State

Long Road Back: Mapping our way out of economic downturn

Vacant storefronts, abandoned homes and shuttered schools tell the story of the economy in the Northern San Joaquin Valley: This is the new normal.

People are beginning to look at the 3-year-old economic downturn as a permanent condition rather than a storm to be weathered.

Modesto is looking at $8 million in cuts this year from its $106 million general fund, the money that pays for essential services such as police, fire and parks, Mayor Jim Ridenour said. That number is down from the city's $130 million general fund of its 2006-07 budget year.

School districts around the region are feeling the pain, as well, with declining enrollment and the steep drop in tax revenues leading to layoffs, pay cuts and campus closures.

Businesses have closed or cut back drastically.

"For lease" signs line commercial strips and office complexes. Important tenants such as Gottschalk's, Mervyn's and Circuit City left gaping holes in shopping centers that, as a result, get less traffic.

Often the nation's car theft capital, the region earned another dubious title when it led the country in foreclosure rates. Weeds overtake

lawns at homes abandoned by people who could no longer afford to pay for them.

Kelvin Jasek-Rysdahl, professor of economics at California State University, Stanislaus, and co-director of the university's Center for Public Policy Studies, recalled a presentation he gave in November 2008. It was just before the government officially recognized the country had been in a recession for more than a year.

'Hindsight is 20-20'

"The projections then among several groups of economists were that this might last through the first quarter of 2009," he said. "Hindsight is 20-20, but obviously nobody predicted this."

Shane Elliott didn't think he'd be out of work.

In February, the 48-year-old Modesto man lost the electrical technician job he'd held for 11 years. A job hunt yielded no results, so he is taking his contractor's license exam and planning to start his own business.

"I went back to school five years ago to get my (associate) degree in business operations," he said. "My goal at the time was to add new skills sets to be part of the management team with my previous employer. Little did I know that my degree would help prepare me for starting my own business."

Several factors combined to make the Great Recession worse than downturns in recent decades: banks failed, the housing market fell apart and there wasn't good news in any of the financial sectors.

Still, Jasek-Rysdahl said, there are significant differences in the current situation and the Great Depression 80 years ago. Among them, the government response. It's too early to tell if such actions as the $787 billion federal stimulus package will be a success, but the alternative likely would have been far worse.

"It did stop a complete collapse of the financial system," he said.

And economists are seeing some positive effects. With housing prices down so far and credit harder to get, homeowners aren't spending equity like they were.

Savings rates are up, debt is down. But it remains to be seen if that's going to be the case long term, Jasek-Rysdahl said. "Hopefully, people have learned that lesson, but only time will tell."

Recovery will be a slow, arduous process, especially in the Northern San Joaquin Valley, where nearly one in five workers is without a job.

In the past, Jasek-Rysdahl said, people spent their way out of recessions. With cash-strapped banks shutting down lines of credit, that's not going to happen this time.

"Recessions are bad," he said. "People are without jobs. It's hard to find a silver lining."

Cities will have a long road back, as well.

Turlock City Manager Roy Wasden said property taxes will be lower for the foreseeable future.

"You get your house reappraised, and your property taxes go down," he said. "But even if the value goes up, property taxes can't go higher because of Proposition 13," citing the 1978 California ballot measure that caps property tax increases.

That's more money that cities and counties don't have, in addition to lower sales taxes and nearly nonexistent building and planning fees. General-fund hits have cities everywhere considering another year of salary cuts and layoffs.

Individuals are suffering, too.

Unemployment in Stanislaus County sits at 19.1 percent, its worst level in 17 years. More people are seeking help from government and private assistance programs. And many hover on the brink of homelessness, forced to pick between paying rent and feeding their families. At the same time, donations have slowed as fewer people find themselves able to give.

Answers are elusive.

The stimulus money pumped into local governments and agencies is aimed at saving jobs and getting the economy going again. But budgets can't be balanced long-term on a one-time infusion of cash.

Such efforts are helping, however. Cities are using federal funds to buy foreclosed homes, rehabilitate them and offer low-interest loans to first-time home buyers. Turlock housing program services manager Maryn Pitt spent nearly $1 million buying property in the last few weeks.

Her staff gets to hand keys to people who otherwise wouldn't be able to buy a home.

"We had a woman in here who started crying and said, 'I can't believe I won't have to tell my kids we have to sleep in the car next week,' " Pitt said. "That was a really good day."

Research shows that the future will be in the hands of those with college degrees. A 2009 study by the Public Policy Institute of California finds that by 2025, 41 percent of jobs will require at least a bachelor's degree, but only 35 percent of adults in California will have them. Still, those in college now are faced with unprecedented uncertainty.

"They're asking, 'Are there going to be jobs when I'm done?' It's a much more nervous time for students," Jasek-Rysdahl said.

Fewer teachers, classes

At the same time, students are finding it harder to get the classes they need to graduate because teachers and classes have been cut. So they're staying in school longer, and taking additional classes they don't need to keep their financial aid.

Fortunately, that aid remains available. Though the state threatened to stop funding Cal grants, it hasn't. And federal Pell grants also are still available to the increasing number of students who need assistance. Programs help pay to retrain people who lost their jobs in a faltering industry.

Richard Atsatt is one of them.

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The 51-year-old Lodi man worked as a heavy equipment operator in construction for 20 years until building slowed down.

"I found myself pretty much unemployed, hoping the construction market would turn around," he said.

It didn't.

"I've pretty much had to reinvent myself," he said.

Atsatt is taking a Modesto property management class; the field has a steadier future and isn't as hard on the body as construction "When you hit 50, your body tells you to slow down a bit," he said.

He remains optimistic.

"You just move on and do whatever it is you can do," he said. "My glass is always half-full, if not three- quarters."

Whether it's training for a new job, changing habits to spend less or looking for new ways to spend less, people are trying to find ways to manage with the new normal.

Frana Hamilton urges her co-workers and students to keep the situation in perspective.

"I was born at the tail end of the Great Depression," said the 79-year-old instructor at Community Business College in Modesto. She works with people who have lost their jobs and are retraining in new fields.

"Some people think they're sacrificing by not going to dinner as much or not going to the movies," she said. "You don't know what it is to suffer until you've had to stand in a soup line."

Bee staff writer Patty Guerra can be reached at pguerra@modbee.com or 578-2343.

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