The Cosco Busan spill on November 7 dumped over 58,000 gallons of bunker fuel into the San Francisco Bay and surrounding waters and prompted a state ban on fishing in regional waters on November 13. The ban was lifted (except at the Berkeley Marina and Rodeo Beach in the Marin Headlands) yesterday but resulted in significant economic loss for the local fishing industry.
Net Loss: Overfishing off the Pacific Coast [Environment California]
Meanwhile, a report recently released by Environment California says that one in seven federally managed West Coast fish stocks are now overfished (with the term “overfished” being defined as the population of the fish being reduced to below 20-25% of its original size). Some of the species affected include bocaccio, darkblotched and yelloweye rockfish, cowcod, and Pacific Ocean perch.
The biggest economic news in recent years has been the national mortgage, foreclosure, and securities crisis. California has been hit particularly hard. According to a new report from the U.S. Conference of Mayors, the state is expected to have one of the highest negative changes in GSP (gross state product) growth in the 2005-2008 period, with a 1.1% drop, and property taxes could fall by as much as $2.9 billion. (An added $994 million could be lost in sales tax revenues due to pullbacks in consumer spending, and $39 million in transfer tax reveenue could be lost because of falling home sales and prices.) Given that the state is facing a $10 billion budget shortfall, according to analysis from the Legislative Analyst, 2008 could be one of the worst economic years on record in California.
The Mortgage Crisis: Economic and Fiscal Implications for Metro Areas [U.S. Conference of Mayors]
The U.S. Conference of Mayors report says, “The real estate crisis of 2007 and 2008 will go down in the record books …. The wave of foreclosures that has rippled across the U.S. has already battered some of our largest financial institutions, created ghost towns of once vibrant neighborhoods — and it’s not over yet.”
The report optimistically concludes that the economy will not “come off the rails,” but it is difficult to see that the next year or two will not be some of the most problematic times that the state has faced since at least the post-dotcom recession of 2001.
According to an article in today’s Los Angeles Times, the Department of Finance has ordered all state departments and agencies to prepare plans to cut their budgets by 10% for the budget plan that the governor will submit to the legislature in January 2008.
The article goes on to say that
[s]tate officials have warned the governor that the likely deficit for next year has jumped from a few billion dollars to as much as $10 billion, threatening to wipe out the progress Schwarzenegger has claimed in getting the state’s accounts in order.
The problems are clear when you look over the data in the Department of Finance’s latest economic bulletin, covering the months of August and September 2007. Home sales were down in August by 28% from the same month last year. Unemployment in California was up to 5.5% in August, 0.9% above the national average. General fund revenues in September were $809 million below projections. Year-to-date revenues as of the end of September were $777 million below the original projection of $22.7 billion.