WASS Special Districts Edition

Why play the lottery when you can just put in your time at the Calleguas Water District.
Check out these salaries:

Calleguas Municipal Water District 

68 employees

$86,506 average wages for all employees in this special district

$5,882,400 amount spent on total wages by this special district

Activity: 

Water Enterprise

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Now check out the top 10 salaries:

Hard to see when the GM snakes a sweet $618,608 on the way out the door.  Here is the break out (click for larger):

Here is the website to research your favorite agency: 

http://gcc.sco.ca.gov/

And here is the Calleguas website:

http://www.calleguas.com/index.html

There are some 7000+ "special districts" in California but we need the water.

From Fruits and Huts to Taxes and Deficits

The latest monthly revenue for the State is out and it is not good.  Really not good.  If it weren't for Apple stock sales front running the cap gains increase it would be fiscal emergency sized not good.  
Here's the snapshot:

Things to notice.  
• Corporate taxes running 30% below estimates.  
• Personal income taxes on budget but 11% higher than last year.  
• Retail enough lower that the Prop 30 revenue is unlikely to meet goal.

10% of all sales tax revenue is gasoline.  Falling prices and declining consumption are going to be a permanent drag on that component.  Total employment is generally flat as well.  Corporations are not just fleeing the State with their mobile assets and employees but they are running down what assets they leave behind.  We are increasingly trying to extract more and more from a shrinking base.  

My guess is that we get the draconian cuts that Prop 30 was supposed to forestall.  The Republicans in the legislature should take the principled stand in the budget process and not participate and vote present. Next I will have a post discussing the 800 lb gorilla in the budget.  Local "support" is running way above projections.  

Harvest the Grapes and Hold On

California Reservoir Conditions

The new "Water Year" started October 1st.  It is interesting to watch the real time evolution of California's water supply condition.  A few years ago the state water agency killed hundreds of thousand of acres in the Central Valley with extreme restrictions on supply.  Not "crops" but orchards and vineyards.  It wasn't necessary except as a lever to exert political will.  A show of force.  You can drive the lesser used roads Bakersfield to Sacramento and see thousands of signs; "CA killed this land."

This year is already on track to be a very good year.  The phrase "Atmospheric River" may be unfamiliar but "Pineapple Express" is not.  Seven, fifteen, even twenty inches of precipitation may be dumped by a trio of low pressure systems pulling moisture from the Pacific Ocean near Hawaii.  Thus the "Pineapple" nomenclature.

We should consider buying Tom Stone a poncho to keep his chartreuse print aloha shirt from bleeding out and staining his argyle socks and Birkenstocks sandals all over the client's imported Italian oak laminate.

Big Bad Choo-Choo

The voice of people in the path of progress:

"In this case - forgive me - we don't really care what goes on statewide. We're very concerned about what's happening in our county, and what's happening in our county is very real and it's happening every day," said Anja Raudabaugh, executive director of the Madera County Farm Bureau, one of the parties to the lawsuit. "My guys can't get operating loans to plant trees next year. My guys can't get operating loans to buy equipment for expanding their operations because they're in the footprint of the alignment."

Judges Backs HSR Over Farmers

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The fix is in.  There's nothing going to stop this dumb idea from riding the state into bankruptcy.  Not that it won't go "tango uniform" regardless but this will get us there faster.  

RThe fix ead more here: http://www.sacbee.com/2012/11/16/4990620/calif-high-speed-rail-faces-crucial.html#storylink=cpy

CalPERS = Naughty, Still Gets Presents

According to CalPERS:

The California Public Employees’ Retirement System (CalPERS) today reported a 20.7 percent return on investments in preliminary estimates for the one-year period that ended June 30, 2011.

And the details:

As of June 30, 2011, the market value of CalPERS assets stood at approximately $237.5 billion. A year earlier, the fiscal year ended with $200.5 billion. Investment returns are based on compounded daily earnings over the year, including continuing member contributions and benefit payments, and don’t precisely correspond to one-year changes in market value.

And now for the fun part:
CalPERS’ value is down from its all-time peak of $247.7 billion on June 30, 2007 to $225.4 billion as of Sept. 8, 2011. That’s a decline of $22.3 billion, or 9 percent, in four years and three months. That includes employee contributions and state back-filling.

Unbelievable Gap Closure

Bloomberg:California last sold general-fund backed bonds in June, when it offered about $120 million of debt for veteran’s homes. The state sold $450 million of public-works bonds in May and $5.9 billion of debt in March.

The standoff drove the extra yield investors demand on 10- year California bonds to 119 basis points above AAA rated municipal securities today from as low as 109 basis points in August, Bloomberg Fair Value Index data show. A basis point is 0.01 percentage point.

Schwarzenegger and legislative leaders will hammer out the details of the agreement when they meet again in Sacramento on Sept. 27th.

Bullshit. This is all about bond rollovers.

Bloat Don't Float

In the 1950-51 fiscal year, California had 10.6 million residents and the state general fund budget was $587 million. $55.40 per capita. Adjusted for inflation; $442.51 in 2010 dollars.

FY 2010-11 37 million residents and $83 billion. $2,243.24 per capita.

Bad Teacher

LATimes: CalSTRS' $130-billion investment portfolio lost more than a quarter of its value in the recent recession. The projected shortfall at the state's second-largest public pension fund ballooned to $43 billion by last June.

"There's no doubt about it -- we need to come up with a new financial plan," Ehnes said.

The 97-year-old pension plan must ask the state Legislature, the governor and taxpayers for billions of dollars. Getting that money -- even with an expected massive lobbying campaign and a bruising political battle -- is no sure thing.
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Must be nice to gamble with OPM.

California Default Watch II

March 8 (Bloomberg) -- California Treasurer Bill Lockyer’s bid to sell $2 billion of bonds this week, his first issue since November, may benefit from a falling risk premium after lawmakers at his urging passed a bill to prevent the most- populous U.S. state from running out of cash.
A special session of the Legislature approved measures to chip away at a $20 billion budget deficit and give state officials powers to put off as much as $5 billion in spending. The delays are intended to sidestep cash shortfalls like those last year that forced the state to issue IOUs to pay bills and triggered cuts to its credit rating.
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And an excellent blogger I haven't mentioned in a long time, Of Two Minds:

Why California Is Doomed (March 9, 2010)

California is doomed for two simple but profound reasons: the cost structure is too high for most businesses to survive, and a boom-dependent economy.

The dysfunctions crippling California would easily fill a volume: a dysfunctional Legislature that has been gerrymandered to protect virtually every seat; a dysfunctional proposition system which enables special interests to craft Protected Fiefdoms via the ballot box; recalcitrant public unions who don't see anything wrong with public servants getting 90% of top-pay in pensions while still earning big bucks as "contract employees," an enormous population of undocumented workers who pay only sales taxes, and whose employers pay no payroll taxes, either-- and that just scratches the surface.
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Thieving Rat B@st@rds

Stealing. There's no other word for it. No matter how they torture the language in the end the legislature has taken money out of the Stat highway Trust Fund and used it to cover general fund debt payments. It gets a little complex and involves weird concepts like different kinds of money but follow me here.

From Businessweek:
The swap allows some accounting maneuvers that would funnel more money into the state's general fund, where the deficit exists.

The tax exchange is estimated to generate $1.1 billion for the general fund while continuing to provide close to the current level of funding for public transit and repairs to highways and streets.

Californians would see no difference in prices at the pump.

Bullshit. The Trust Fund carries a close to $9 billion balance. The State won't spend it because as long as it sits there it helps balance the bookson paper. What about on the streets? KTLA:

Huge Pothole Flattens Tires On 101 Freeway
KTLA News7:17 AM PST, March 1, 2010

The 101 south through downtown was closed by a massive pothole. (February 28, 2010)

LOS ANGELES - Late last year, a national transportation research group stated that Los Angeles had the worst roads in the nation.

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They robbed the Trust fund and we pay twice.

California Debt Watch Resumed

WSJ:

NEW YORK—California, owner of the worst credit ranking among U.S. states, plans to tap bond markets for $4 billion in March to finance infrastructure improvements, a spokesman for State Treasurer Bill Lockyer said.

The sales-a pair spaced several weeks apart—would come at a time that the Golden State's budget is bleeding about $20 billion in red ink through fiscal 2011 and when some portfolio managers have cautioned that investments in California debt are turning riskier.

The state, however, is counting on a new cash-management tool that it expects to gain legislative approval Monday to put a floor under its short-term needs and to improve both market and investor confidence in the finances of the world's eighth-largest economy.

"We need a credible solution to our cash-flow situation," and this legislation will help Controller John Chiang and the Department of Finance to defer general-fund payments for specific programs and for specific time periods, if needed, in order to maintain an adequate cash cushion, Tom Dresslar, a spokesman for Mr. Lockyer, said in a telephone interview Sunday.

The program would remain in place for the balance of this fiscal year, ending June 30, and through the next fiscal year, giving the financial officials more flexibility by not having to seek legislative approval each time.
...
"California is done with financing its deficits with the issuance of bonds," Mr. Dresslar stated Sunday.

Thus endeth the nobel experiment in democracy. not with revolution but with a "cash-management tool."

Wagons! East!

California braces for repeat of last fiscal crisis

The emergency budget session, called by Schwarzenegger, will not tackle the entire $20 billion deficit that is projected over the next year and a half. It will target the $6 billion shortfall in the current year, leaving longer-term funding for core services such as public schools, colleges and health services in a state of uncertainty.
...
Democrats are searching for ways to sidestep the rule that requires a two-thirds vote of the Legislature for tax increases and to pass state budgets.

Repeat. This is not a revenue problem, this is a spending problem and no amount of taxing authority will fix it. If the Democrats succeed in obviating the 2/3rds requirement the exodus of business and upper income people will be breathtaking.

A Little Off The Top

Why rent when you can buy? Then again why not buy and rent it out? Here's a tri-level town home in the new Riverpark complex. Let's run the numbers. Actually that's old hat. Let's run just one number; carrying cost ex-mortgage.

614 Green River St, Oxnard, CA 93036
3/ 2.5/1,519/$188
YEAR BUILT: 2008 MLS#: 90013806

Great tri level condo available in the gorgeous RiverPark development. The home features granite counter tops with Stainless Steel Appliances. The home will include the washer, dryer, softwater system, alarm and refrigerator. The home includes a third level with a huge room and walk in closet. Walking distance to parks and schools.

Now the important numbers:
Homeowners Association Dues: $211
Tax (2008) $5,384

Got that? $660/mo for the privilege of ownership.
You might get $1300/mo renting this out. That leaves $640 for debt service. That sets the value at $143,000. Asking price? $285,900. It's almost as if they were working the numbers backwards except multiplying by 2.

Young Guns vs. the Vested Interests

Capitol Weekly has a wide ranging discussion of California's long term obligations. As I've long suggested the tragedy of split employment has been raised:
“But I have come to the conclusion it’s a very strong likelihood I would be looking out for future employees by negotiating a second-tier retirement system,” he said. “The last thing we want to do is leave it to the initiative process.”

Creating a second tier of lower benefits for new hires is one way to lower pension costs. But significant savings can take decades, until employees with the lower benefits begin to retire.

Pensions promised current employees and retirees are regarded as vested rights, protected by contract law, that cannot be reduced without providing something of equal value.

File this one under crueler harder society as well.

Wendell Cox Takes (on) the Train

Extended excerpt because WSJ pulls articles too fast:

The administration is giving California $2.25 billion for trains that are expected to reach 220 miles per hour between Los Angeles and San Francisco. The cost of building this rail line is now estimated by the California High Speed Rail Authority to be more than $40 billion and could be $60 billion or more.

Even after adjusting for inflation, the projected cost of the system has increased by half over the original cost in the past decade. Ridership projections have also fluctuated wildly, from as low as 32 million annually to nearly 100 million; now the rail authority estimates the train will carry 41 million passengers each year.

High-speed rail does little to unsnarl traffic jams because most highway congestion is within urban areas, not between them. It also has negligible impact on airport congestion. The world's strongest high-speed rail market, Tokyo to Osaka, is also one of the world's largest airline markets. Even with high-speed rail, there is still frequent air-shuttle service between Paris and Marseille.

Environmental claims are misleading. Using California High Speed Rail Authority's data, Joe Vranich and I estimated that the California system would reduce the emissions of greenhouse gases, such as CO2, at a cost of $2,000 per ton. The Intergovernmental Panel on Climate Change estimates that we should be able to meet its greenhouse gas targets by spending $50 or less per ton.

California Default Watch

The grind continues. Never mind the headlines and reports of recovering consumption. Here's the truth:

Betty T. Yee, Chairwoman of the Board of Equalization [pdf] (BOE), today released California gasoline and diesel consumption figures for October 2009. The demand for gasoline decreased 0.4 percent and diesel declined 11.1 percent compared to the same month last year.
“Following a long period of much volatility in gas prices and consumption, both were fairly stable last fall,” said Chairwoman Yee. “However, diesel consumption continued to decline, reflecting continued weakness in economic activity.”
Through October 2009 California gasoline consumption had declined 1.3 percent compared to January through October of 2008.

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This is why the State is facing a $21b deficit. Now observe the follow on effects:

LA County officials consider spending freeze
Jan. 26, 2010 | KPCC Wire Services | KPCC

Los Angeles County officials said today they may face a $600 million deficit next year and are considering a non-emergency spending freeze on fixed assets, services and supplies.

The Board of Supervisors gave staffers 14 days to develop recommendations for implementing the freeze and ensure that salary savings from the hiring freeze are not spent on other items.

"Every computer and every desk we hold off on buying today means the impact will be less tomorrow,'' said Supervisor Don Knabe, who proposed the freeze to the board.

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Even churches:

Economics are forcing Southern California's Crystal Cathedral to suspend its "Glory of Easter" pageant, sell property and lay off workers, officials say.

A 27 percent decline in revenue in 2009 has prompted the megachurch founded by Robert H. Schuller to cut its televangelist "Hour of Power" programs as part of a series of "tough decisions" made by the cathedral's International Board of Trustees, The Orange County Register reported Sunday.

Sheila Schuller Coleman, who was appointed leader of the Crystal Cathedral by her father, Robert Schuller, said the economic crisis forced this year's suspension of the Easter pageant, which features angels suspended on wires and a parade of animals, but the extravaganza would be back by 2011 or 2012.

The church also plans to shut down its 20-acre retreat in Rancho Capistrano, leaving 50 employees out of work.

Near Owens

Let It Snow

Fresh tracks!

California Default Watch 2

Controller Releases November 2009 Cash Report

PR09:031
12/10/2009
Contact: Jacob Roper
916-445-2636

SACRAMENTO – State Controller John Chiang today released his monthly report covering California’s cash balance, receipts and disbursements in November. The month’s receipts were relatively close to estimates, down by 0.7% or $40.8 million.

“While revenues largely held up for two months, the next eight weeks will be far more telling of the State’s fiscal health,” said Chiang. “Record unemployment, at levels not seen for three decades, continues to aggravate California’s structural budget deficit.”

The receipts from tax deadlines in December and January are generally reliable indicators of expected Spring tax receipts.

Year-to-date revenues remain below the amended 2009-10 budget’s estimates by $835 million or -2.8%. But lower-than-anticipated State expenses combined with an additional $1 billion in external borrowing put the State’s cash position $610 million ahead of its projected level on November 30.

The State started the fiscal year with an $11.9 billion cash deficit in the General Fund, which grew to $24.4 billion by November 30. Those deficits are being covered with a combination of $15.6 billion of internal borrowing from special funds and $8.8 billion in short-term revenue anticipation notes.

November 2009's financial statement and the summary analysis can be found on the Controller’s Web site at www.sco.ca.gov.

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There's no words for this that discerning readers cannot see for themselves. Internal borrowing is "not paying bills" and "short-term revenue anticipation notes" is more debt.

Let's Play Does It Float?

Not that there's any open bodies of water anywhere near Victorville but there sure are more and more possible signs of a reasonable real estate investment market.
How would this one pencil out?

13752 Bluegrass:
Year Built: 2003 4 total bedroom(s) 2 total bath(s)
2 total full bath(s) Approximately 2277 sq. ft.
Fireplace in the Den 3 car garage
Central air conditioning Lot is 7205 sq. ft.

Decent house, not a mess, established neighborhood. Taxes don't appear too high.

Here's what the whacky z-people think they know.


$70k purchase, $5k costs. You'll need $20,000 and a $55,000 mortgage at ~6%. Payment $340. Taxes $160. I'd put at least $100 toward upkeep. It's gonna cost ya $600/mo to own this place plus $100/month lost opportunity cost of tying up $20k. These are tough times and so I'd have to factor 15% vaccancy. You'd need to rent for $825/month.

Yes, it floats.

Now for a rant. You all know the z data is hopelessly inaccurate. No news there but check out this bit:

That's Bing™ on top with a 2009 Copyright of 2008 NAVTEO material. These houses were built in 2003 no doubt these images are 2001 or earlier. Abusive application of supposed copyrights is getting entirely out of control.