Wednesday, May 09, 2007

Under Pressure

From the Sacramento Bee:

Gov. Arnold Schwarzenegger is likely to call for state spending cuts beyond those he proposed in January when he presents a revised budget to the Legislature next week, administration officials said Tuesday.

Growing expenses and the housing market's drag on the economy are putting pressure on California's finances, said Department of Finance spokesman H.D. Palmer. The governor and his staff are meeting this week to make tough choices on how to curtail the budget for the fiscal year that begins July 1, Palmer said.
...
[S]tatewide home sales in March were down 31 percent compared to the same month a year ago, according to La Jolla-based DataQuick Information Systems. The median price was up only 3 percent statewide. And in some counties, such as Sacramento, prices have dropped to December 2004 levels.

The housing downturn could increase the amount the state must pay from general revenues to fund education, administration officials say. The state may be obligated under Proposition 98, the law guaranteeing a minimum level of funding to schools, to make up for a decline in county property-tax revenues that pay for schools.

4 comments:

Dr. Brightside said...

From the SRRI

Job growth in the six-county Sacramento Region picked up slightly at the end of the first quarter of 2007. Increasing from a period of somewhat flat growth seen during the past few months (averaging around 1.8 percent), the Region posted 2.0 percent growth in March 2007, reflecting a 12-month gain of 19,100 jobs. This recent uptick, which marks one of the highest growth rates seen since August 2006, is mainly due to improvements in the Construction and Professional & Business Services sectors.

Diggin Deeper said...

I wouldn't get too excited about Sacramento job growth as one quarter does not make a trend. Sacramento is likely to lose jobs due to the cuts that Arnold likely to impose based on declining revenues.

Also, the latest job growth figures from the BLM are deplorable and when you factor in the jobs vs birth/death model across the same quarter, I doubt they are as rosey as given. In fact its probably negative if you take out all the "ghost jobs" found in the model.

bgamall said...

I am sure California did like most states, by refusing to see the potential downturn and by spending as if it would never pop. http://housebubble.newcovenanttheology.com

B. Durbin said...

Worse than that, bgamall— California's been doing that since the dotcom boom, so the binge has been deepening for a while.

And a lot of those "guaranteed spending" bills got passed during the years of highest revenue, no less. The California Teacher's Association spent millions on an ad campaign blaming the gov when he didn't keep pushing more money at the schools— or, more accurately, didn't increase the spending going to the schools— when he was trying desperately to find some place to cut the budget. And the budget is promised too many ways, and the voters keep voting in more funding issues!

C'mon people, we're broke. We can't just fund everything because we think it sounds good. I mean, I had to debate over whether to vote for desperately-needed road improvement moneys because we're so broke, and road fixes should be a given. (Much more than stem cell research, or abortion assistance, or a thousand other things the state really doesn't need its sticky little fingers in. Fix the damned roads already!)

Gah. Rock, meet hard place. We're so screwed...