A new report from the California Budget Project highlights state demographic trends that are likely to shape and influence public policy over the next 12-15 years. The three major trends that the report discusses:
- Between 2000 and 2020, California will have added 10 million people, “roughly equivalent to the population of Michigan.”
- By 2020, the percentage of whites/Anglos in the state will have decreased to 37.5%, and African-Americans will have decreased to 5.4%. Latinos will have increased to 41.4%, and Asians will have increased to 12.5%.
- By 2020, the number of Californians over the age of 65 will have increased by 75%.
The report recommends more investment in infrastructure, education, and care and services for older Californians. The executive director of the California Budget Project, Jean Ross, is quoted in a San Francisco Chronicle article today as saying, “We need to decide what is going to be the role of state policies. If not, we’re not going to have an economy that can compete globally.”
The PPIC survey mentioned in the last post also asked Californians to assess the performance of Governor Arnold Schwarzenegger and of the state legislature. Californians are increasingly unhappy with the governor’s performance — 48% disapproving and 41% approving (a decline in 16 points in approval from December 2007). The legislature’s approval rating is much lower, at 26%.
New figures from the Employment Development Department show that the unemployment rate in California jumped to 6.2% in March, the highest rate since July 2004, when the rate was at the same mark. California is now only behind Michigan (7.2%) and Alaska (6.7%) in unemployment. Counties with high numbers of jobs in housing-related employment appear to have been hit hardest, with Riverside County the worst affected (7.4% unemployment).
In a new poll from the Public Policy Institute of California, Governor Schwarzenegger’s approval ratings have slipped to 44%, which is down 6 points since January and 13 points since December. The governor’s lowest approval rating was 33%, which was in October 2005.
Approval of the legislature among Californians is down to 30%.
The state’s budget woes, which have been heavily featured in the news lately, are a source of particular concern among Californians, according to the PPIC poll. 68% say that the budget situation is a “big problem.” 56% say that they are “very concerned” about the effects of spending reductions in the governor’s latest budget proposal. 42% prefer a mix of budget cuts and tax increases to deal with the budget crisis. In general, Californians are extremely pessimistic about the way things are going nationally — 73% say that things are going in the wrong direction, the highest point in the 10-year history of the PPIC poll in which this question has been asked.
The poll also asks about Proposition 98, the eminent domain initiative on the June ballot that would restrict or eliminate rent control in jurisdictions in which it is now in effect. 41% of likely voters say that they would vote against Proposition 98. 37% say that they would vote for it. Proposition 99, a competing initiative that would supersede Proposition 98 if it got more votes on the June ballot, garners 53-27% support.
A recently-released Public Policy Institute of California fact sheet highlights California’s sluggish employment growth rate, noting that the state’s total non-farm employment grew by only 0.5% in 2007. (The same figure was 1.7% in 2006.) Employment actually grew faster nationally than in California in 2007 — by 1%. Inn addition, national unemployment in 2007 rose by 0.6% (from 4.4% to 5%) — but the comparable rise in California was 1.3% (from 4.8% to 6.1%).
A roundup of some of the reaction from media outlets and policy groups to the governor’s 2008-2009 budget:
Legislative Analyst’s Office:
The Governor has put forward an aggressive agenda for the special session and the 2008–09 budget. The Legislature should focus first on those areas where time is of the essence — where early decisions will allow state programs to achieve desired savings in the current year. The special session should also be used to lay the groundwork for achieving budget–year savings — for instance, by developing any program restructurings and taking any necessary actions on the current–year Proposition 98 minimum guarantee. In contrast to the Governor’s approach of across–the–board reductions, in our view the Legislature should (1) eliminate or further reduce low–priority programs in order to minimize the impact on higher priority programs and (2) examine additional revenue options as part of a more balanced approach. Making tough choices now will allow the state to move closer to bringing its long–term spending and revenues into alignment.
California Budget Project:
The magnitude of the proposed reductions and the policy changes necessary to achieve them are significant, even as compared to the sizeable shortfalls of the early years of this decade and the early 1990s.”
Governor Schwarzenegger unveiled his 2008-2009 budget yesterday, and, as expected, it was a bleak one. Under the proposed budget,
- all state agencies and departments would face mandatory across-the-board budget cuts of 10%;
- 48 state parks would be shuttered or closed to visitors;
- the Medi-Cal program would be hit with a $1 billion cut;
- K-12 school spending would be cut by $400 million in mid-year and by another $4 billion in the new fiscal year;
- Proposition 98 would need to be suspended to pave the way for the education cutbacks;
- funding to the CSU, UC, and community college systems would be cut by $1.1 billion (and student fees at UC campuses would rise by at least 7.4% and at CSU campuses by at least 10%);
- between 37,000 and 50,000 non-violent-felony prisoners would be given early releases and prison staffing would be slashed;
- and an $11 vehicle registration fee increase would be implemented.
Even if all of these cuts were implemented — by no means a certainty given the widespread opposition that they have already engendered — the state would still face a $3 billion deficit in the 2009-2010 fiscal year.
The summary of the proposed 2008-2009 budget is available here.
A recent Public Policy Institute of California survey indicates a drastic downturn in Californians’ mood about the state of things in the past year. In January 2007, 39% of California residents said that they expected bad economic times in the coming year. That number has now risen to 65%. In January, 37% of Californians said that they believed that the state was headed in the wrong direction. 52% now believe that the state is on the wrong track. The mortgage and credit crisis is also heavily on Californians’ minds — 28% of residents think that the crisis will affect their own financial situation “a great deal” and 24% think that it will affect their own financial situation “somewhat.”
Californians and Their Government [Public Policy Institute of California]
Interestingly, the approval ratings for the governor (57%) and the legislature (41%) continue to be relatively high, given the general mood. The PPIC report theorizes that the high ratings may have to do with Californians’ hope that state policymakers will be able to get something done with health care reform, although the likelihood of that happening appears slimmer now than it was a year ago. The PPIC report acknowledges that state policymakers’ ratings may take a hit if it appears that nothing is getting accomplished. The report also mentions the looming state budget crisis and makes note that 65% of Californians do not favor the idea of raising taxes to deal with the deficit. That percentage is up 14 points since January 2004 (when a similar question was asked).
According to data released by the economic research and forecasting firm Global Insight last week, five of the 20 top overvalued housing markets are in California. 63% of housing markets nationwide are overvalued, according to the data.
The five housing markets in California that fell in the top 20 were (along with cost of an average house in the third quarter of 2007):
- Madera ($291,600; overvaluation 62.3%)
- Merced ($248,300; overvaluation 56.6%)
- Riverside-San Bernardino ($329,600; overvaluation 44.6%)
- Bakersfield ($219,300; overvaluation 42%)
- Los Angeles ($512,900; overvaluation 42%)
Two reports about state and national economic conditions were released recently by the UCLA Anderson Forecast and the Chapman University A. Gary Anderson Center for Economic Research. They don’t make for pleasant reading, although one is slightly less pessimistic than the other.
The UCLA Anderson forecast predicts “a slightly slower and prolonged period of sluggishness for the state’s economy, but no recession in California.” The prediction is for 6.1% unemployment in the state by the end of 2008, along with 1-2% growth in gross state product and personal income. The prediction seems to indicate worse to come in 2009, however, with the expectation that “contraction in state and local government will derail the momentum of a private sector beginning to recover in 2009.” The Chapman University forecast predicts positive annual growth of 0.9% next year nationwide, a decline of $125 billion in new housing construction nationwide, and only 0.1% in job growth in California. The conclusion: “The Anderson Center is forecasting a recession in 2008.”