Russ Steele
The City Fathers of Grass Valley issues press release on the current economic health of the city: CITY PREPARES FOR IMPACTS FROM ECONOMIC DOWNTURN. The bottom line in the report:
Within this fiscal year (2007-2008), the revenues have slowed to a point where the city does not have sufficient funds to match our expenditures by fiscal year’s end. As a result, the city must reduce expenses and do more with less and continue efforts to improve efficiencies in all our operations while at the same time protecting critical services for our community.
An then City Council takes some action by freezing all hiring, but delays any real leadership decisions until they holding some workshops.
The City Council will be holding workshops in early April 2008 to review the budget and determine our priorities for the upcoming year. All efforts to solve a looming budget shortfall from a slowing economy and state takeaways will be explored.
For god sake people lead, that was what you were elected to do. Holding public workshops to make critical economic decision makes you look like weak and ineffective leaders.
However, if you have to make decisions by everyone holding hands, let's hope the brains behind those hands are willing to take a hard look at the future and makes some realistic assessments. The near term future is not very rosy, and there is some tough sledding until after 2010. Just in time for California's green house gas regulations in 2012 to kill off any growth.
All the hand holders might want to start with the Eberhardt School of Business, University of the Pacific, Business Forecasting Center’s first quarter California and Metro Forecast.
Some highlights from the BFC report:
Payroll employment growth in California was 1.9% for 2006, the highest annual growth rate since 2000. In 2008, job growth will fall precipitously from this level. It is expected that payroll employment will grind to a near halt and expand at just 0.1% for the full year. In the second quarter of 2008, payrolls will contract. Over the 2009-2010 horizon, employment growth will average 1.5%, coming in right on par with the forecast for the national rate of job creation. In 2010, payroll employment is expected to expand at 1.6%, well above its 10-year average.
The construction industry accounted for 13-17 percent of our local economy, depends on who made the assessment. This is what the BFC Report said about the construction sector.
The Construction sector, which helped lead employment growth in many regions of the state atthe high point of the housing boom began to slow in 2006 with the onset of the cooling of housing markets. In 2007, employment in this sector declined -1.5% as developers cut back on planned projects in the face of high inventories and high foreclosures. Job losses in this sector will accelerate in 2008 to -6.9% before easing to -2.4% in 2009 and finally showing growth of 1.7% in 2010. Housing starts are expected to bottom out in 2008 at levels that represent just 42% of the peak level of starts. Even though they will start to rise in 2009, cautious builders will not start hiring in earnest until 2010.
As Grass Valley looks forward the workshop hand holders might want to consider investing in these sectors to generate future revenue.
The Professional and Business Services sector will continue to lead all sectors in job creation and continues to exhibit growth in California. This growth is expected to accelerate to 2.3% in 2008, 3.5% in 2009, and 3.6% in 2010.
Education and Health Services should also see solid gains, averaging 2.0% growth per year from 2008 to 2010. This year’s growth of 2.9% will continue to decelerate to 1.9% during 2009 and employment growth in this sector will slow further to 1.3% in 2010.
At the same time the workshop participants might want to shy away from Manufacturing and Information sectors.
Structural changes in the national and California economy will continue to result in job losses in the Manufacturing and Information sectors.
There are some hard decisions ahead for Grass Valley. I predict after all the workshop hand holding is done -- there will be layoff and early retirements!
See George's thoughts at Rebane's Ruminations on the Grass Valley Press Release, where you can down load a copy of the Press Release. Union story is here.
