California County News

Census Report Covers Decline in Local Govt Revenues during 2009

A new report from the U.S. Census Bureau demonstrates the economic impact of the recession with new figures about state and local government revenues. For instance, in 2009 there was a 22.1 percent ($587.5 billion) decrease in revenues in comparison to 2008, according to the 2009 Annual Surveys of State and Local Government Finances, which covers stats on revenues (including taxes), expenditures, debt and assets (cash and security holdings) for state and local governments. State and local governments brought in nearly $2.1 trillion in 2009, and most tax revenue categories saw declines except property tax, which saw a 3.7 percent increase to $424 billion. Here are some key findings from the report:

• “Debt outstanding for state and local governments increased $131.1 billion (5.1 percent) to $2.7 trillion in 2009
• Spending increased 4.6 percent for state and local governments, totaling almost $3.0 trillion in 2009. Education continued to be the largest expense ($850.7 billion), followed by public welfare, which consisted of support of and assistance to needy people ($431.1 billion) and insurance trust ($275.5 billion)
• Revenue from the federal government increased 12.3 percent from $478.0 billion to $536.8 billion between 2008 and 2009
• State and local spending on education comprised more than 33.0 percent of expenditures in nine states (Alabama, Arkansas, Georgia, Kansas, New Jersey, Texas, Vermont, Virginia and West Virginia)
• Unemployment compensation saw an 86.0 percent increase from $35.6 billion in 2008 to $66.2 billion in 2009
• Revenue from individual income taxes decreased 11.3 percent from $304.9 billion to $270.5 billion

You can see more of the report’s findings here.

And speaking of the economy, the National League of Cities is pushing for Congress to pass the President’s jobs act as the unemployment rate remains high at 9 percent, according to the latest figures for the month of October. James E. Mitchell, Jr., Council Member, Charlotte, NC and President of the National League of Cities, released the following statement about the nation’s jobless figures:

“The nation’s cities and towns continue to call on Republicans and Democrats in Congress to set aside their partisan differences and put the country first by passing a jobs plan. The Senate said no to a proposal to save thousands of teacher and first responder jobs in our communities. [And] the Senate rejected a $60 billion infrastructure proposal that would help modernize our roads, rails, airports and waterways while creating thousands of jobs in our communities. 

A plan from Congress to accelerate jobs and economic growth is overdue.  A nine percent unemployment rate is unacceptable to our country and our communities.  We need Congress to say yes to a jobs plan and we need it now.”

Filling the Gap: $15.2 Million Shortfall Looms for SB County in Mid-Year Projections

Santa Barbara recently closed a budget shortfall of $72 million and officials can expect to face another shortfall next fiscal year, albeit far less than before. Mid-year financial projections have pegged the next shortfall at $15.2 million, according to the Fiscal Outlook Report that was presented to the Board of Supervisors this week. The largest chunk of the $15.2 million shortfall is due to rising pension costs ($4.6 million in pension fund stability), as well as increases in the county’s health insurance contribution ($1.8 million) and in workers’ compensation and general liability ($2.9 million).

Further cuts in services or increasing revenues are likely to be options the county will have to consider. The Santa Maria Times reports on the county’s options:

“In 2011-12, the county closed its budget gap with employee wage concessions, departmental consolidations, the development of a new retirement tier and staff reductions — since 2007-08, the county has unfunded 600 positions. The county proposes similar solutions for the coming fiscal year, which begins July 1, 2012, including ongoing measures such as improving the efficiency of its operations, increasing revenues, and decreasing levels of service. One-time measures such as using prior year savings and existing fund balances are also an option.”

We relayed recently that the county was weighing a local ballot measure that would tax crude-oil production in the county as a way to generate revenue. Reportedly it could create between $1.8 million and $3.3 million each year and supporters posit the county cannot merely cut its way out of its fiscal woes and that additional revenue will be necessary to maintain a certain level of services. However, fierce opposition has already been voiced against initial plans regarding the ballot measure.

Under Pressure: Controller’s Latest Cash Update Says State Has $1.5 Billion Gap

The latest cash update from the State Controller shows that revenues are once again below projections for the month of October. To be specific, the monthly report covering California's cash balance, receipts and disbursements shows that the state is $810.5 million below projections from the recently passed state budget. Percentage-wise, that is 16.3 percent below expectations. This means that California is now $1.5 billion short for the fiscal year. The report also indicates that the state ended the last fiscal year with a cash deficit of $8.2 billion and the combined current year cash deficit stands at $20.3 billion. John Chiang, the state controller, commented the following about the recent cash figures:

“October's poor revenues capped a very disappointing first four months of the fiscal year. Unless revenues and expenditures begin to track with projections, the State will face increasing cash pressure in the months ahead.”

October’s financial statement can be seen here. A summary analysis is available here.

So what about those trigger cuts? The latest cash update is sure to raise concerns that deeper cuts are all the more likely this winter. But nothing is a given at this point. That being said, if revenues fall as high as $2 billion short of projections, then we could potentially see cuts to higher education, social services, public safety, K-12 schools and community colleges. In recent weeks the Controller has skirted around saying whether or not he thinks the trigger cuts are likely, but he has said that legislators should be looking for alternatives now in preparation. It was revealed recently that Assembly officials believe the state will face a deficit of about $5 billion to $8 billion in the next fiscal year, according to a legislative memo. See more here.

New Stats from the Census Bureau on Income Inequality, Mobility, and County Figures

Interesting new statistics have been released by the U.S. Census Bureau that are partly a reflection of the economic times we find ourselves in. First are stats on income inequality, as California is one of a few states that has some of the highest levels of inequality on all three indices that factor into rankings (the other states are New York, Connecticut, Louisiana, Mississippi, Texas and Alabama). The Bureau’s analysis basically shows that household income inequality is higher in the Golden State than the nation as a whole. That being said, the stats show that there are areas within California where there are low levels of income inequality, namely San Diego, San Jose, the Riverside-San Bernardino area, and the Sacramento-Roseville metropolitan area. You can find the full report on income inequality here.

In the picture below, states colored in blue have income inequality that is higher than the nation as a whole on three different measures:

In addition, the Census Bureau has updated a database that allows for multicounty comparisons or single county profiles. Topics such as agriculture, crime, education, health, retail trade and other vital statistics are a part of the profiles for each county. New in this update are additional statistics from the 2010 Census, the 2007 Survey of Business Owners, County Business Patterns and Non-employer Statistics. You can access the database here and find a ton of information for each county in California.

Finally, the Census Bureau has also released new stats that show more Americans are staying put, especially younger Americans who are typically more mobile. Older Americans have also been affected, meaning retirement plans may have changed for those who have been impacted by the poor economy. Many young adults simply cannot afford to move out of their parents’ homes and devalued homes have left many owners stuck. The AP reports:

Roughly 11.6 percent of the nation's population, or 35.1 million, moved to a new home in the past year, down from 12.5 percent in the previous year. The current level of low mobility comes after the recession technically ended in mid-2009, beating a previous low of 11.9 percent in 2008. […] The biggest drop-off occurred in local moves, down to 15.4 percent from 17.7 percent in 2010, a sign that young adults in the prolonged slump weren't even willing to venture outside their counties, continuing instead to live with relatives or on college campuses.”

For more, see here.

President of Yolo Farm Bureau Stresses Importance of Agriculture to Local Economies; Yolo Co

Chuck Dudley, the President of the Yolo County Farm Bureau, has written an op-ed for the Daily Democrat about the efforts behind the agricultural work that greatly benefits the county. The Farm Bureau protects and promotes agricultural interests throughout the state of California and works to find solutions to the problems of the farm, the farm home and the rural community. Dudley’s article serves to remind consumers and Californians about the importance of farm production to rural counties, especially to the local economy. An excerpt reads:

“The gross farm-gate value of Yolo County farm production is in the neighborhood of $500 million a year. This is a lot of money (except to the federal government). These proceeds are used by the farmer to pay his employees, purchase machinery and equipment, lease farm land, purchase operating supplies including fuel, fertilizer, seed, transplants, water, and for many other things including payment of local, state and federal taxes. In large part this farm earned money stays in the county and supports the local economy. […]

The significance of Yolo County agriculture goes beyond the thousands of people employed and the billions of dollars put into the local economy from the development of the seed through the raising and harvesting of the crop, to the transportation and processing, to the grocery store shelf and finally to the consumer table, and, importantly, Yolo County agriculture provides a working landscape of open space. This farmed landscape produces 1 percent of the greenhouse gas emanating from urbanized land. This open space certainly adds to the quality of life in Yolo County.”

Read the full op-ed here.

NACo Survey Shows Counties are Adapting to the New Normal under Tough Fiscal Realities

According to a recent survey from the National Association of Counties, budget cuts and staffing adjustments have impacted nearly every aspect of county government services under the effects of the recession. NACo has conducted its 7th survey to provide perspective on how counties across the nation are grappling with tough economic realities. The latest report, entitled “Coping with the New Normal: An Economic Status Survey of Counties,” demonstrates how a loss in revenues has led to difficult budget decisions the past few years and county officials are adapting to severe fiscal positions that have become the norm rather than the exception. NACo Executive Director Larry E. Naake commented that “As a result of the slow economic recovery, counties appear to be settling into the ‘new normal’ of revenue, staffing and service delivery levels.” As for how counties are coping, the following stat is telling: only 35% of responding counties report that they adopted balanced budgets this fiscal year with no anticipated shortfalls.

When asked why counties are experiencing such shortfalls, respondents provided the following reasons:

• 51% of counties cite reductions in state or federal funding as a reason for revenue shortfalls
• 36% report that continuing declines in property taxes contribute to their shortfalls.
• 32% cite sales tax decreases as a reason for continuing shortfalls
• 26% cite decreases in miscellaneous revenues (includes investment income)

Of the counties surveyed, the following results were also reported (38 states are represented in the survey results):

• 64% of responding counties report adopting budgets with anticipated shortfalls of less than $100,000
• 29% of responding counties report anticipated shortfalls between $1 million up to $25 million or more.
• 7 counties report anticipated shortfalls of $25 million or more
• 24% of responding counties report that their anticipated shortfall increased since the beginning of their fiscal year.
• Of the counties reporting increased shortfalls, 39% reported up to $100,000 additional shortages
• Only 1 county reported addition shortfalls exceeding $10 million.

In addition, a majority of counties surveyed have instituted salary and/or pay freezes and have used their rainy day funds. You can read the full report here.

State’s Latest Finance Bulletin; 27,300 Govt Jobs Lost in the Past Year

The Department of Finance has released a new economic bulletin for the month of October and the overall picture isn’t exactly encouraging. The report reveals that an average of 900 jobs were lost each month from May to August and that the state’s economic recovery lacks any apparent momentum at this point. Year-to-date revenues are $654 million below the expected $19.39 billion and as for those trigger cuts, the report states “In November and December, the Legislative Analyst’s Office and Finance will produce new forecasts of revenue for the 2011-12 fiscal year based on the economic and cash data available at those times. It is these forecasts that will determine whether the “trigger” budget reductions will be implemented.” Here are highlights from the bulletin:

• California lost 8,400 nonfarm jobs in August 2011—the second consecutive month-over-month loss and the fourth loss in six months.
• Only five of the state’s 11 major industry sectors gained jobs in August. After three consecutive month-to-month losses, a strong gain in retail trade employment led the trade, transportation, and utilities sector to add 5,700 jobs. Manufacturing added 1,600 jobs; leisure and hospitality, 1,500; mining and logging, 200; and professional and business services, 100.
• Construction lost 7,200 jobs; financial activities, 4,000; government, 3,600; other services, 1,300; information, 800; and educational and health services, 600.
• From August 2010 to August 2011, nonfarm payroll employment rose by 171,300 (1.2 percent)—the 11th consecutive annual increase.
• Over the year, employment fell by 27,300 in government; 6,600 in financial activities; and 4,200 in other services.
• The number of people unemployed in California rose 8,800, but was down 82,800 compared with August of last year.

For the full report, see here. Other figures for the month of September have also been released by the state's Employment Development Department. Last month the unemployment rate fell to 11.9 percent from 12.1 percent in August. More here.

1 in 4 Solar Energy Jobs in CA; Industry Saw 7 Percent Nationwide Job Growth

The nation has experienced 7 percent job growth in the solar industry during the past year. California in particular has the most solar jobs out of any other state, with 25,575 employed in the industry. Nationwide solar energy has led to 100,000 jobs. These stats come from a new study by The Solar Foundation, a nonprofit education and research organization. The report would appear to show that the clean-tech industry is doing quite well, which may counter the bad coverage from the Solyndra fiasco (the company went belly up after a half-billion dollar federal loan guarantee). The LA Times reports:

“Nationally, employment in all parts of the solar industry, including manufacturing, installation, residential, commercial and large-scale power generation, grew 6.8% in the 12 month period ended in August. Overall U.S. job growth was less than 1% for the same period, the census said. Growth is expected to accelerate 24%, creating 24,000 jobs, over the next year, based on a survey of solar employers.”

Andrea Luecke, executive director of The Solar Foundation, commented that “Employers are slightly less optimistic than they were last year. But they feel that if the market conditions and the policy conditions are in place, they will have the need and the desire to grow (the workforce) by 24 percent in the next year.”

A list of states with the most solar jobs is below:

1. California 25,575
2. Colorado 6,186
3. Arizona 4,786
4. Pennsylvania 4,703
5. New York 4,279
6. Florida 4,224
7. Texas 3,346
7. Oregon 3,346
8. New Jersey 2,871
9. Massachusetts 2,395

The PayScale Index: Are Wages in the Largest Metropolitan Areas Bouncing Back?

The PayScale Index for Q3 2011, which tracks quarterly trends in compensation, has been released and over the past year, only six of 20 major metros had wage increases of 1 percent or more. When examining the data on a city-by-city basis, it is apparent that metro areas with well-educated populaces fared far better than those who suffered the worst effects of the construction slump. For instance, Seattle and San Francisco, both of which have highly educated workforces, top the list of cities experiencing wage increases. In comparison, wages in Los Angeles are stagnant and in Riverside they are down by 1%. PayScale tracks compensation for full-time private industry employees.

Dr. Al Lee, the director of quantitative analysis at PayScale, commented the following about the latest figures:

“The good news is that some metro areas, particularly those with strong high-tech and energy industries, are starting to see actual wage increases for typical jobs. The bad news is that, in a normal growing economy, for example, back in 2007, we would be talking about 3 percent or higher increases everywhere. The worst performing metro for wage growth in Q4 2007 beats the best metro today.”

Here is the rundown on percentage change in pay in major metro areas:

1 Seattle 1.9%
2 San Francisco 1.6%
3 Houston 1.4%
4 Boston 1.2%
5 Washington, D.C. 1.0%
6 Minneapolis 1.0%
7 San Diego 0.8%
8 Detroit 0.7%
9 Philadelphia 0.6%
10 Chicago 0.5%
11 Phoenix 0.4%
12 Atlanta 0.3%
13 New York 0.2%
14 Dallas 0.1%
15 Los Angeles 0.0%
16 St. Louis 0.0%
17 Tampa -0.2%
18 Baltimore -0.5%
19 Miami -0.7%
20 Riverside -1.0%

Here are some highlights from the latest report:

• Nationally, wages for Q3 were up 0.5 percent over the previous quarter, the largest increase for the U.S. overall since wages hit their peak in Q4 2008.
• Energy and high technology (biotech and information technology) industries performed well over the last year, particularly for skilled engineering and similar jobs.
• Metro areas with large energy and tech presence led for wage growth: Seattle, San Francisco, Boston and Houston.
• Food service and restaurant jobs have seen no increase in pay since 2006.
• Retail jobs (dominated by retail salespeople, cashiers, and similar) are at wage levels that are less than 2 percent higher than 2006 wages.
• The real estate and rental services industry has still not recovered from the burst of the housing bubble. In Q3 2011, real estate wages fell once again and are now over 1 percent lower than the previous quarter - the worst quarter-to-quarter change of any industry included in The PayScale Index.

Controller Says Latest Cash Update Doesn’t Paint a Hopeful Picture for Avoiding Trigger Cuts

In the latest report covering California's cash balance, receipts and disbursements, the State Controller John Chiang notes that revenues came in $301.6 million below projections from the recently passed state budget. Furthermore, total year-to-date general fund revenues are now behind the budget's estimates by $705.5 million, which is 3.6% short. The current year cash deficit stands at $17.6 billion. In light of these new figures, trigger cuts outlined in the state budget appear increasingly likely as the state continues to miss the mark on revenues. It will have to be determined by December whether or not those trigger cuts will have to be pulled.

Chiang commented the following about the latest receipts for the month of September:

“For better or worse, the potential for revenue shortfalls is precisely why the Governor and Legislature included trigger cuts in this year's State spending plan. September's revenues alone do not guarantee that triggers will be pulled. But as the largest revenue month before December, these numbers do not paint a hopeful picture."

Highlights from the report are as follows:

• Corporate tax revenues came in below the estimates by $190.3 million (-17.1%). Personal income taxes were above expectations by $285.4 million (7.0%). Sales tax revenues were $56.8 million lower (-3.8%) than anticipated
• Compared to September 2010, General Fund revenue in September 2011 was down $651.8 million (-8.2%). This was driven by sales taxes, which were down by $708.8 million (-33.2%). Corporate taxes came in below last September by $276 million (-23%), but personal income taxes were above last September by $318.5 million (7.9%)

Summary analysis is available here.

September’s financial statement can be viewed here.