the nonpartisan Legislative Analyst's Office estimated last month that the state now faces a $20.7 billion gap between what it can expect to collect in revenues and spend over the next 18 months.

That figure includes a $6.3 billion hole for the current fiscal year, which ends June 30, and a $14.4 billion deficit in the 2010-2011 year, which begins July 1.

"And as hard as $60 billion was, closing the (new) deficit is going to be even more challenging," said H.D. Palmer, spokesman for the governor's Department of Finance, "for three reasons."

First, Palmer said, the state can't rely on another $8 billion in federal stimulus money, as it did this year, although state officials hope at least some aid from Washington will show up.

"Second," he said, "some of the solutions this year were one-time in nature, and we made that very clear."

Those "one-time" solutions included budgeting maneuvers such as accelerating the collection of payroll taxes, and postponing the last payday of state workers in the fiscal year until the first day of the next fiscal year.

Third, Palmer said, the state is scraping bottom in cutting some major spending programs because of something called "maintenance of effort."

That basically means the federal government sets minimum standards for programs such as education and social services that states must meet to be eligible for federal funds.

For example, the state must have enough money available to pay 90 percent of doctors, pharmacies and other providers of Medi-Cal services within 90 days of being billed. If it doesn't, it risks the loss of billions of federal dollars.

"As we're putting the budget together, we're mindful we are close to the bottom in a number of areas" in terms of more cuts, Palmer said.

In addition to the trio of troubles he outlined, lawmakers and the governor also must confront some legal problems.

Among them are lawsuits challenging the legality of $489 million in budget vetoes the governor made in July; disputing his claimed right to furlough state workers; disputing the "borrowing" of $1.7 billion from local redevelopment agencies; and fighting a federal court order to reduce the prison population.

The state already lost one budget-related lawsuit, when an appeals court ruled that the state illegally grabbed about $1 billion in gas-tax money meant for local transportation issues, diverting it to pay California's general fund bills.

The legislative analyst's $21 billion budget gap forecast assumes that the state will prevail in the still-active court cases. If it doesn't, the hole gets deeper.

Process Problems

Thursday's SacBee chronicles the Facilities Permit Program (FPP) which was launched by the City of Sacramento four years ago to help facilitate economic activity in the community (link here).

FPP is designed to push along development of commercial and industrial facilities by allowing companies to begin work on multiple aspects of their projects with a single building department approval. Projects are still subject to inspections, plan reviews and permit requirements, although permits are issued when work is completed instead at the onset of the project. Full drawings and project submittals were required before work could begin.

The City Attorney, who apparently was not aware of the program, now claims that the program is probably not legal. Staff believes that with minor retooling, the program can be adjusted to be consistent with local and state laws.

The process enabled the fast tracking of over 1,500 tenant improvements in 50 large buildings. It likely saved many projects that might have gone to another jurisdiction if improvements had to follow the usual lengthy process.

This issue is typical of the challenges faced by city planning and buildinig departments. Cities are under tremendous pressure to deliver projects quickly to ensure their success--state regulations often make this a herculanean task--and give project opponents the opportunity to slow or kill projects with red tape.

Highlights from "The Week in Review" (TWIR)

You can access the entire TWIR by clicking on the link on the right side of this page.

Public Works
Crosswalks: Crosswalks are typically placed at road intersections to direct pedestrians to locations that provide the safest opportunity for crossing streets. Most crosswalks are placed at controlled intersections where drivers are expected to operate with additional attention to conflicting traffic and pedestrians. However, additional crosswalks are sometimes requested by those who assume that adding a crosswalk will provide an additional level of safety for pedestrians. Unfortunately, experience has shown that the presence of crosswalks does not alter driver behavior and, thus, installing a new crosswalk can actually create greater risk by creating a false sense of security for pedestrians. This is especially true for small children who may walk right out onto a crosswalk, without looking for cross traffic because they have been taught they should cross at crosswalks because they are safe.

Powers Avenue Crosswalk – In the case of Powers Avenue, some residents have requested that the City install a crosswalk at the intersection with Hutchins Street, across from Lincoln School. The site for this request has been reviewed multiple times, and to date, adequate justification for a crosswalk at this location has not been found. Following the most recent review of the site, a speed survey showed traffic was moving at a higher rate of speed than appropriate. To address this issue, additional enforcement was performed, and striping of the street was modified to reduce the width of the traveling lanes. These two measures were both implemented in an attempt to slow traffic, which in turn will make it safer for pedestrians. Follow-up speed surveys will be undertaken in coming months to monitor the area, and determine if more extensive measures should be implemented.

Alley Paving – Powers Tract: In the last two years, the City has paved most of the alleys in the Powers Tract subdivision. One alley that could not be paved is the alley behind Cowell Avenue, on the east border of the tract. This alley was previously dirt and weeds and largely impassable to most vehicles. In the last two months, Streets crews cleared the alley, took asphalt concrete grindings generated from the recent overlay project, and spread the grindings on the alley to provide an all-weather surface that would be stable and reduce nuisance weeds and dust. The grindings are similar in nature to crushed rock and are very durable, allowing water to penetrate through the surface, rather than running into backyards. The down side of placing the grindings is that some gates that open onto the alley must be modified, and the water meter boxes and manholes have to be raised. Most of the meter boxes have now been reset, but manholes will still need to be raised once the Streets crew is available in January or February.

Leaf Pickup: The recent cold weather and rain have helped bring down many of the leaves in the City. City streets crews are currently picking up leaves that are piled by residents in the streets. Leaf pickup will continue on a regular basis up to Christmas Day. From Christmas through the end of the year, Streets staff will be furloughed and no leaf pick will be available. During and after that time, leaves should be placed in the green recycle Toters for pickup on the regular green waste day. After the first of the year, Streets crews will be picking up any remaining leaves along with clean Christmas Trees.

STAA Truck Route Signs: City Streets staff completed the installation of STAA truck route signs, the day after City Council adopted the new route along Spreckels Avenue and Industrial Park Drive. Engineering staff will continue work on additional STAA routes in January.

Fire
Training: Firefighters participated in Fire Attack Training this week, which consisted of ventilation techniques including positive pressure, negative pressure and vertical ventilation. Other training this week consisted of apparatus placement at emergency incidents for engines and the ladder truck.

Emergency Incidents: We had a total of 95 incidents this week, which included 3 that were fire related: 1-Structure Fire and 2-Outside Fires. Dollar loss for the week was minimal. The remaining calls this week were: EMS-52, Vehicle Accidents-9, Service Calls-21 and Other Emergencies-10.

Fire Prevention: This week’s Fire Prevention Activities included: Business Inspections-50, New Construction Inspections-6, Plan Checks-7, Certification of Occupanies-2, Business License Inspections-2 and Fire System Checks-7.

Police
Stabbing: On December 11, Ronnie Raymond Schaapman, 55 of Manteca, came into the Police Department lobby reporting he had been stabbed in the forearm during a domestic dispute with his ex-girlfriend. Schaapman and his ex-girlfriend currently live together. The incident occurred at about 7:00 a.m. at their residence. Schaapman refused medical treatment but then decided to have his daughter take him to San Joaquin County Hospital. After being treated, he returned to the Manteca Police Department. An investigation into the fight showed Schaapman was the dominant aggressor and was stabbed in self defense. He was booked into San Joaquin County Jail for Corporal Injury to Spouse.

Burglary Arrest: On December 12 at 12:27 p.m., officers responded to an interrupted residential burglary at 706 Emerald Place. Neighbors called 9-1-1 when they saw a suspicious gold Saturn occupied by a male and female park in front of the residence. The female stayed in the car while the male went up to the door and knocked. The male then checked the side gate and disappeared into the backyard. The female drove down the street and returned, parking partly in the driveway at the residence. She left the car running and went into the backyard area. Another neighbor went to the suspect vehicle and removed the keys so the suspects could not leave. The female returned and got into a verbal argument with the neighbor before running into the backyard again. Both neighbors know the owner of this residence well and knew these subjects did not belong there. Upon arrival, Officers cleared the residence. The suspects were already gone. Entry had been made by breaking into a bathroom window with a crowbar. It appeared the suspects had fled out a rear sliding door and over the fence onto Cobblestone Lane. Officers located the male suspect on Cobblestone Lane, and the female was later located in the 400 block of Elm Avenue. Both were positively identified by witnesses. Jewelry was recovered in the area and on the male suspect. It was later returned to the owner. Officers arrested a Hispanic male juvenile, 17, from Manteca. He was charged with Possession of Stolen Property, Burglary, Conspiracy and Gang Enhancement, and was also booked on a no bail misdemeanor warrant. Jessica Espinosa, 20, from San Martin, was booked for Contributing to the Delinquency of a Minor, Burglary, Conspiracy, and Unlicensed Driver.

Burglaries: On December 12, Officers responded to a report of two residential burglaries in the Del Webb area. At 4:58 a.m., Officers responded to an alarm on Glen Abby, a model home. Upon arrival, Officers discovered an interrupted burglary. Suspects had made entry by prying into a back glass sliding door. Appliances were removed from the kitchen and placed by front door. Footprints were located outside but no suspect was located. Nothing was actually taken from the residence. At 9:49 a.m. Officers discovered another burglary on Edge Brook, a short distance from Glen Abby burglary. When the new owners arrived at the house for a final walk-through, they discovered the burglary. Entry was made by prying open a back window. The appliances from the kitchen were removed and placed in the garage. Again, nothing was actually taken from the premises.

Parks and Recreation
CAMPRS and CAPS Team Up: CAMPRS (Community Ambassadors for Parks and Recreation Services) met with Nicole Gowan from Manteca CAPS to coordinate volunteer opportunities in support of our parks. Beginning in December, the CAPS will start providing volunteer work at Woodward and Northgate parks. They will provide weekly assistance with garbage clean up, weed removal, and clean up around the playgrounds and rake safety surfacing material back under the swings and slides. The plan is to clean Woodward on Mondays and Northgate on Fridays. Their numbers will fluctuate a bit, but we are anticipating about 10 people on each of the volunteer crews.

Community Development
Building Safety Activities: The City’s Building Safety Division conducted a total of 317 inspections during the week. The division issued 53 building permits, which included 15 Single-Family Dwelling, 3 Changes to Existing Plans, 1 Commercial Remodel, 1 Dry Rot Repair, 1 Hood and Duct, 2 Miscellaneous Electrical, 9 Miscellaneous Mechanical, 2 Miscellaneous Plumbing, 1 Patio, 5 Photovoltaic, 1 Power Pole, 1 Residential Addition, 1 Residential Remodel, 1 Commercial Roof, 3 Residential Roofs, 3 Sign Permits, 1 Government Building Miscellaneous and 1 Housing Code Violation. A total of 63 new project applications were submitted for plan check services, which included 59 Single-Family Dwellings, 1 Commercial Parking Lot, 1 Fire Sprinkler, 1 Sign and 1 Solar.

Tracy approves Business Improvement District

From the Tracy Press (click for link here):

The votes are in, and downtown property owners agreed to tax themselves to raise money to boost business in Tracy’s core.

At Tuesday night’s City Council meeting, ballots mailed out to property owners last month were opened and counted.

The tally showed that owners of 59 percent of the property within the new district voted yes, with 10 percent opposed. Apparently, some people declined to mail in ballots.

The vote caps months of work by the city’s economic development agency, which hired an expert in the field and only recently swayed one-time opponents to jump aboard with their support.

This is great news for downtown Tracy. Unlike downtown Manteca, this group of property owners realized that combining resources was the way to make downtown stronger. The owners in Tracy did have an advantage over Manteca, in that they already had been working as a group for many years. This group realized that the small amount of money ($30,000) generated by the existing business district was really not enough to put together the resources needed to make downtown competitive with other commercial centers. With $135,000 in their pocket, they'll be able to hire a director who can coordinate the marketing and services needed to make downtown Tracy a viable business entity.

I'm hoping that the owners and businesses in downtown Manteca take note and realize that a Property Based Improvement District is one of the few available ways to keep downtown a viable business entity. I'm sure if they talk to owners in Tracy, they'll learn that this isn't another city-imposed tax. In reality, it is essentially a common area maintenance fee--which is how a typical shopping center efficiently charges its tenants as a group for common costs such as marketing, maintenance and security.

None of the costs generated by the District are kept by the City, in fact the City usually contributes significantly to these Districts. Instead of every owner paying for their own security, or their own maintenance--they can share this cost. Instead of every individual business attempting to figure out how to coordinate marketing with every other business downtown, they have an executive director who can pull all the information together and execute the plan. Instead of 20 different businesses all lobbying city hall when downtown interests are at stake, they have a full time employee who can speak with the power of every business in the downtown.

It is for these reasons that hundreds of districts in California have put in this self-asssessment. In addition, it is also why nearly every one of these districts have been renewed--as the law requires these districts to have a new vote after the first five years.

Let's hope that once the downtown finally forms an association, they'll realize that a Property Based Improvement District is the next logical step.

Even more from Sacramento...

Here's another interesting study hot off the press on the status of our state finances. There are a lot of future projects -- particularly road and levee construction -- that are dependent on the state's ability to issue bonds. Without the ability to issue bonds, tens of billions of dollars in future job generating infrastructure projects will be delayed indefinitely. Hopefully, the threat of default will force the state to get its house in order and make the same financial sacrifices that all other governments in the state of California are now making. The labor unions are likely the biggest obstacle in the way of the state staying liquid.

Here's the full story just issued by the Sac Bee:

The latest on California politics and government
December 16, 2009

Cal Lutheran forecast suggests state debt default likely
California faces at least another year of recession, and the state budget is so far upside down that it's now "more likely to default than not," on some of its debt, a new economic forecast from California Lutheran University's economists declares.

The director of Cal Lutheran's new Center for Economic Research and Forecasting, Bill Watkins, cites the state's budget problems, its high regulatory and operating costs and its deficit infrastructure as impediments to rapid recovery.

"We expect California's economy to continue to contract, slowly, through the first three quarters of 2010," the forecast says. "However, the contraction will be a bit less each quarter. By the fourth quarter, the state's gross product growth could be mildly positive. Output is then likely to slowly improve, but at an improving rate, through 2011.

"Job growth will lag economic activity. We don't expect to see California gain jobs until the second half of 2011. Consequently, unemployment will probably remain in double digits through 2011. Wages, by contrast, will likely show some gains almost immediately, but we don't expect to see California's average wage reach its pre-recession levels within the forecast horizon."

Despite the state's chronic fiscal woes and concerns about its mounting debt load, its top economic officials have consistently told investors and the public that the state is in no danger of defaulting on its bond payments, which by law have a high priority claim on the state's revenue streams.

Watkins and other members of the Cal Lutheran economic team migrated this year from the University of California, Santa Barbara's Economic Forecast Project. Data from the Cal Lutheran center can be purchased here.

More from Sacramento...

If the Britney story wasn't enough for you today, here's a nightcap from today's Sacramento Bee:

State's revenues running $1 billion below forecast
When Gov. Arnold Schwarzenegger and legislators fashioned the latest version of the state budget in July, they inserted a $3 billion fudge factor on revenues, cutting income expectations by that amount on the assumption that the economy was continuing to decline.

The latest monthly bulletin from the state Department of Finance, however, says that through the first five months of the 2009-10 fiscal year, revenues are running more than a billion dollars under even that lowered expectation.

Personal income, corporate income, sales and vehicle taxes all fellow below forecasts in November, the department said, but the bulletin found "encouraging" news on the employment front, with the first month-to-month increase in jobholders in 17 months. Even so, the unemployment rate increased due to growth in the labor force.

The revenue drop forms one component in the current forecast by the Legislature's budget analyst that the state faces a $6-plus billion deficit in the current budget and a $14-plus billion gap in the 2010-11 budget.

The Department of Finance report is available here.

This says it all...

Just when you thought the folks in Sacramento reached their lowest point in public opinion polls...California City News has a great post about our legislature, to wit:

Public Split on Trusting the Legislature or Britney Spears with Budget Choices

In the latest blow to the California legislature's psyche, a recent poll by Wilson research demonstrates that the public is basically split on whether to trust our elected legislature, or Britney Spears with the budgetary decisions. An excerpt from the poll as shared by CCN friend and political consultant Tab Berg:

Q17: And, who do you think would do a better job handling your family's budget [ROTATE] California legislators or Brittany Spears?

1. California Legislators 35%
2. Brittany Spears 31%
3. Don't Know/Refused 34%

Bear in mind, this is not a website poll or other informal kind of 'push-polling' -- it's a professionally administered poll by a respected firm. Tab Berg wrote an opinion piece reacting to this latest disgrace on the conservative Flashreport blog that is worth a read.

And the longer we look at these numbers, the crazier it sounds. Maybe the most troubling part is the 34% of respondents who can't decide between the two! Maybe they want to go re-watch the clip of Brittany shaving her head before making that call for sure.

City Council Headliners

Here are some of the items Council will be considering at 7:00 p.m., Tuesday night:

Only one scheduled public hearing:
-Amendment to the Municipal Code, Section 15.24.040, Flammable Liquid Storage Aboveground - District Limits.

Non-consent calendar items of interest:
-Adoption of a resolution deferring the 2010 increase to the water use charge for one calendar year.
-Adoption of a resolution approving an STAA truck route from State Route 99 to East Yosemite Avenue, Spreckels Avenue, Industrial Park Drive and South Main Street to State Route 120, authorizing staff to install appropriate signs.
-Council will consider appointments to the Manteca Building Board of Appeals, the Manteca Recreation and Parks Commission and the Manteca Senior Advisory Committee, with alternates.
-Ratify the Mayor's appointment of two Council Members to serve on a Council Committee on the Housing Market.

Consent calendar items of interest:
-Approve reclassification of the Fire Marshal position as part of the Fire Department reorganization.
-Approve the Side Letter Agreements to the existing Memoranda of Understanding with the City's Manteca Police Employees Association, Manteca Firefighters Association, Technical and Support Services, General Services, Mid-Managers and Executive Management (including the City Manager) bargaining units; and adopt associated resolutions required for full implementation of agreements.
-Approve the reorganizations with Parks and Public Works Departments as outlined in the staff report.

A copy of the full agenda packet is available at the following link on the City's website:
http://www.ci.manteca.ca.us/CityClerk/agendas

Customer Service

While we aren't yet at the New Year, 2010 will be the year of increased focus on customer service. I think we all realize that our customers are the most important aspect of our business. Not only do they provide the revenue that keep us afloat, they can also provide us with the guidance we need to decide how to allocate our resources.

One of our employees passed on this email the other day, and I thought it was a great example of the importance of customer service.

Before I left to for my errands, Sprint had me pretty wound up (you all probably heard). I called Applebee's and spoke to a pleasant, 12-year old sounding young woman (Ashley) who took my order and info, told me exactly how much my order would be and at exactly what time the order would be ready. She politely instructed me as to where I should park, what her name was, and that she would be happy to bring that out to my car.

Well...bla bla bla, I was still upset at Sprint, so walking out to my car I actually thought about calling and canceling my order and not going to Home Depot for the tree - cuz I was just mad that Sprint shows me as having a past-due amount when my online bank statement shows the payment in question has cleared.

AAAAAAny way....I got in the car, turned up the music, sang along with Kelly Clarkson, glared at a few irresponsible drivers on my way to the appropriate parking stall at Applebee's. Out bounces Ashley - looking all of 12 - and she says you must be the person who called, I could tell by the cool car. She gave me my order, reminded me of the amount, which I had cash (+tip), and she says I'll be right back with your change. I told her no need for change and she said OK then here is your receipt...I decorated it for you (all excited)! She told me to enjoy my lunch and she bounced back into the restaurant. I adjusted my bag of food on the front seat and realized she had decorated my bag w/my name and a big THANK YOU and a smiley face.

Wow...now that was customer service! I really felt like she meant it when she told me to "enjoy my lunch."

But wait! There's more....

So, I head over to Home Depot - busy parking lot, hoping to park close in case the rain really started coming down. No such luck finding a close parking space. I hustle in...still kinda mad at Sprint, but smiling because of Ashley. Then, the Home Depot Greeter catches me at the door..."Hi, can I help you find something?" I pointed to the Christmas area. She stepped aside and told me to let her know if I needed any help. She saw me struggling with the box and asked if I needed a cart, of course I said no. She quietly left and came back with a cart, grabbed the box from me and put it in the cart. She said, "there, now you can keep looking ." She shared a story with me about buying a discounted tree for her mother last year and that she hoped to get one for herself this year. Again, very pleasant, not over the top or annoying. She told me to have a good day as I left her area.

I got over to the self-check area and was fighting with the box to get the UPC Code in the right position so I could scan the box - and a checker came running towards me saying, "ma'am, ma'am, ma'am, I got'cha, put the box down."...she was pointing a scanner gun at me. In one motion, she scanned the box and placed back down in the cart, instructed me scan my card, push the finish button and wheeled me to the door. She, too, wished me a good day.

Two young men gathering carts in the parking lot asked me if I needed any help...of course I told them no. They told me to holler if I did need help getting the box in the car. I managed to get the box in the car all by myself...imagine that.

I practically skipped back to the car. How could I be mad at Sprint when everyone else was being so helpful and kind.

It appeared to me these employees were thrilled to be at "work." Again, I say, imagine that.

Guess I should call back to Applebee's and Home Depot and tell the on-duty managers about their employees that gave excellent customer service.

A great reminder of what a difference we can make in the lives of others.

Highlights from The Week in Review (TWIR)

You can access the entire TWIR by clicking on the link on the right side of this page.

Police
Parolee at Large: On December 4 at 7:00 p.m., dispatch received an anonymous call that John Tacilauskas was in the area of Shasta School and was a parolee at large. A warrants check confirmed his parole status. Officers went to the area and located him walking on the 100 block of East Alameda. When Officers ordered him to stop, he fled on foot. Tacilauskas ran onto Grant, and jumped a fence into the east alley of 400 N. Main St. Tacilauskas hid behind a dumpster in the alley. He was located rolled up into a ball and would not comply with orders to show his hands. As Officers tried to take him into custody, they saw a gun next to him on the ground. Tacilauskas ignored orders to show his hands and rolled onto his hands under his stomach. He continued to ignore all orders to submit to custody and show his hands. Officers deployed a canine to get Tacilauskas to comply, but he continued to fight the dog. As one Officer reached in to take control of the gun, Tacilauskas kicked him in the face, causing injury. Ultimately, Tacilauskas was taken into custody. He was transported to Doctor's Hospital for treatment of the K9 bites. The gun was found to be a plastic replica derringer. John Tacilauskas, 31, of Manteca, was booked for being a Parolee at Large, Battery on Officer Causing Injury, and Resist/Delay/Obstruct an Officer.

Drug Arrest: On December 9 at approximately 9:35 p.m., an Officer observed a white Volvo traveling eastbound on Highway 120 at a high rate of speed. The Officer locked the Volvo on radar traveling 93 miles per hour in the posted 65 mph zone. The vehicle was stopped prior to it entering Highway 99. While speaking to the driver, the Officer observed a large glass container on the passenger floor board. The glass container had a large amount of marijuana inside the jar. The Officers searched the Volvo and located 610 grams of marijuana and records of sales. The driver also had 11.5 grams of Hashish on his person. The driver and passenger were arrested and transported to the Police Department. Both are students at Merced College. The driver, Danyaal Shahid Abbasi, was arrested for Possession of Marijuana for Sale, Transporting Marijuana, Possession of Over an Ounce of Marijuana, and DUI/Drugs. The passenger, Braden Michael Wiegand-Shahani, was arrested for Possession of Hashish, Possession of Marijuana for Sale, Transporting Marijuana, and Possession of Over an Ounce of Marijuana.

OTS Grants Pay Off: The Manteca Police Department participates in several traffic enforcement projects funded by the Office of Traffic Safety. During
2009-10, the department received $164,616 in State and Federal funding to assist the City in programs that will make our community a safe place to live, work, play and visit. Those grants include “Click it or Ticket” seat belt and child safety seat enforcement ($22,820), Mini Grant for Sobriety Checkpoints ($25,836), Vehicle Impound Program for unlicensed and suspended drivers ($88,000) and Countywide Avoid the 10 DUI Enforcement Project ($27,160). Many of the programs will be operating heavily during the next month to help ensure a safe holiday season. Your Police Department urges everyone to drive safety, fasten your seat belts and, when necessary, have a designated driver.

Fire
Fireworks Lottery: The 2010 Fireworks Lottery took place December 9. There were a total of five openings for 2010, and nine carryovers from a previous lottery drawing. A total of 24 non-profit organizations submitted fireworks applications this year. Those drawn for the five open fireworks stands include:
● Journey Church of Nazarene
● Boys & Girls Club
● Northgate Little League
● Manteca Historical Society
● His Way Recovery House
Carried over from the previous fireworks lottery:
● American Legion Post #249
● Calvary Community Church
● East Union High School Band Boosters
● Freedom Christian Center
● Knights of Columbus
● Manteca CAPS
● Manteca CVB
● Manteca High School Athletic Boosters
● South County Crisis Center
● City Stand: Manteca Police Officers Association

Emergency Incidents: We had a total of 90 incidents this week, which included four that were fire related: 3-Structure Fires and 1-Outside Fire. Dollar loss for the week was estimated at $145,000. The remaining calls this week were: EMS-62, Vehicle Accidents-4, Service Calls-12, and Other Emergencies-8.

Fire Prevention: This week’s Fire Prevention Activities included: Business Inspections-45, New Construction Inspections-10, Plan Checks-11, Certification of Occupanies-2, Business License Inspection-1, and Fire System Checks-8

Community Development
Jo-Ann’s Fabrics Coming to Manteca: The City has been notified that Jo-Ann Fabrics and Crafts is coming to Manteca. Kitchell Development, the developers of Manteca’s Stadium Center, confirmed that Jo-Ann’s will occupy the vacated Circuit City store. The new store is expected to open in the Spring of 2010. Jo-Ann’s will fill the last large vacancy in that shopping center. Jo-Ann’s is the nation’s largest fabric and craft retailer, with locations in 48 states. Founded in 1943, there are now more than 800 Jo-Ann stores across the country.

Building Safety Activities: The City’s Building Safety Division conducted a total of 288 inspections during the week. The division issued 31 building permits, which included 1 Single-Family Dwelling, 1 Change to Existing Plans, 1 Commercial Addition, 1 Commercial Remodel, 1 Fire Alarm, 1 Fire Sprinkler, 2 Miscellaneous Electrical, 3 Miscellaneous Mechanical, 4 Plumbing, 1 Patio, 3 Photovoltaic, 1 Residential Addition, 1 Residential Master, 1 Residential Remodel, 5 Roofs, 2 Sign Permits and 2 Tenant Infills. The two infills consisted of Fabulous Nails at Promenade, and the expansion of Stadium Dental Group at Stadium Center to include child specialty dental service. A total of 45 new project applications were submitted for plan check services, which included 27 Single-Family Dwellings, 3 Changes to Existing Plans, 2 Fire Sprinklers, 1 Residential Remodel, 5 Solar, 1 Swimming Pool and 2 Duplexes, which will include 2 Carports and 2 Accessory Buildings. Huff Construction has also completed the Prime Shine Car Wash, located at 1115 W Lathrop Road.

Public Works
First Winter Storm: Public Works reports that there were no major problems reported from the freezing weather and snow earlier this week. Staff received a few reports of icy sidewalks in front of some homes where sprinklers came on. Residents should remember that they may be liable for damages if their sprinklers cause someone to slip and fall on an icy sidewalk. Because plants are dormant or grow more slowly during the winter, residents are encouraged to conserve water by reprogramming their irrigation systems to run less often. Anyone who needs assistance with reprogramming their irrigation timer can contact the Water Division at 456-8466.

Bid Opening for Moffat Boulevard Water Pipeline Project: The Moffat Boulevard Water Pipeline Project will install approximately 4,000 feet of new 12-inch and 16-inch diameter water pipes from Spreckels Ave to Sherman Ave. Competitive construction bids for the project were opened on December 8, and 12 bidders submitted proposals, with the apparent low bid coming in at $321,823. The average price of all bids was $388,670, and the engineer’s estimate was listed at $390,000. Staff plans to place the award of this construction contract on the January 19 City Council agenda, and anticipates the start of construction to be approximately March 1, 2010.

Parks and Recreation
Winter/Spring Activity Guide: The Winter/Spring 2010 Activity Guide is published and available! Look for your copy in the mail this week. To download the Recreation Guide, register for classes online or to look up your favorite activity information, please visit us on the web at www.mantecagov.com/parks.

S.H.A.R.E.S. Fundraiser: The Manteca Parks and Recreation Department would like to remind everyone to continue using their Parks and Recreation Save Mart S.H.A.R.E.S cards throughout this holiday season. If you do not have a S.H.A.R.E.S card, please contact the Manteca Parks and Recreation Department at (209) 456-8600 to get your free card. Just as a reminder, the Parks and Recreation Department receives 3% of all purchases at SaveMart, Food Maxx, Lucky, and S-Mart Foods, and Save Mart.

Parks Vandalism: Vandals removed approximately 200 feet of copper wiring from the Sierra Creek Landscape Maintenance District. The wiring supplied power to the walkway lights located adjacent to the linear park. Park maintenance staff will work with Building Maintenance technicians to replace the wiring. The cost of materials and labor are expected to be $600.

Energy-Efficient Christmas Tree: New high-efficiency LED lights were installed on the new Christmas tree, located at the City Hall complex. The new lights will last much longer, because they are more durable and require less maintenance. This is a more cost-effective approach than continuing to use incandescent lights, and is a positive move toward reducing the City’s energy consumption. Happy holidays and enjoy the lights!

More Good News

While we are still basking in the glory of the latest sales tax numbers, I thought I'd pass on some additional data that demonstrates how Manteca is outperforming our adjoining cities. The Council of Governments collects a Regional Transportation Fee (RTIF) based on the amount of development annually built in each San Joaquin County jurisdiction.

I recently received the annual report on RTIF collections. Obviously, collections were not exactly robust in 2008-2009. However, without Manteca, collections would have been downright depressing.

While Manteca comprises approximately ten percent of the county's population, we were responsible for nearly 40 percent of all the RTIF revenue collected county-wide. In addition, the report shows that out of 414 single family permits issued countywide in 2008-2009, 237 came from Manteca. Tracy, Ripon, Escalon and Lathrop issued a cumulative total of two residential building permits this past fiscal year. Manteca was also the home of nearly half the office development in the county during this time.

Since the RTIF program was put in place several years ago, Manteca has issued nearly half of all the single family building permits countywide and nearly half of all the retail and office permits in the county. With the spate of building activity this year, I expect Manteca to continue to be the county leader in most types of construction.

These numbers are yet another vindication for the economic development policies promoted by our City Council during this decade.

I've attached the data below regarding the program if you'd like to see the detail.

RTIF.pdf
rtif-2.pdf

Sales Tax Update - Good News

There is a small group of critics in this community who continue to crticize the City's pursuit of major sales tax producers over the past few years. The attached spreadsheet is proof positive that this pursuit was worth the trouble.

As nearly every other city in the state continues to experience double-digit percentage drops in sales tax revenue--Manteca was actually in the black this past quarter. Sales tax collections in the 3rd quarter of 2009 are actually 7.6% ahead of the same quarter last year. Year to date, we are only 1.2% behind last year's collections.

This small negative is great when you consider that the rest of San Joaquin County is down 20 percent from last year. Statewide, collections are down 17.8%.

I don't need to say any more, the numbers speak for themselves!

MANCRA%20%284%29.XLS

San Jose Strong Neighborhoods Initiative

For decades, San Jose has been one of the most innovative cities in the country. While they've got many of the same challenges as most big cities, they've done a better job than most at working on solutions that actually create long term positive change. It is no coincidence that San Jose is one of the safest big cities in the country.

Back in the 1990s, San Jose was faced with an increase in gang and drug problems, like most cities, they put an emphasis on increased law enforcement. However, unlike most cities, they realized that addressing the crime wasn't enough. You can't materially change a situation unless you also look at the underlying issues that have caused the problem in the first place.

While others cities continued to add additional police officers (at considerable expense), San Jose began to look at all the other resources in the community and realized that while police are still the primary element in reducing crime, every city department and every citizen needed to play a role in reducing crime in the community. Thus, San Jose has far fewer Police officers per capita than most similar sized cities---and a low crime rate to boot!

I'll be talking more about the San Jose model in future blogs. While every city is unique, we can learn a lot from the San Jose experience that can be applied in Manteca and many other communties.

I've attached a business plan that was created for their Strong Neighborhoods Initiative--which is the driving force behind San Jose's focus on tapping the strengths of all of city staff and all of the community in improving the city's quality of life.

SNIBusinessPlanVersion7C.pdf

Community Based Government

This blog has had a strong emphasis on financial/labor issues over the past eight months. While the worldwide, national, state and local budget crisis continues unabated, I thought it was time to subtlety shift our focus to how we respond to this crisis.

It is painfully obvious that our community's financial situation is going to continue to deteriorate for some time, and then likely bounce along the bottom for a while. In addition, when the economy eventually improves, it is unlikely to generate property tax and sales tax dollars even close to what we experienced during the 2002-2006 bubble.

Understanding this reality, we in government still have a responsibility to provide excellent service to our community. In order to keep up service levels in an environment of declining resources requires outside the box thinking--and an outside the box resolution. We have to break the model we've been following in local government for 60 years.

The current model of local government is fairly standard from city-to-city, and includes a lot of participation on the part of the bureaucrats and little input from the community. We've been performing the same services for decades, and while we may tweak our delivery method from time to time, there has been no fundamental change in the way we do things.

Here in Manteca, we are about to change the fundamentals--we are going to turn government upside down--literally!

Since we no longer have the funds to do everything, we are going to find our what services are most important to our citizens, what services they'd prefer to do themselves, and what services are a waste of time and money.

I've attached a power point I presented to staff back in September that launched our initiative to convert Manteca to a government that is community based instead of bureaucrat based.

I'll be updating you periodically on what we are doing to shift to this model.

Vision%20Quest.ppt

How we got into this budget mess...

Here are excerpts from an excellent piece in the Orange County Register (click here) that talks about a state budget being held hostage by our prison system. Here are some of the highlights from the article:

At a time when the state is struggling with its finances, the spiraling costs of California's focus on public safety have tied the hands of budget-makers who want to spend more on education and social services – and have given power, influence and wealth to the state's law enforcement community. Consider:

•California has the most costly state prisons in the nation. But the $8 billion a year system is plagued by inconsistent and outdated policies that have led to severe overcrowding and high recidivism. California's lock-em-up mentality gets criminals off the streets—but New York has cut crime far more by keeping fewer convicts in prison.

•State and local governments are buckling under the weight of generous public safety pensions, which were given to police, firefighters and prison guards without a sufficient examination of future costs. Pension costs have driven one city to bankruptcy and pushed others in that direction. Since the pensions were liberalized in 1999, state pension resources have fallen from a surplus of $32.8 billion to an unfunded actuarial liability of $35 billion last year, according to the state's own numbers.

•California has become more protective of its police than any state in the nation. Police and prison guard unions and other public safety lobbies have secured laws that keep the public from gaining access to police disciplinary records, making it almost impossible to publicly identify offending officers and determine whether they are being adequately punished.

Meanwhile, the services California provides to all its citizens are in trouble:
State spending on primary education is mediocre. A 2008 study by the nonpartisan Legislative Analyst's Office found that California spent $7,673 per K-12 student, 25th out of the nation's 50 states. Budget cuts this year could push the state further down the list.

California roads are among the worst in the nation. A 2009 study by the American Association of State Highway and Transportation Officials and TRIP, a national highway research group, rated 66 percent of California roads as mediocre to poor, fourth worst in the country.

California has the highest general sales tax in the nation, at 8.25 percent, with local governments permitted to levy an additional 1.5 percent. According to the nonpartisan Tax Foundation in Washington, D.C., California has the nation's fourth highest individual income tax rate and the highest corporate income tax rate in the West.

You can't blame public safety for these problems, but California would have more money at its disposal if it could more efficiently fight the war on crime.

While it is an extremely complicated discussion, the bottom line is that we spend far more than any other state in the union--and we still have plenty of crime. It is unfortunate that there isn't more intelligent discusssion about finding more cost-effective ways to reduce crime.

TARP hangover...

Sunday's Washington Post (click here) has an interesting story about Neel Kashkari, the 35-year-old Treasury staffer who came up with TARP. How did he do it? Here's an excerpt:

In Washington, he used his BlackBerry to determine the bailout sum presented to Congress. His arithmetic: "We have $11 trillion residential mortgages, $3 trillion commercial mortgages. Total $14 trillion. Five percent of that is $700 billion. A nice round number."

Looking back, he says, he is more confident about the two-by-sixes (he's purchasing at Home Depot)

"Seven hundred billion was a number out of the air," Kashkari recalls, wheeling toward the hex nuts and the bolts. "It was a political calculus. I said, 'We don't know how much is enough. We need as much as we can get [from Congress]. What about a trillion?' 'No way,' Hank shook his head. I said, 'Okay, what about 700 billion?' We didn't know if it would work. We had to project confidence, hold up the world. We couldn't admit how scared we were, or how uncertain."

The story goes on to talk about the trials and tribulations he went through as he attempted to implement the TARP program via congress. The end result of all of his hard work over the past year--he has now retreated to a remote cabin in the Sierra Nevadas.

The story is a cautionary tale for those of us who believe we can go to Washington and actually change things.

I think it also gives those of us a fresh perspective on local government--while our work can seems overwhelming at times--we really do have the ability to effectuate positive change at the local level. This ability diminishes as you attempt to accomplish tasks at the upper branches of government.

When will we start buying things again?

One of the biggest unknowns for our city budget is where we think revenues are heading--particularly sales tax revenues. I've been spending lots of time researching this question--and I'm really struggling to find evidence that consumption is going to increase any time soon.

Here's a great posting from "Richard's Real Estate Blog" -- compliments of a professor at my alma mater (USC):

Why it is hard to imagine consumption reigniting.

Mark Thoma wonders about whether consumption will come back any time soon.A graph making the rounds uses the Federal Flow of Funds data to look at the ratio of Household Debt to GDP--the ratio rose from around 60 percent as recently as 15 years ago to more than 100 percent now. If households begin reducing their leverage back toward the long-term average, it will depress consumption for three reasons:

Debt service payments will rise when interest rates rise, and so discretionary income will be lower than it was when households had less leverage ( we are getting some relief right now because of very low interest rates on debt tied to LIBOR or the prime rate).

Households will not take on new borrowing to support spending.Households will in fact be amortizing their current debt (meaning they won't spend).

The counter-argument is that average household net worth relative to GDP remains quite normal by historical standards. But here is where the skewed distribution of wealth is a problem. I am reasonably sure that when the next Survey of Consumer Finances is released for 2010, median household net worth will be down. Corelogic says that one in four households with mortgages has negative home equity--this would be about 18 percent of owner households (about 30 percent of owners have no mortgage). If we combine this with the fact that 1/3 of the country rents, this means that the median households has little or no home equity. The median household is not loaded with financial assets, either. According to the 2007 Survey of Consumer Finances, only half of families have a retirement account, and only 21 percent owned stocks. Put this all together, the median household is not in great shape financially, and the median household consumes a higher share of its income than higher income households.

One more back of the envelope calculation on getting us back to a steady state: suppose the steady state household debt to GDP ratio is 70 percent. If the national economy uses 5 percent of its income to pay down that debt (which is about 7.5 percent of current consumption), at an interest rate of 8 percent, it would take 9.2 years to de-lever down to the steady state ratio.

[Update: the above back of the envelope assumes six percent nominal growth. If nominal growth is less, it will take longer].

Highlights from "The Week in Review" (TWIR)

You can access the entire TWIR by clicking on the link on the right side of this page.

Fire
Emergency Incidents: We had a total of 94 incidents this week, which included 4 that were fire related: 1-Structure Fire, 1-Vehicle Fire, 1-Rubbish Fire, and 1-Outside Fire. Dollar loss for the week was minimal. The remaining calls this week were: EMS-65, Vehicle Accidents-5, Service Calls-12, and Other Emergencies-8.

Police
Residential Burglary Arrest: At 9:00 a.m. on November 20, officers responded to a report of a residential burglary at 1304 Higton St. Neighbors reported seeing suspicious subjects loitering near the residence and then break into the west-side window. Dispatch kept witnesses on the phone, while patrol and unmarked detectives set up a perimeter. One suspect was taken into custody immediately as he walked out from the side yard. Another was arrested after he jumped several fences into surrounding yards. The third was arrested a short distance away. Flat screen TVs, computer equipment and other electronic equipment was stacked just inside and outside of the residence. Erick Emanuel Flores, Eduardo Zubirias-Rios, and Alejandro Guadalupe Garcia, all San Jose residents, were arrested for burglary and possession of stolen property.

Drug Arrest: On November 20, members of the Streets Crimes Unit served a search warrant at 1956 Box Car Drive in Manteca. During the search, officers found marijuana, packaged marijuana, money, scales, packaging, marijuana plant and sales records. One juvenile male was arrested for possessing marijuana for sale. He was released on a juvenile citation to his mother. During the search, Mitchel Gray, 19, of Manteca showed up at the residence. Mitchel is also on probation with a search-and-seizure condition. Inside Mitchel’s car was marijuana packaged for sale. Mitchel was arrested for possessing marijuana for sale and transportation of marijuana.

Stabbing: On November 21, officers were dispatched to a report of a stabbing at 1555 Crestwood Ave., Unit No. 1. Victims reported they were walking from the street to a party. As they entered the driveway, they were confronted by two suspects. After a short verbal altercation, one of the suspects punched one victim in the head and face. A second suspect attacked a 15-year-old victim, cutting him on the neck. The suspects fled in an unknown direction. Witnesses gave officers conflicting suspect descriptions. Both victims were treated at Doctor’s Hospital of Manteca. The victim, who was cut on the neck, was fortunate. The emergency room physician said the cut, which was 6 to 8 inches long, was extremely close to cutting his carotid artery.

Recovered Stolen Vehicle: On November 27 at approximately 10:20 p.m., officers located a stolen Honda Accord in the Comfort Inn parking lot, 1920 E. Yosemite Ave. The stolen Honda had two stolen license plates, and parked in front of Room No. 114. Room 114 was registered to Christopher Balcom. Detectives responded to the scene and placed a GPS tracker on the vehicle. Detectives then set up surveillance and observed Balcom and Richard Araujo standing at the open driver’s-side door of the stolen vehicle. A short time later, Detectives saw the stolen Honda leaving the Comfort Inn parking lot and turn eastbound on East Yosemite Avenue. The Detectives followed the Honda eastbound on Highway 120. The driver of the stolen Honda parked in the Olde Towne Bar parking lot. Araujo was detained as he walked away from the stolen vehicle. Officers went back to the Comfort Inn, Room 114, and secured the room for preparation of a search warrant. While waiting for another Detective, Balcom and Celena Gordon walked up to the motel room. Both consented to a search of the motel room. Detectives located property from the stolen Honda Accord inside the motel room. Police also discovered stolen property from a residential burglary out of Stockton. Statements from both Balcom and Araujo revealed they were part of a group who is responsible for several residential burglaries and auto thefts that occurred in the Manteca and Stockton areas. Detectives responded to the scene to recover the stolen property, search Balcom’s storage unit for additional stolen property, and to follow up with Stockton Police for additional victims. Richard Steven Araujo was arrested for Vehicle Theft, Possession of a Stolen Vehicle, Possession of Stolen Property, and Felony While Released on O/R. Christopher John Balcom was arrested for Possession of Stolen Property and Possession of a Controlled Substance.

Stabbing: On November 27 at approximately midnight, MPD Officers responded to 733 Tahoe St. in regard to the resident finding a victim of a stabbing in his front yard. The victim, Danielle Bernardeau, was with her ex-boyfriend, Charles Benham, in a vehicle in the Jack-in-the Box parking lot on South Main Street. Benham was upset with Bernardeau due to their recent break-up and her filing a temporary restraining order against him. During the argument, Benham took out a fixed-blade knife and stabbed Bernardeau in the right thigh. Bernardeau and Benham drove from the Jack-in-the Box parking lot to 733 Tahoe St. She started feeling sick so she stopped and started drinking water from the resident’s garden hose in the front yard. The resident saw the light and heard the water running and walked outside to investigate. He located Bernardeau in the front yard. The resident escorted the victim into his residence and called for an ambulance. Benham walked away and is still at large. The victim was transported to Doctor’s Hospital, where she was treated and released.

On December 1, officers located Benham walking in the 700 block of West Yosemite Avenue. He was arrested without incident and booked for Domestic Violence and Assault with a Deadly Weapon.

Carjacking: On November 29 at 3:00 p.m., a carjacking occurred next to the park in the 1900 block of Crestwood Avenue. The victims were parked next to the sidewalk. A subject walked up to the passenger side and asked the passenger and driver if they had a cigarette. They told him they didn't have any. The suspect pulled out a black semi-automatic handgun from his waistband and shoved it into the passenger’s ribcage. The suspect ordered both victims out of the vehicle. The suspect and three other subjects who were loitering a short distance away climbed into the pickup and left the area. The victims watched the pickup go north on the west-side frontage road and then south onto Highway 99. The suspects were not known to either victim. On December 1, a Ripon police officer located the stolen vehicle in that city. Police detained the three occupants, two juveniles and one adult, and searched the car. They located a handgun and numerous items of gang paraphernalia. It was determined the two juveniles were not involved in the original carjacking, and they were released to their parents. Miguel Zamora, 18, of Tracy, was booked for Possession of Stolen Property and Auto Theft.

Firearms Arrest: On December 1, Detectives were on patrol in the 500 block of South Veach Avenue. They drove past Timothy Franklin, a transient, who they knew had warrants for his arrest. As soon as Franklin saw them, he fled on foot and was pursued by police. Timothy ran into the backyard of 530 S. Veach and then into the house, where he was caught and detained. He was later booked on the warrants and transported to jail. Additional patrol and detective units arrived at the house as back-up. Also in the house was Christopher Cebrian and Raquel Azevedo. Both had warrants for their arrest and were transported to the Police Department for booking. During the investigation, Detectives were standing outside the house and in the front yard. A small white car drove by with Sean Malendrez, a transient parolee out of Manteca, in the front passenger seat. Detectives attempted to stop Malendrez to conduct a parole search. The driver of the white car sped up and turned onto Edith Street, where Malendrez jumped out of the car and fled on foot into a backyard. Detectives followed and caught the suspect, detaining him for the search. Detectives went back and searched the path of the foot pursuit. They found a loaded .44 magnum revolver on the ground. Malendrez was charged with a violation of his parole, Felon in Possession of a Concealed, Loaded Firearm, Obstructing an Officer and Being a Gang Member in Possession of a Loaded Firearm. It was later determined the pistol was stolen out of Manteca.

Fraud Arrest: On November 15, Detectives began investigating a reported fraud case involving Steven Garcia and numerous victims of a scam. Garcia had befriended approximately 20 teachers, parents and staff at McParland School, with the promise of selling a laptop computer for $275. He accepted the money from over 15 people, but never delivered the computers. The investigation showed that Garcia took well over $8,000 from the victims without delivering the purchased computers. On December 2, Detectives received information regarding Garcia’s location in Stockton. They set up a sting and were able to locate Garcia as he left a residence. Garcia was taken into custody for the Fraud, Grand Theft, and an outstanding felony warrant.

Public Works
Recycling Education: The State budget crisis may impact the City’s recycling education program. We have historically received approximately $17,000 for the CRV value of the bottles and cans that are recycled through our curbside recycling program. The State has taken most of the funds allocated for this program to use for other purposes, and the City has been informed that we will only receive approximately $850 this year. The City historically used these funds to purchase bottle/can recycling containers for schools, classrooms, cafeterias and apartment complexes, printing recycling brochures, and to purchase give-away items made from recycled materials to hand out at the Pumpkin Fair, Street Fair and various other community events.

Finance Lobby Remodel: The Finance lobby remodel project is essentially complete. Building Maintenance and Finance staff worked closely to minimize the cost of this project by clearly defining the needs, and by using modular furniture components, where possible, to reduce structural changes to the building. Staff also scheduled all of this work so that it could be completed without any disruption to customer service. The new lobby configuration increases the inside waiting area, improves flow by adding another door, and should improve our customer service, while increasing staff efficiency and comfort. The project was completed during the holiday/furlough closure week to minimize the impact on City staff and the public.

Community Development
Building Safety Activities: The City’s Building Safety Division conducted a total of 291 inspections during the week. The division issued 19 building permits, which consisted of 5 Single-Family Dwellings, 1 Hood and Duct, 1 Miscellaneous Electrical, 5 Miscellaneous Plumbing, 1 Residential Remodel, 5 Roofs and 1 Sign Permit. A total of eight new project applications were submitted for plan check services, which included 1 Commercial Electrical, 1 Commercial Remodel, 3 Fire Alarms, 1 Patio, 1 Residential Fire Repair, and 1 Sign.

Public Meeting

McKinley Avenue Specific Street Plan: The second workshop for the McKinley Avenue Specific Street Plan will be held December 9 at 6:00 p.m. in the McFall Room of the Manteca Library. The discussion will include alignment refinements based on community input from the first workshop, and flood protection. The City encourages all interested residents to participate in the identification of the future route for the next major roadway in south Manteca.

The City's Master Plan has designated McKinley as a major thoroughfare to connect all of the neighborhoods south of Highway 120 with both Highway 99 and State Route 120. It will play a critical role in keeping much of our local traffic off of our local highways.

Good News on the CalPERS Front

The latest entry from calpensions.com is good news for our budget. As we attempt to keep our expenses flat for the next year, this should be a big help. I suspect the rate hike delay for local government is due to the fact that the state has been heavily lobbying CalPERS to not hike their rates next year, as the state grapples with another enormous budget deficit. Here is the entry:

CalPERS is delaying a contribution rate hike for local governments and schools a year, pushing back the impact of huge investment losses in the stock market crash last year.

The change puts even more distance between the historic crash and the higher annual payments from employers needed to make up for the losses, which will not fully kick in until five or six years later.If the critics are right and the current level of retirement benefits are “unsustainable” for future employees, the financial crunch may not be a sudden rate shock but instead a kind of slow-motion train wreck over a number of years.

In any case, there will be no big CalPERS rate hike to point to next year during the campaign for an initiative to cut retirement benefits for new state and local government hires, if enough signatures are gathered to put the measure on the ballot.

Ron Seeling, the CalPERS chief actually, told a board committee last week that what had been expected to be three years of roughly equal rate increases will now have little or no increase in the first year.

Seeling said the rate increases approved by the CalPERS board last June were based on an estimate that investment losses during the fiscal year that ended that month would be 29 percent, but the amount turned out to be 24 percent.

“I wanted to make you aware that the 5 percent better performance than we had anticipated does have that impact,” he said.

There will now be little or no change in the contribution rate for non-teaching school employees next July 1, the first year of a three-year “smoothing” of the rate increase required by the market crash.

And there will be little change in the contribution rate for the 2,000 local government agencies in CalPERS on July 1, 2011, when their three-year smoothing starts after a lag caused by reporting and the time needed for the many actuarial calculations.

“It’s really a two-year phase-in and it comes two years out for the local governments,” said Seeling.

Facing opposition from the Schwarzenegger administration, the CalPERS board has taken no action on a contribution increase for state workers scheduled to begin next July along with the new rate for non-teaching school employees.

The administration opposed the proposed smoothing plan that pushes the big contribution increase required by the market crash into the future, arguing that CalPERS and future state budgets could be harmed by deferring payments.“

While the proposal achieves short-term savings, the employer rate would increase for 28 years thereafter as a result of that deferral,” Dave Gilb, Personnel Administration director and a CalPERS board member said in a letter last June.

“It resembles a form of borrowing from the fund because the employer rates are lower for two years, but must be paid back with higher rates in future years,” he said.

Gilb estimated that the state payment to CalPERS, $3.3 billion this fiscal year, should increase $879 million next July to reflect the crash. He said the increase under the proposed smoothing would be a small fraction of that, about $29 million.

But things have changed since June. Gilb retired, replaced by Debbie Endsley. More importantly, nonpartisan Legislative Analyst Mac Taylor estimated last week that the state budget has a $21 billion shortfall over the next year and a half.

Seeling told the CalPERS board last week that his staff has given the Schwarzenegger administration a half dozen options for increasing contributions for state workers.

Greg Beatty, Endsley’s board representative, thanked Seeling and said the administration will respond next month. Seeling said CalPERS wanted to accommodate the administration, but it “goes without saying” that the CalPERS board can set the rate.

“We could have set the rate for the state using the same methodology that we used for everybody else and said, ‘If you would like to pay it faster, send in some extra money,’” said Seeling, “and that may be where this turns out.”

A chart given to the CalPERS board last spring shows that after the three-year smoothing, contribution rates for most workers were expected to slowly climb for three decades, going from roughly 17 percent of payroll now to 27 percent.

The actuaries said they were treating the market crash as a unique event, “isolating” its cost from the rest of the fund and paying it off over 30 years with contribution increases.

“We believe that this year should be handled differently and that it should be paid separately and outside the smoothing process,” the actuaries told the board. “We do not want to rely on future investment returns to pay for the 2008-09 investment losses.”

Critics who argue that the current level of retirement benefits are “unsustainable” and should be reduced for new hires say CalPERS is too optimistic about its expected investment earnings, an annual average of 7.75 percent.

Among the experts who think average earnings will be less than 7.75 percent in the years ahead is Laurence Fink, chairman of BlackRock, the world’s largest money managing firm, who spoke to the CalPERS board last summer.

The CalPERS chief investment officer, Joe Dear, addressed the earnings issue last week during his monthly report to the board. He said 5.25 percent of the earnings assumption is “real” and 2.5 percent is inflation.

Dear said the 7.75 percent earnings assumption is below the national average for pension funds, 8 percent, and below the earnings average of CalPERS during the last two decades, 7.9 percent.

He said CalPERS believes, among other things, that stocks will yield 3 to 4 percent more on average than bonds and that private equity investments will average 3 percent more than domestic stocks.

Dear said he might agree with money managers, who tend to have a short-term investment horizon, that earnings may average 6 percent in the short term. But, he said, CalPERS has decades in which to repeat its past investment performance.

“It will take prudence, discipline, conviction and skill to repeat this performance over the next 20 years,” Dear said. “But I believe we have what it takes.”

If CalPERS earnings fall short of their target, the annual contributions required from state and local governments will grow even larger, taking money that could be used for other programs.

But as the aftermath of the historic stock market crash apparently shows, the financial squeeze could take years to play out. This article originally appeared on the Capitol Weekly Web site.

Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. His blog is www.calpensions.com.