California Economy

SACRAMENTO - California has been flooded with revenue this tax season and is on track to finish the fiscal year with a surplus of billions of dollars, according to officials. State coffers contain about $4.5 billion more than expected in personal income tax payments. Nearly $2.8 billion of it arrived April 17, the third-highest single-day collection in California history, according to government figures. Business taxes have also rebounded and are likely to be $200 million ahead of projections.

No one ever said the economic recovery would be pretty. California eked out more growth in April as employers added 10,400 jobs, bringing the net total added over the year to 273,000. The state's unemployment rate dropped to 9% from 9.4% the month before. But aside from the construction sector, which gained 7,400 positions, few industries in California gave economists much to celebrate. "There isn't great around right now. There's just good," said Stephen Levy, director of the Center for Continuing Study of the California Economy.

State Treasurer Kathleen Brown on Wednesday unveiled a plan to stimulate the state's flagging economy by investing as much as $700 million in California's small businesses, housing and agriculture. Saying her goal was to help "reinvent the California dream" by making more money available in these tight-credit times, Brown told participants at an economic development conference in the Concord Hilton that the money will come from the state's $21-billion short-term investment portfolio.

SACRAMENTO - California has been flooded with revenue this tax season and is on track to finish the fiscal year with a surplus of billions of dollars, according to officials. State coffers contain about $4.5 billion more than expected in personal income tax payments. Nearly $2.8 billion of it arrived April 17, the third-highest single-day collection in California history, according to government figures. Business taxes have also rebounded and are likely to be $200 million ahead of projections.

A slow rebound in California's economy and gradually rising home prices should push home foreclosures in the region lower over the next five years, according to a report released Tuesday, but foreclosures in New Jersey and many other parts of the Northeast will rise more than twice as fast as the national average. New York-based Fitch Investors Services Inc.

Economic conditions in California remain weak, as the confidence of business leaders and consumers has deteriorated, the Federal Reserve said Wednesday in its survey of regional business activity. The gloomy report on California came as the Fed said the economy has been growing unevenly across the country, with weak loan demand and flat real estate sales despite cuts in interest rates.

Think of California's economy these days as a car with a powerful eight-cylinder engine--except not all the spark plugs are firing. The car is chugging ahead, but sputtering badly. That the economy is moving forward at all, of course, is a major improvement from two years ago when the state was stopped cold in a severe recession. Jobs are again being created and consumer spending is ahead of last year. But hopes were high early in 1995 that the economy was on its way to a full recovery.

California continues to resist the national economic recovery, but a few of the state's key industries, notably Hollywood, are beginning to show signs of vigorous growth, the Federal Reserve Board said Wednesday. "The motion picture industry in Los Angeles is growing at a double-digit pace, and summer box office revenues are at record levels," the Fed said in its periodic survey of economic conditions around the country.

Jose Gonzalez has done just about every job there is as a Central Valley farm worker--from hoeing cotton to picking peaches, grapes and tomatoes. "I was raised in the fields," he says. But like many of his friends, Gonzalez decided to forsake the fields for the factory floor, and he now makes twice as much keeping electricity and water flowing smoothly at Nisshinbo, a state-of-the-art Japanese yarn-spinning and textile-weaving plant in Fresno.

The Federal Reserve Board, in its first report to the new Clinton Administration, said Thursday that California's economy continues to deteriorate even as conditions improve in the rest of the country. Although holiday sales exceeded expectations in some regions, particularly the Midwest, California retailers reported disappointing seasonal revenues, the Fed said in its review of economic conditions across the nation.

A California legislator wants to require the state's prisons, schools and other public institutions to buy local agriculture products to support California farmers.  Assemblyman Chris Holden (D-Pasadena) recently introduced the Choose California Act, a bill that would require public institutions to buy California agriculture products if the price is within 5% of the lowest out-of-state competitor. Schools would be exempt from that rule and would be required to buy California-grown products only if they are cheaper.

With the Pentagon set to whack its share of $85 billion in automatic federal budget cuts last month, it didn't take long for Velma Searcy to feel the pain. The owner of a Palmdale maker of military aircraft parts saw two contracts quickly evaporate as defense firms pulled back. Southern California's aerospace industry is expected to be hit hard by the so-called sequester. Still, the state generally should be able to weather the cuts without major economic damage, experts said. That's because California's economy has become more diverse over the past quarter-century, making it much less dependent on cash flowing from Washington, said Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto.

California's economic growth revved up in February as employers added 41,200 jobs, one of the highest monthly gains since the Great Recession ended nearly four years ago. The payroll gains helped push the unemployment rate down to 9.6% from 9.8% in January, according to data released Friday by the state Employment Development Department. The growth in net new jobs, buoyed by increased consumer spending, was another positive sign for a state that has steadily gained jobs over the last year, hitting a monthly high of 74,000 in January 2012.

Proposed legislation to raise the state minimum wage could eliminate tens of thousands of jobs and harm the California economy, a small-business advocacy group said. The measure, AB 10, could wipe out more than 68,000 jobs over 10 years and cost $5.7 billion in lost production of goods and services, according to a study released Tuesday by the National Federation of Independent Business. More than 63% of the lost jobs would be in the small-business sector, NFIB researchers said.

Los Angeles is at a disadvantage competing with Las Vegas, New York and Miami for tourists who want a lively nightclub scene because of a California law that cuts off alcohol sales at 2 a.m., a state lawmaker contends. State Sen. Mark Leno (D-San Francisco) has introduced legislation that could extend the last call for alcohol in some California cities until 4 a.m. "This legislation would allow destination cities like San Francisco, Los Angeles and San Diego to start local conversations about the possibility of expanding night life and the benefits it could provide the community by boosting jobs, tourism and local tax revenue," Leno said.

SACRAMENTO -- Tapping California's oil-rich Monterey shale using hydraulic fracturing could boost the state's economic activity by as much as 14.3% and create hundreds of thousands of jobs, according to a new USC study. As detailed in Money & Co. blog , the development of the 1,750-square-mile formation in Central California could have a transformative effect on the Golden State's economy, with the state potentially reaping oil-related tax revenue of $4.5 billion in 2015 and $24.6 billion by 2020.

Democrat Kathleen Brown's gubernatorial campaign theme of scoring California's economy as the worst in the country was sharply criticized Thursday by one of her informal economics advisers, Joel Kotkin, who said he was disassociating himself from the Brown effort. Kotkin, a journalist and commentator who believes in the economic power of emerging industries, said that the "America's worst economy" line in Brown's literature and television ads is damaging California's business allure.

The Los Angeles riots have taken a toll on tourism, jobs and income in the region, exacerbating the state's deep economic slump even as much of the nation begins a long-awaited recovery, a UCLA study has found. For Californians, the economic turnaround may not come until 1993, according to David G. Hensley, author of a report titled "Hopes for a '92 Recovery Are Fading Fast."

Now that President Obama and congressional leaders have failed to reach a deal on the federal budget, billions of dollars in spending cuts will begin taking effect. At this point, however, it's not clear exactly how they will affect California's budget. It remains to be seen when the cuts will reach the state and how state agencies will be forced to respond, said H.D. Palmer, a spokesman for Gov. Jerry Brown's Department of Finance. Palmer said officials were still waiting for more guidance from the federal government.

SACRAMENTO -- With the passing of a deadline to prevent billions in across-the-board federal spending cuts, economic experts and White House officials say the reductions could slow down the state's economy unless an alternative deal is reached. The across-the-board budget cuts known as sequestration could lead to cutbacks in defense, healthcare and other areas, putting California's fiscal health in danger. Jason Sisney, a spokesman for the state's legislative analyst, said the cuts could mean "a few billion dollars" less for state coffers because of the resulting slowdown in economic growth.