Welcome To Mendota

This isn't an article from 1933, it's from 2009:

The customer seemed interested in a black blouse offered for $1 at the thrift store. But instead of buying it, she set it on the front counter.

Maybe tomorrow, she told the cashier, she would have the money. Or the next day. But not now.

"That is the way people are now," said the cashier, Alicia Reyes, as she watched the middle-aged woman walk out of the store. "They just come in here and look. They just come in here to kill the time. And then they take off."

Welcome to life in Mendota — the unemployment capital of California. With a 41 percent jobless rate, the town's social fabric is tearing at the seams. Alcoholism and crime are on the rise. To save money, some mothers wash and re-use disposable diapers. Unemployed men with nothing to do wander the streets and sit on benches.

The irony is obvious: In a large swath of the nation's most productive farming region, many struggle to fill their own cupboards.

There are many factors here - the economic meltdown and struggling economy, of course. But the third year of drought conditions have devastated harvests, leading to less workers needed to pick crops. This is the sad future of a dry California. With housing cratered throughout the state, the fallback option of construction is closed off as well. And as seasonal workers stay home, the businesses that support the economy have less consumers and suffer as well.

This is a disaster area, and the signs are it will only get worse. The state jobless rate is projected to grow as high as 15% before subsiding, and will remain in double digits until the beginning of 2012. The FDIC has issued warnings to at least six state banks, telling them to increase capital levels. "Two-thirds of the state's banks will be operating under cease-and-desist orders" by the end of 2009, according to one analyst. And housing prices continue to fall off the cliff.

The Central Valley is in a Depression. The rest of the state may not be as far behind as you think.

Property Values - The Next Huge Wave Of Revenue Losses

The enactment of Prop. 13 in 1978 prohibited commercial and residential property taxes from rising as property values rose. Curiously (actually not so curiously), it did not prohibit them from falling should values fall. And as property values crater year-over-year in the housing implosion, homeowners and businesses have the ability to reassess. They have every right to do so under the law. But this is going to bankrupt California cities.

Assessors in Los Angeles, Riverside and San Bernardino counties are forecasting the first drops in property tax collections in more than a decade, presaging reduced revenues for many cash-strapped local governments.

Until now, property tax revenues had been a relatively stable source of money for cities amid a recession that has dramatically reduced sales tax intake, particularly from car dealers.

Even with the decline in home values, the property tax base in five Southland counties grew last year thanks to continuing sales and the completion of construction begun during the 2003-2006 building boom. But assessors in those counties said they have reduced the value of more than half a million properties and expect to make deeper cuts to their rolls by the summer.

This is bad news for local governments that have been relying on property tax proceeds to help make up the shortfall from reduced incomes and spending in their areas. Already, cities and counties across California have been freezing jobs, imposing work furloughs and pay cuts, postponing repairs and reducing some public services.

The reason Prop. 13 is such a disaster is that property taxes are a stable revenue source no matter what the economic climate. Unless a massive housing bubble bursts and prices collapse. Just to show you how big this is, the county assessor in Los Angeles is predicting a 1% decline in the property tax base. That comes out to ELEVEN BILLION DOLLARS. The drop in San Bernardino County, one of the ground zero sites of the housing crisis, is predicted to be much greater, nearly 6%. I can only imagine what the number is in the Central Valley, which lawmakers want declared an economic disaster area.

When you keep in mind that property taxes fund a great deal of municipal education, you can see what a major problem this is. And without structural change, not one that's fixable.

Media News Boldly Tells The Truth On The California Budget

Good for Media News. Central Valley readers got a page-one editorial yesterday not only lambasting the legislature for the budget mess, but squarely putting the blame on the Yacht Party for their obstructionism.

The governor and all 120 legislators share responsibility for this. But most of the blame for the immediate crisis falls on Republicans in the Legislature, who this past summer - to a person - signed a pledge to not raise taxes. That was before an already large deficit mushroomed, making the need for more revenue imperative. Since then, Democrats and the Republican governor have offered significant compromise, but GOP lawmakers cling to ideological purity - schools, health care and other essential responsibilities be damned.

These lawmakers constitute barely over one-third of the Legislature. But because the California Constitution requires a two-thirds vote on the budget, it enables the tyranny of a minority to trump majority rule.

This day didn't sneak up on anyone. It's the result of too much borrowing and too little political courage over too many years - lavish spending in good times and insufficient restraint in bad. For this, Democrats, who've controlled the Legislature, and the governor share responsibility. Compounding the problem are spending initiatives that bind the Legislature's hands. Voters have themselves to blame for these.

This is fairly honest, although the tendency to blame everyone in part sneaks through. Other papers in the Media News Group were more scathing:

The best hope is that the people will become angry enough to get the message across, especially to the Republicans, that they need to get the job done or get out of the way.

The stalemate is the result of the GOP's "no new taxes" pledge. It may have made for good headlines months ago, but sustaining it to the point of budgetary chaos is irresponsible....

A huge part of the problem is the state Constitution's requirement that budgets be approved by a two-thirds vote. It has not prevented past overspending, but it enables the minority party, Republicans for the moment, to play the spoiler role no matter the consequences.

It is time to join the majority of states without a super-majority provision. It is time to say goodbye to those who pretend to stand on principle. The no-tax pledge may have been sincere at the start, but it has become only a bargaining chip. Republicans are simply holding out for maximum impact.

That they put the editorials on Page 1, so nobody could miss them, and said they were doing so specifically to increase activism around the budget crisis, really speaks well to the responsibility of the editorial group. All I can say is it's about time.

In a kind of response, head rabble-rouser for the Yacht Party Jon Fleischmann has issued an ultimatum to the Republican caucus: vote for taxes and face censure (and by extension face a well-funded primary opponent). There is no better example of how the Yacht Party is committed to hijacking the state and obstructing anything resembling fiscal sanity.

Maybe Media News will report on that tomorrow.

Now With Obama, It's Time To Fix The Foreclosure Crisis In California

Democratic legislative leaders are in Washington today arguing for increased stimulus money for California. I've been arguing that this is required for some time, and hopefully it will be done in such a way that a) it can be applied to the General Fund deficit (so far Arnold has not asked for budget relief in that way) and b) it can be used without up-front money that will be matched, because the cash crisis limits our ability to do that.

However, there is something else that the Obama Administration can do right away to help the bottom line of the state and its citizens, and that is deal with the crisis in the housing market here. It's no secret that California is one of the hardest-hit states by foreclosures; in Stanislaus County, for example, 9 percent of all houses and condos in the county have been foreclosed upon, a staggering figure. That's almost $4 billion dollars worth of foreclosures in Stanislaus alone. In larger counties like San Bernardino and Riverside, you can see how this foreclosure crisis affects new housing starts (there are a glut of cheaper foreclosed homes on the market) and thusly unemployment figures.

Only four years ago, Riverside and nearby San Bernardino, often called the Inland Empire, were California’s economic powerhouse, accounting for more than a fifth of the state’s new jobs. Today, unemployment reigns in the sprawling region east of Los Angeles. The 9.5 percent jobless rate in the two counties matches Detroit’s as the highest of any major metropolitan area in the U.S.

Although there was a surge in construction employment in the U.S., and about a 50% increase in California (as a percent of total employment), construction employment doubled (as a percent of total employment) in the Inland Empire [...]

With the housing bust, the percent construction employment has declined sharply and the unemployment rate has risen to almost 10%. Is it any surprise that jobless rate in the Inland Empire matches Detroit’s as the highest of any major metropolitan area in the U.S.?

Nobody is calling on the federal government to prop up a sick housing market that will not see a broad recovery for a while. But foreclosures have a disruptive effect on the greater economy. They hurt property values, they hurt banks, and they hurt employment. The crisis is only slated to grow if nothing is done, with homeowners of every income class affected. And so foreclosure aid would be a major boost to California, and it can be done both quickly and effectively. By pledging that $100 billion from the TARP program will go to limit foreclosures, Obama has already begun this effort. Ted Lieu thinks that the Obama Administration understands the nature of the problem.

Time is of the essence. I commend the incoming Obama Administration for pledging up to $100 billion from the Troubled Assets Relief Program (TARP) to help distressed homeowners stay in their homes. In California, which has the highest number of foreclosures in the nation, we experience one foreclosure filing every 30 seconds to 1 minute. The TARP funds, which the U.S. Senate recently released, should be immediately put to use to rescue homeowners from foreclosure. Our economic recovery will not begin until we slow down the astronomical rate of foreclosures and stabilize the housing market.

Strategic direction is of the essence. The haphazard strategy of the Bush Administration’s use of the initial $350 billion in TARP funds resulted in the following: more foreclosures, less market confidence, and zero benefits for the ordinary citizen. How does giving yet another $20 billion to Bank of America so it can complete its purchase of Merrill Lynch’s brokerage arm help anyone on Main Street? Answer: it doesn’t. The only people this TARP money under the Bush Administration has been helping have been Wall Street firms. It is time for change and January 20th cannot come soon enough.

However, more needs to be done. Earlier this month, Democratic Senators got Citigroup on board for what is known as "cramdown" legislation, which would allow bankruptcy judges to restructure mortgages that would give homeowners the ability to pay them. The lenders take a haircut but it's a better situation for them than foreclosure, and those who get to keep their homes can continue to contribute to the economy. It's a great idea and a major step toward reforming the hideous 2005 bankruptcy bill. Yet despite supporting it, Obama's team doesn't want to include this reform in the economic recovery package, which I think is a mistake.

President-elect Obama and his advisers are resisting attempts to include a provision in the economic stimulus bill backed by congressional Democrats that would allow bankruptcy judges to shrink mortgages.

In a hastily convened Democratic Caucus meeting last week, Obama economics adviser Jason Furman made it clear to lawmakers that Obama thinks the so-called “cramdown” provision would cost GOP votes and endanger bipartisan support in the Senate.

He committed to dealing with the issue after the bill passes, as did House Speaker Nancy Pelosi (D-Calif.).

Lead supporters of the cramdown provision say the time to deal with the issue is now. Rep. Jerrold Nadler (D-N.Y.) said it’s worth losing some Republican support to help homeowners.

“I would take that risk,” Nadler said. “I don’t think you’re going to get a lot of Republican votes anyway.”

This is absolutely correct by Nadler, and risking a few votes on the margins is no reason not to limit foreclosures now. There is an urgency here, because each foreclosure hurts the housing market more and makes it less liable to recover quickly. We cannot wait a few months for the sake of political expediency. Cramdown needs to happen fast, particularly for us in California.

California Nearing The Cliff

The unemployment statistics for October at the state level were released today, and as it turns out California lost the third-most jobs in the nation at 26,400. Only Washington and Florida lost more. This puts the unemployment rate in the state at 8.2%. This is a 2.5% increase from one year ago, the largest year-over-year increase since 1982, the last major recession. Worse, in regions of the Central Valley, that number is much higher. Unemployment in Fresno County is 11.2%. In San Joaquin County, 11.1%. In Merced County, 11.7%. In Tulare County, 11.8%. And in Stanislaus County, 11.8%. Those are desperate numbers.

The loss of income tax revenue along with the dip in property taxes thanks to cascading foreclosures is leading more cities to the brink of bankruptcy.

Now two more California cities – Rio Vista and Isleton – are considering bankruptcy protection as an option as they face large budget shortfalls and staggering debt.

While experts caution against ringing the alarm bells just yet, they do say tough economic times could push municipalities already on the brink over the edge.

"I think it's quite possible municipal bankruptcies could become somewhat more common but will still be very rare," said Jason Dickerson, budget and policy analyst at the state's Legislative Analyst's Office. "There are more municipalities that will look at what it means."

We need a massive fiscal stimulus as soon as humanly possible. And that needs to include aid to state and local governments, particularly here in California. We are right on the edge.

Heard We Got The Central Valley Too

The story of the 2008 election is going to be the epic collapse of the Republican Party in traditional strongholds.

The Republican Party, which overtook Valley Democrats in voter registration totals eight years ago, is losing ground for the first time in at least a decade.

After peaking just ahead of the 2004 presidential election, Republican registration numbers are down in Fresno, Tulare, Kings, Madera, Mariposa and Merced counties.

The GOP's decline is most obvious in Fresno County, where the losses have turned into an avalanche, even as the party gears up its efforts to keep the White House in GOP hands by electing Arizona Sen. John McCain as president.
The most recent voter registration numbers show the Democrats are closing the gap and are now fewer than 9,000 voters behind the Republicans.

At the peak in 2004, GOP registrations were ahead by more than 23,500 voters.

This will obviously help in AD-30, where Fran Florez is facing Danny Gilmore to keep Nicole Parra's seat in Democratic hands. But this is a nationwide and statewide shift that is generational in nature.

In Riverside County, Republicans have lost close to 34,000 voters since October 2004; in Orange County, an 18 percentage point Republican Party lead in 2004 is now at 14 percentage points.

Bob Mulholland, campaign adviser to the California Democratic Party, points out that Democrats picked up almost 75% of the more than 411,000 new voter registrations statewide between voter-registration reports filed Jan. 22 and May 19.

During that same time, close to 21% of new registrations were decline-to-state. Republicans picked up just 3.6% of the new voters.

I think that in particular, failed conservative policies have most adversely impacted Republican areas. The collapsing home market as a result of "inmates running the asylum" in the lending markets has hit the exurbs hard. Job loss is most keenly affecting the areas where jobs are newer to arrive. And of course high energy prices hurt those with long commutes. The exurbs, the fast-growing counties, the greatest strength for Republicans in 2004, are massively turning to the Democrats. That leaves Democrats with a noticeably bigger tent, and we have to recognize that as an issue moving forward, but for now, this cratering of Republican numbers is truly a sight, as stark a picture as it was right after Watergate in 1974.

A Bush Dog Revels In Poverty

Considering all of the rural areas and dirt-poor urban centers in the country, you have to be a little surprised that Jim Costa's Central Valley district is the worst in the country for quality of life.

Poverty, poor health and low graduation rates have put the San Joaquin Valley's 20th Congressional District dead last in a new national scorecard that ranks the well-being of residents.

Even notoriously grim Appalachia fares better than the congressional district that sweeps in Fresno, Kings and Kern counties, the study made public Wednesday shows. The assessment of health, education and income ranks the district 436th out of 436 districts nationwide.

CA-20 has the lowest rate of college graduates in the country, just 6.5%. The median annual salary is just $16,767, and life expectancy is 4.5 years lower than in rich, high well-being areas like the Upper East Side of Manhattan. It's an appalling set of numbers.

We know the challenges in this district. Factory-style farming has lowered the air quality and increased the public health risks. As income inequality stratifies, places like the Central Valley get left behind, even more so in a California with a 6.9% unemployment rate. A lack of development into 21st-century jobs causes a brain drain, and higher energy prices cripple rural America.

And there's a residual benefit. A dirt-poor district is a district that doesn't vote heavily or pay much attention to politics, paradoxically so since they need to the most. And so we get Representatives like Jim Costa, whose district has the lowest participation rates in the entire state. Which means he can vote the wrong way on issues like FISA or war funding and not get much feedback about it from a constituency that's struggling to survive. In this context, his desire to return federal funds to the district or improve quality of life would seem to be low, at best. It's a vicious circle: poverty breeds inattention, inattention breeds bad lawmakers, bad lawmakers have trouble improving poverty.

We need less legislators like Jim Costa who seem more interested in pleasing their corporate contributors than the suffering citizens in their own districts. The problem is how to reach a low-information constituency, and how to make that connection, that sustained political power and engagement is vital if we want to end poverty and build the post-carbon, post-agrarian economy that would lift up whole regions like the Central Valley.

California State Legislative Scorecards

The Capitol Weekly did their first annual legislative scorecard of members of the State Assembly and Senate. They go into detail about their methodology and recognize that devising these types of scores is more art than science. In addition the voting sample size is fairly small. But I still believe there's some value to them.

The full list (PDF) is here. Some interesting tidbits:

You can pretty obviously see that we have an ideologically rigid legislature. 8 Republican Assemblymen have a "perfect" 0 score on legislation (fully conservative), and 13 Democrats have a 100 (fully liberal). In the Senate, there are 2 Republicans with a 0 score and 5 Democrats with a score of 100.

The Republicans, however, are FAR more unified. There are no Assembly Republicans with a score above 20, and no Senate Republicans above 30. Put it this way, the 2nd-most "moderate" Republican in the legislature is right-wing loon Tom McClintock, I guess because he is occasionally libertarian.

By contrast, a handful of Democrats dip into the other side of the ocean. Here are the Democrats with scores under 50.

Assembly:
Cathleen Galgiani 20
Nicole Parra 20
Juan Arambula 50

Senate:
Lou Correa 40
Mike Machado 45

All 3 Assembly Democrats live in the Central Valley (Galgiani's from Stockton, Parra's from Bakersfield and Arambula's from Fresno). Mike Machado is also from this area (Stockton, Tracy). Correa is the only exception to this rule.

Galgiani's election site features the line "I'll never raise your taxes." Machado endorsed Steve Filson in last year's Congressional primary against Jerry McNerney.

I'm not making value judgments, this is all just somewhat interesting stuff and I'm trying to make sense of it, particularly in the context of yesterday's discussion about the Central Valley. The spotlight is not usually shined on this area; is that how we end up with Democrats like this?

Population Shifts and Central Valley Politics

Let's face it. Politics in California in general are heavily tilted to the large population centers in the Bay Area and Southern California (including Orange County and down to San Diego). But to continue in this fashion would be shortsighted, because it's clear that the population patterns are moving away from two all-powerful hubs and toward a more widely spread pattern. What has been getting most of the ink from the recent study by the state Department of Finance is that the Inland Empire will soon become home to the second-largest county (Riverside) in all of California. But what has been less remarked upon is the expansion of the Central Valley:

With a new state forecast predicting that California's population growth will tilt ever more toward the Central Valley, Southern California's Inland Empire and fast-growing areas around Sacramento, experts say the state's political center of gravity may shift, too - away from the more urbanized, coastal metropolitan areas that dominate the state's political and economic life today.

The Central Valley "will clearly gain heft compared with the other metropolitan regions," said Carol Whiteside, president of the Great Valley Center and the former mayor of Modesto. "It won't be the baby cousin any more."

The Central Valley will grow from 10 percent of the state's population in 2000, to 16 percent of all Californians by 2050. The Bay Area is projected to gain about 3.5 million new residents by 2050, but its share of California's population will drop to 17 percent, from 20 percent in 2000, an analysis of new state Department of Finance projections shows.

This is something important for political groups to internalize. The traditional structure of Democratic election efforts has been to raise turnout in LA and SF, and hope to do half-decent everywhere else, and walk away a winner. That's not going to work as we go forward. With 1 in 6 Californians living in places like Modesto and Fresno and Stockton and Bakersfield and Merced and the numerous towns throughout the San Joaquin Valley, Democrats must build and grow their presence outside of the urban metropolises, to a level where they were in the recent past before giving up practically all of that ground to the Republicans.

Here's the spread of population in 2000:

Coastal Southern California: 47%
Bay Area: 20%
Central Valley: 10%
Inland Empire: 10%
Other (High Desert, Sierras): 13%

Here's the projections for 2050:

Coastal Southern California: 39%
Bay Area: 17%
Central Valley: 16%
Inland Empire: 14% (3x the size in 50 years!)
Other (High Desert, Sierras): 14%

The "big 2" go from 67% of the population to 56%. That's significant in a statewide election. It will also likely affect reapportionment, with the Bay Area potentially losing seats in Congress or the state legislature as early as the 2010 Census.

We have to start thinking about this and planning now. What are the concerns of the Central Valley? Obviously agriculture and water concerns would weigh heavily, one would think, but the Valley is also urbanizing and developing rapidly. These aren't all cow towns anymore; there are at least 5 cities with over 100,000 inhabitants. The San Joaquin Valley is also the primary oil-producing region in our state. Culturally this is likely to be a more classically Western libertarian area.

We have a 3-2 deficit among the Congressional delegation in this area. Dennis Cardoza and Jim Costa are Democrats, and George Radanovich, Kevin McCarthy and Devin Nunes are Republicans. By 2050 there could be up to 10 seats in this region. Are Cardoza and Costa helping grow the Democratic brand in the Central Valley? Are they promoting policies that can help Democrats win? This is a diverse area as well, with not just Hispanics but lots of Asian and European communities. How are they being served?

I hope people are asking these questions. The Central Valley could hold the key to continued Democratic dominance in California.