Dan Walters: California's inland city budgets still weak

June 17, 2013 

California's monthly report on jobs and unemployment includes a county-by-county breakdown and provides graphic evidence of the state's bifurcated recovery from the worst recession since the Great Depression.

In the main, coastal California metropolitan areas — particularly the San Francisco Bay Area in the north and the San Diego-Orange county region in the south — are recovering smartly, with strong job growth. However, inland counties are still struggling with double-digit unemployment rates, especially those in rural areas.

The east-west economic split is also manifesting itself in sharply differing fiscal situations for local governments, especially cities.

Most coastal cities are enjoying sharp increases in local property and sales tax revenues that are easing the austerity that the recession had imposed, while inland cities are still coping with the effects of recession, as well as rising pension costs and, in some cases, with their own overspending.

>Two inland cities, Stockton and San Bernardino, have filed for bankruptcy, and several others are teetering on the cusp, including Fresno, the state's fifth largest city, thanks to a hard-fought election.

Fresno Mayor Ashley Swearengin's nearly $1 billion budget hinged on her plan to outsource trash collection to a private firm that would pay the city millions of dollars in franchise fees. Unions challenged it via a special election and last week, a laborious vote count finally resulted in rejection of her plan. Fresno is scrambling to fill the hole, but may be forced to declare a financial emergency, a first step toward bankruptcy.

Interestingly, one of the state's troubled cities is located in the booming San Francisco Bay Area. Oakland, in the words of an Oakland Tribune editorial, "slowly slides toward insolvency" because of many years of overspending revenues. Oakland Mayor Jean Quan's budget projects a $128 million deficit, but offers only a few token steps toward bridging the income-outgo gap, much less address its huge pension fund deficit.

>Oakland indicates that a city's finances depend not only on the economy, but on the willingness of its elected officials to make hard-headed decisions. Oakland and other cities with liberal political tendencies and powerful unions have the most difficulty making those decisions, as what's happening 80 miles up Interstate 80 in Sacramento indicates.

Sacramento's voters passed a local sales tax hike and its City Council seem bent on spending the proceeds on expanded services despite warnings from its city manager that it sets the stage for deficits down the road.

Tellingly, the new Sacramento city budget nearly doubles the allocations to City Council members to spend as they please in their districts. Call them political slush funds.


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