Sacramento legislators are getting serious about an ugly budget | Tim Talk | Tim Hunt | |

Local Blogs

Tim Talk

By Tim Hunt

E-mail Tim Hunt

About this blog: I am a native of Alameda County, grew up in Pleasanton and currently live in the house I grew up in that is more than 100 years old. I spent 39 years in the daily newspaper business and wrote a column for more than 25 years in add...  (More)

View all posts from Tim Hunt

Sacramento legislators are getting serious about an ugly budget

Uploaded: May 12, 2020
This most unusual May brings with it the requirement that the Legislature and the governor address the budget that must be approved by June 15. The numbers are dauntingly bad compared with an estimated $6 billion surplus in the January budget presented by Gov. Gavin Newsom.
Now, it’s as bad at $54 billion according the governor’s finance department looking at the budget proposed by Newsom in January. The Legislative Analyst put it at between $18 billion and $34 billion using the current budget. The non-partisan analyst built the $18 billion estimate based upon a rapid return to economic growth in a U-shaped recovery from the current deep recession. The report estimates that between 3 and 4 million Californians have lost their jobs since March. The higher budget deficit would result from an L-shaped slower recovery.
The office estimated current year revenue at $152 billion with about $16 billion in reserve.
The governor, while fighting the pandemic, consistently has, in recent weeks, talked about the need for the feds to step in and help state and local governments much more. Just how much stomach there is for that in Congress remains to be seen. Even with the quicker recovery, budget challenges could last for the next few years.
What is clear is that schools, in particular, need to brace for tough budgets in the fiscal year that starts July 1. The analyst’s report estimates that school funding, which has a voted-mandated minimum, would drop by $2.4 to $2.3 billion if the Legislature and the governor maintain spending at the current year’s level. That will be felt in districts across the state. State spending on k-12 schools has increased 60% since the low water mark in 2012.
Locally, the cities have significant reserves and likely can whether the slowdown. Tina Olson, Pleasanton’s finance director, told the City Council last month that it could cost the city $6.3 million in the current two-year budget. There will be a big hit in the hotel tax as well as the sales tax. Pleasanton, with its healthy property tax base, is among the cities statewide best positioned to ride out the recession and its long term impact.
Meanwhile in Livermore, the council will hear a similar report as it prepares for its next two-year budget. The report reduced sales tax projections by 11% ($4.1 million) for the current fiscal year and 18% ($6.8 million) for the upcoming fiscal year. The hotel tax is expected to be off 35% ($1.6 million).
The hotel tax is not a key factor for local revenues, which is not the case in other communities that are much more dependent upon tourism. The Sacramento Business Journal ran a story last week in which a South Lake Tahoe City Councilwoman was quoted saying “stay away” to potential visitors. The hotel tax makes up 37% of the city’s general fund revenue. Sales tax, again driven by visitors, also has plunged.
The counties surrounding Lake Tahoe have health orders in place forbidding non-essential travel to the lake. If the order remains in effect into the summer months, the hotel tax impact is estimated at $2.3 million per month. Thanks to prudent spending and the previously roaring economy, the city has a 25% reserve that will help it ride out the summer.
It’s the same in the Coachella Valley where golf courses have re-opened with COVID-19 required changes, but tourism is shutdown at least through this month.
What is it worth to you?


Posted by Rich Buckley, a resident of Livermore,
on May 12, 2020 at 11:32 am

If we are willing to tolerate some inflation, we can continue to print money and inflate and push an operational cash flow to solve these real shortfalls. More importantly, the country also needs to focus on MADE IN USA and educate consumers to buy with a strong bias for MADE IN USA. We are watching the lying, untrustworthy CCP self destruct even though elites in the US Swamp shadow government also have blood on their hands. These elites are pulling out of doing business with the CCP. They have liked having slave labor from the CCP. To break the cycle of inflation reform the Federal Reserve. There are any number of ways of providing reform, the soundest manor would be as Bill Still suggests: Start paying off short term bonds with US Treasury Notes and Start Calling in Federal Reserve Notes in equal amounts. Over the coarse of just a few years nearly all US Debt can be paid off. Cash stays in circulation. Additionally now with a new dynamic of passing out money from the Federal budget directly to the neediest consumers it's likely we are forging a new social dynamic for growth. Bring home manufacturing and buy MADE IN USA.

Posted by Charlie , a resident of Amador Estates,
on May 12, 2020 at 2:58 pm

Made in America requires that people in America are willing to pay what it cost to make it here.

I was a manager in a factory in the mid 90's that had to lay-off 300 mfg workers when we closed the factory die to people demanding cheap computers. These were good jobs with average pay of $17 an hour with excellent benefits - really good pay 25 yrs ago.

Companies are in business to make money - not to provide goods at a loss or to just provide jobs to people

Time to be willing to pay the prices to move mfg back here to take the risk out of the supply chain

Posted by Rich Buckley, a resident of Livermore,
on May 12, 2020 at 5:08 pm

Rich Buckley is a registered user.

Typo: not US Treasury Notes, US TREASURY DOLLARS

Posted by Spudly, a resident of Laguna Oaks,
on May 13, 2020 at 10:31 am

@Rich - you bring up good points but there is one other factor that does not seem to be mentioned often. People also need to live within their means. We can get by with a lot less consuming than we are grown accustomed to.

Posted by BobB, a resident of Another Pleasanton neighborhood,
on May 13, 2020 at 5:21 pm

BobB is a registered user.

"educate consumers to buy with a strong bias for MADE IN USA."

That's a laugh. I won't be doing that anytime soon. Free trade is a plus for the US. Nothing about this virus changes that. Just add some inventory and capacity for strategic things like food and medicine.

Posted by Mr. Julius, a resident of Another Pleasanton neighborhood,
on May 14, 2020 at 8:10 am

Mr. Julius is a registered user.

This blog post by Tim Hunt is a little confusing. $54 Billion, $18 Billion, $44 Billion ... $18 Billion WHAT?

My guess is he is referring to a DEFICIT. Two cogent items he left off. One, how big is our Rainy Day Fund; and second, what was our total yearly budget the past few years? I believe its in the hundreds of Billions.

Follow this blogger.
Sign up to be notified of new posts by this blogger.



Post a comment

Sorry, but further commenting on this topic has been closed.

Stay informed.

Get the day's top headlines from sent to your inbox in the Express newsletter.

Common Ground
By Sherry Listgarten | 2 comments | 1,241 views

Eating retro with TV dinners
By Deborah Grossman | 5 comments | 1,092 views

Labor unions win big in Sacramento
By Tim Hunt | 5 comments | 993 views