Wednesday, April 29, 2009

Deepening Problems...

Bay Area Charities Unite, Share Aid To Survive

California's economy has threatened many non profit organizations especially in the Bay Area where one of the highest concentrations of non profit organizations exists. Currently the combined budgets of all of these Bay Area non profit organizations is 14% which is twice the national average. An area that places such value on these organizations is facing the problem of downsizing as many other businesses are in today's economy. The San Francisco Foundation and other foundations and the government have made efforts to help out these non profit organizations, however, their budgets are also tightened and they do not have the freedom to help this sector greatly. Everyone has to figure out how to do more with the little that they have currently. Therefore, many Bay Area non profit organizations are trying to bond together in order to curb their financial woes. These non profit organizations are facing reductions in their money from many different sources such as from donations, state funding cuts, and smaller foundation grants, as more and more individuals who have recently become unemployed are seeking aid from these organizations. The non profit sector has been one of the sectors most affected by the economic troubles within California, because they are all struggling to make ends meet and provide an increasing demand of people in need of aid. These organizations have been downsizing and trying to combine their companies in order to more adequately provide aid. With all of these organizations split up with little money and power, little aid is able to be provided. Many owners of these non profit organizations have been forced to confront the problem of either shutting down or shifting their duties to other, stronger organizations. Therefore, these non profit organizations are realizing the nescessity of combining their efforts. For example in San Francisco, Glide Memorial, St. Anthony's and the San Francisco Food Bank have all banded together by buying in bulk together and sharing kitchen space in order to reduce their costs. The problems the non profit sector truly shows how the economy is taking a toll especially on California. The organizations that are supposed to be providing aid to those who are more affected by the economic recession are themselves struggling to stay afloat. However, these organizations unique and creative efforts should be applauded because despite their budget crunches, they are still finding ways to produce a successful business that is not profit geared, in comparison to the profit geared automobile industries which continue to struggle and are even receiving lots of government aid.

Deepening Woes for The Imperial Valley


The Imperial Valley in California is experiencing the extreme of the economic woes the rest of the country and particularly the state of California is experiencing. Historically, The Imperial Valley has always been a place where financial troubles, pain and desperation have existed. Even since the earliest days during colonization, many visitors reported this valley as deadly and advised travelers to keep moving on. The Imperial Valley is plagued by isolation, an austere landscape and blistering heat. However, the current economic recession has greatly affected this area, leaving it in complete desperation and in danger of failure. Currently the area is full of unemployed workers. These workers used to be unemployed farmers, however, the number has increased to include, truck drivers, construction workers, retail salespeople and other individuals who have been plagued by the economic downturn. Unemployment rate has always remained high within this area however it has continued to skyrocket. In March the unemployment rate was 25.1%, which was the highest in all of the United States for an area with a population over 50,000. Signs of foreclosure are posted throughout the major cities, and the more major businesses such as Walmart are driving the smaller, older businesses out of business. These foreclosures are due to the fact that The Imperial Valley has the highest percentage rate in 100% loans in any county of the state. The housing market is this area's bigest concerns because the housing prices continue to plummet as more and more homes are foreclosed. The individuals living hear are severely considered with their living standards which have recently suffered immensly. These people are no longer looking to save to buy a house, but rather now they are faced with worries over making car payments on time. This area has few areas of possible growth and turn around. They are looking towards Indian casinos as an aid to reboost the economy, however, their cries for help seem far from answered. Although this is only an example of one of the areas within California that is being hit the hardest and is an extreme example, it proves that these economic troubles are making significant impacts within our country, more specifically California.

California's low-carbon fuel standard has oil companies anxious


The debate over global warming is becoming more and more complicated within California. The California air board recently passed a new fuel standard in order to curb global warming. Environmentalists claim that this measure will actually save California many costs in the long run because it will decrease oil dependency and encourage individuals to develop new forms of energy. However, critics are raising concerns that this new measure will pose many new prices and possibly increase the costs of fuel in California. This new fuel standard will require the gasoline providers to be much more limited in who they can buy gasoline from. The type of gasoline that California is requiring is not produced by many gasoline companies, therefore these companies that will provide California with oil will be able to hike up prices because they know they control the market and the gasoline providers must purchase from them to follow the law. This possible increase in gasoline prices can threaten California's economy even more because last summer portrayed that tourism shrunk and subfuel charges increased due to high gas prices. Also the California air board has condemned the use of corn ethanol based gas, leaving many in search of a gas that will comply with the standards described in the law. The only answer seems to be gasoline that is imported from Brazil which would also hurt California's economy as they were faced with high import taxes. The impact on the economy is unsure, however this new standard is obviously inefficient. Although the California air board is trying to decrease carbon gases and global warming and trying to encourage the creation of new forms of energy, they are making this very difficult and costly especially during the current economic situation. This measure is a very risky measure, which provides an option of success and an economic boom if new sources of energy are created, or further devastation for the economy if gas prices continue to rise during the current economic recession.

Tuesday, April 14, 2009

Downward Decline

Southern California Water Agency to Cut Water Supplies by 10%
The issue over the water supply in California has been a rising concern for Californians and their economy. In previous blogs I touched upon how the state is in dire need of rainfall in order to avoid droughts. They have established several possible solutions, however, this action the government is implementing in Southern California is not one that was previously mentioned. The Southern Californian government has decided to cut back the flow of water from Northern California to Southern California by 10% for environmentally friendly reasons. This seems like an odd action considering that Southern California faces the threat of drought and needs every possible ounce of water it can get, however, the state must also recognize the current economic crisis. The state has decided to cut its water shipments from Northern California, which will cause the Metropolitan Water District to impose penalty rates in order to make up for their loss in profits. Los Angeles will also force its citizens into reducing their water consumption by 15% and local utilities will be penalized for surpassing their allocation levels. Although statewide water conditions are slightly better this year, overall the water supply of California is much less than a few years ago. The Colorado River basin's storage of water is less which affects Lake Powell and Lake Mead's water supply which are large contributors to California's water. The Metropolitan Water District has continued to have lessened business and is continually facing increased costs due to the water crisis, and California's strict policies in regards to the environment. This crisis could be a serious detriment to California's economy. Although the state is making efforts in reducing their negative effects on the environment, I think it is important that they protect their people first by ensuring that these possible droughts do not hit the California population too hard. I am impressed by Southern California's diligence and attention to the issue, however, I would like to see California act more on some of the other possible solutions they had posed earlier such as the creation of another reservoir to catch water. Although the creation of another reservoir may seem threatening towards the environment, this is not true because the reservoir they proposed to create was almost already in place naturally and could be easily finished with a little man power and little damage to the environment. If anything this extra water could end up helping the economy more because of its ability to allow the land to flourish. This problem seems like it will continue to be an issue especially as summer is right around the corner and the warm weather continues to pose a threat to the water supply and causes concern over possible droughts.

State Revenue Falls Short of Projections
As tax day looms closer, the economy and state budget has been more focused on. The California government reported a few days before the income tax filing deadline that the state's revenue has fallen drastically in the past two months and is much below the projected number for this year. This shortfall is a serious indication of how severe this problem is. The state's revenue for March is billions of dollars below the projected value of the two month old budget. This indication is very scary for California citizens because it really shows how dire of a situation we are facing. However, state officials are trying to downplay the severity saying that the reports of these numbers are very different throughout the year however at the end of the year they will all balance out. Despite state officials nonchalant attitude, other state officials are claiming there will be severe repercussions due to this budget and economic crisis. The state may face large state cuts such as in the closing of schools and parks. The article also discussed how the state have several measures on the May ballot that address the financial situation of California that could greatly aid or harm the economy. The outcome of these measures may determine the fate of California's future. The budget issue within California is a serious problem that needs to be addressed and contained immediately in this unstable financial environment throughout the country. As the United States faces an economic recession as a whole, a state wide economic crisis will spin things out of control for that state's citizens. This article shows how severe this situation in California is despite many people's desire to downplay the severity. I think this article does a good job in informing its readers about how important it is to address this issue. It really puts it into perspective when it gives examples such as closing schools and parks to the citizens because it allows the citizens to feel the effects rather than just reading about an economic crisis that seems distant to them. Last week I blogged about how Governor Schwarzenegger appointed Laura Chick to oversee the California budget. I hope that this recent appointment will help slow the budget crisis and the decline in state revenue. I do not think anyone should judge Laura Chick's abilities until a month or two because she has barely just begun her job in this newly created position. This serious crisis is not something that can be fixed within a short period of time but rather is an issue that requires a long term recovery.

Donors elude state's limits

Despite Proposition 34, which was passed in November 2000, that created strict limits on campaign contributions, political interests have found ways to get around these limits and surpass these contribution limits. These contributions pose a threat towards representative democracy as more individual interests are able to push their own ideas. It is allowing for the power of the wealthy and more elite to push their issues and wants by contributing more money than the dis empowered people. The limits have only been placed on campaign and re-election committees, leaving other candidate controlled committees available to receive mass amounts of contributions from special interest groups. Despite many peoples concerns about these contributions, nothing can be done about them because they are not technically illegal. These contributions still follow the laws because these groups have been able to find loopholes to get around the laws in order to contribute millions of dollars to campaigns. The FPPC has continued to overlook these massive contributions and has not placed a high value on restricting them or changing the rules. Instead, they say that regulation is too difficult because loopholes will always be found and that these contributions do not directly influence the election or re-election of political leaders. Some examples of these contributions are how Arnold Schwarzenegger is tied so closely to the particular ballot measures he supports, which are supported by big companies such as Chevron. Another problem within proposition 34 is that it restricts individuals or individual companies rather than political parties from contributing past limits. These contributions raise a serious problem within politics because it supports the elite and wealthy. Not only can the wealthy special interests push their interests by influencing candidates by their large contributions, but also these rules encourage candidates to bankroll their own campaigns. This issue of campaign contribution is not only within California, but is spread all over the country. However, this issue may have particular interest in regards to California's certain economic situation because if it allows the wealthy to push their interests, the gap between the rich and the poor will continue to widen drastically especially in a time of economic recession when the gap is steadily increasing due to rising unemployment and other factors. California is facing many issues similar to other states, however, the effects are felt much harder in California due to its especially sensitive economic climate.

Tuesday, April 7, 2009

Changing of Times

California Appoints a Watchdog for Stimulus

After the previous budget crisis, Governor Schwarzenegger has appointed a government official to act as a watchdog over the federal money awarded to California through the stimulus bill. This is the first time this position has ever existed. He appointed Laura Chick, a democrat who has continually exposed the waste and corruption within government and their duties. She has even been threatened by a lawsuit from the Los Angeles Police Department for criticizing their inefficient and questionable investigation procedures. Schwarzenegger views Laura Chick as the perfect candidate for this position because with this stimulus bill comes many opportunities for corruption and fraud. Other states have also been concerned with this and many have set up public web sites in order to track stimulus spending. Governor Schwarzenegger supports Laura Chick's diligent and often vicious efforts to erradicate corruption and make sure the stimulus money is being spent efficiently and correctly. I think that Schwarzenegger's appointment of Laura Chick and the creation of this position was very appropriate and even mature. I think this effort will gain a lot of respect from the public, because he is ensuring that the government is not wasting away this stimulus money, and is making the effort to prevent corruption and fraud. Especially after California faced such an extreme budget crisis from frivolous spending, this appointment shows that he is taking responsibility for the past failures and taking the initiative in order to prevent such disaster in the future. I also think that the individual, Laura Chick, who he appointed is very important. Governor Schwarzenegger could have appointed a less vicious individual to fulfill this job or one that may have been willing to overlook government failures, however, Laura Chick's reputation proves that she will not let any mistakes slide. She will maintain a vigilant watch over this stimulus money to ensure that it is being put to the correct use. This is very interesting and very honorable of Schwarzenegger and it will be interesting to see how well it is enforced and to see its consequences.

Santa Barbara County Supervisors Rethink Stance on Offshore Drilling

California, one of the most environmentally friendly states had in the past supported offshore drilling in Santa Barbara County. This proposal is one that does not fall in line with their usual stances regarding the environment. California holds some of the stricest emissions laws, and are constantly one of the up and coming forces driving the nation to become more environmentally friendly. Therefore, this proposal of offshore driling which not only would destroy and pollute the ocean and area near the drilling, but also would contribute to more carbon emissions was completely against their usual stance. However, recently the board's majority has switched from Repubican to Democratic. President Obama's election and the fact that the price of crude oil has significantly dropped has led this county's leaders to reconsider their stance on the offshore drilling within their county. They have changed their minds because they believe that with an environmentally concious president who's desire is to reduce pollution and our dependency on crude oil, they must follow suit with the changing times. However, residents still remain in favor of offshore drilling due to increased technology that reduces the likelyhood of oil spills, which affected their county greatly 1969 and caused them to be very hestitant in regards to oil in their waters. However, other residents are in opposition to the offshore drilling and support this change of heart. The conflict over offshore drilling is caused by a split between the northern, conservative and agricultural half in opposition to the southern, more liberal half. These supervisors of the Santa Barbara County believe that their opposition to offshore drilling could lead to an effect on other counties. I was fascinated how the difference of one president could completely change the minds of its citizens. A county pushed by Bush's close relationship and dependence on oil causing them to support offshore drilling has completely switched in opposition to such measures. I had never realized how certain president's policies greatly impact state and other local government's opinions on certain issues.

Voter's Choice: Bad Policy or Deeper Debt


Within the next month, California will face a very difficult decision in regards to expanding gambling within the state. Their options are to vote for a horrible policy, or to send them selves into a deeper debt. Neither of these options are beneficial, and it will be very difficult to decide what is a better choice. The decision is in regards to Proposition 1C on the May 19 special ballot. Proposition 1C, the Lottery Modernization Act, has the largest and most immediate monetary impact in regards to our state. Proposition 1C would allow for the tweaking of the lottery system in order to ensure a larger number of winners. This also allows for the immediate borrowing of $5 million against future lottery revenue. This propsition causes a dilemma because there are two seperate issues within one proposition. Many critics have raised their voice against the borrowing of money, however, due to the economic strains our the nation and state, ordinary circumstances do not apply. The governor recently closed the $41 billion dollar gap in the state's budget a few months ago, however, the gap has reappeared and is currently at $8 billion. If Proposition is not passed, the budget gap will increase to $13 billion. The state is also facing many other tough decisions in regards to their budget and future steps in creating an economic upturn. Sacramento's hesitancy and waiting on these decisions has caused negative repercussions for the state, that is why they are currently facing the urgency to make even tougher decisions. Proposition 1C seems like a necessary solution for their budget problems because unlike the federal government, states cannot just print money and run huge deficits. This propostion would also help the state to raise money without raising taxes, which is normally very disliked by citizens. This article proves that California is still struggling to keep itself a float during this economic downturn, and they are turning to farfetched and inventive ways to increase their budget. It also shows that often when an economic crisis occurs people are often stuck between a rock and a hard place. In order to solve their problems, they have to make very difficult decisions, many of which do not provide a good solution. It will be interesting to see how California will continue to cope during this economic recession.

Wednesday, April 1, 2009

Effects of The Economy on California

Crime Down in Los Angeles, Other parts of Southern California

Despite many peoples expectations that crime would quickly rise our nation and state's economy plummeted, crime in Los Angeles has actually decreased. This trend is also seen in other major cities such as New York, Chicago, and Houston. However, the rest of the country has not fared as well as these major cities. In Los Angeles, property crimes are down 6.4% and violent crimes were down 4.9%, however, there has been a slight 1.9% increase in robberies in Los Angeles. The most impressive thing about the decrease in crime in Los Angeles in comparison to other large cities is the fact that Los Angeles' economy has been hit the hardest and the unemployment rate has decreased by 12%. They have attributed this decrease in crime rate to the LAPD's diligent efforts. LAPD has been increasingly been improving their police force. In 1991 and 1992, the last time the economy was struggling, Los Angeles experienced a severe increase in crime rates throughout the city. The cocaine epidemic soared, and violence erupted throughout Los Angeles. However, it seems that Los Angeles has learned from the past and reformed their department in order to better deal with the crime that occurs in a large city. A criminologist at the University of Michigan, however, questioned the LAPD's ability to continue to succeed in keeping crime rate low if the economic situation continues. She also stated that because of California's budget problems, police department and law enforcement may face budget cuts which could deter their ability to fight crime. However, currently residents support the LAPD's efforts and have cited that they feel that their lives are significantly less touched by crime today. Although LAPD has made significant advances and had a lot of success in controlling and reducing the crime in Los Angeles, the continual worsening of the economy could hinder their progress. This possibility depends on the future of our nation's economy, and more importantly how it affects the state of California. This article was very interesting because it contradicted my experiences while I was at home. Over spring break, there was the murder of four police officers in Oakland, CA, which is also a large city in California. The killing of these police officers was a tragedy and really portrayed the violence that has been occurring in Oakland. I was very surprised by this article because it doesn't seem like the crime rate has changed significantly in the larger cities near my home such as San Francisco, Oakland and San Jose. I would be curious if Northern California has had as much success as Southern California in minimizing crime. Also this article is very interesting because earlier when California was in the heart of its budget crisis in search of a remedy, Governor Schwarzenegger proposed releasing one third of California's felons in order to reduce prison costs and give California's budget more leeway. This proposal was never put into affect however I wonder whether it would have reversed their efforts and caused the crime rate to spike. California's economy is still struggling, despite its resolution in regards to its budget. If the national economy as well as the California economy does not improve, I would not be surprised to see a gradual increase in crime rates.

Perspective Needed on UC Salaries

During this nationwide crisis, states funds have been cut and these states have not been able to allocate as much money to certain programs as before. An area that is paying a heavy price is the educational systems. Currently the UC system being underfunded by $450 million, which significantly impacts their own budgets and ability to provide quality services to their students for the same price. The UCs are being accused of raising top salaries and giving perks rather than using this money to bolster the areas that their decreased funds cannot support. However, this article is written in response to these accusations to give other pieces of evidence in support of the UC's efforts in light of their underfunding and the current economic situation. It states the the UCs have froze all their salaries on senior managers, cut bonuses and incentive pay and curtailed their faculty recruitment. They are placing the costs on the faculty rather than the students. They are employing less faculty that are not educators and are limiting the teachers' budgets in regards to their travel and other benefits. Some employees of the UCs have been required to take on the work of two jobs but only receive the salary for one. Others are being paid well under what most other individuals performing their jobs are receiving. The UCs have also stated that they will continue to provide financial aid and scholarships because they pride themselves in their abilities to provide students with an affordable education. They have gone to great lengths in order to shift the costs away from the students and onto the employees instead. They need to do this in order to remain competitive with private universities within the state, and other universities in other states. I think this article describes how often the public is quick to criticize government operated systems, especially in times of economic recession. However, this image of our government as exploiting and corrupt is not always true as this response has portrayed. The actions of the UCs to maintain their credibility and affordability is honorable. The administrators, educators, and other employees of the UCs should be held in high respect for the sacrifices they are making in order to allow the students to have better educations and not face the burden of the budget cuts. Elon University also tried to follow this path by not increasing tuition greatly. These actions make these universities more respectable and desirable for future and current students and their families. It displays a high level of trust between the students and these schools.

California Bond Sale Could Revive Public Works


In light of the current economic crisis especially in the state of California, California has began to find a solution to aid in their budget short falls. Recently California has sold $6.5 billion in bonds, after an uphill battle in attempt to sell them. This $6.5 billion exceeds their expected goal of $4 billion. This lucrative yield will allow California to invest in public works projects that before seemed unrealistic due to the national budget cuts, and California's recovery from its budget crisis during the winter. California's success may influence other states to follow suit in order to raise their own bond yields to improve infrastructure. Government officials have realized the dire situation of this economic problem our country is facing and they have realized the necessity of turning to new ways to earn money in order to continue improving their own states. Government officials are hoping that this excess in bond sales continues to be a trend because it would provide the state with much needed assistance in order to continue to improve its infrastructure and overall economy. With this new money, California will repay loans, earmark $1 billion for transportation, water, school construction, and flood control projects, repay for prior projects, and restart recently halted infrastructure projects. All of these efforts seem to be putting California back on the road towards success as they slowly climb out of the whole they dug themselves into. Because of this initial success in bond sales, another sale is expected to occur later in spring in order to raise more money. Although this action may seem to be beneficial, I believe that it has possible negative effects in the future. In the future, the state government may face difficulties in repaying individuals for these bonds which would cause them to end up where they started. However, the benefits reaped in the short run are not in question. Hopefully it will help boost California's economy, and allow them to continue on a positive road to escape their economic woes.