As featured on p. 218 of "Bloggers on the Bus," under the name "a MyDD blogger."

Monday, July 06, 2009

Sacramento Blues

State employee jobs cluster around state capitals, where most of the regulatory and social services agencies are traditionally headquartered. When a recession causes a shortfall in state budgets, the consequent program cuts and job loss impacts those capital metro regions disproportionately. Such is the case right now with Sacramento.

Between furloughs and layoffs, the state's budget crisis could cost Sacramento's beleaguered economy more than a half-billion dollars in the next year.

As the state began issuing IOUs last week to help pay its bills, the economic impact on Sacramento became depressingly clear: State government, which normally buffers the region against the harsh reality of recession, could actually prolong the downturn.

"The longer this drags on, the worse it will be for the local economy," said economist Jeff Michael, director of business forecasting at the University of the Pacific. He said state cutbacks could blunt the vitality of the economic recovery, once it starts.

The effect will be most visible when "Furlough Fridays" return next week, turning pockets of Sacramento into little ghost towns as most state offices close for the day. Thousands of workers will take off three unpaid furlough days a month, all on Friday, until next June. For the past few months they've been furloughed two days but not all on Friday.

"It's definitely going to affect us," said Sam England, co-owner of Dad's sandwich shop on S Street. "We won't have that additional person in here, running the register. We'll gear down accordingly."

Indeed, one of the more vibrant businesses in the Sacramento area right now is home repossession.

I'd like to see a study of this done in other states. Clearly, cutting state budgets to the bone has a multiplier effect that increases in those capital regions. Particularly in a state like California, where public employees have become so demonized, and the political process leaves them little protection.

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