To hear some people tell it, California is out of the metaphorical woods. Just a few years ago, worries were at the forefront for citizens and policymakers alike. State revenues were bottoming out, services were facing repeated cuts, unemployment was still rising into double-digit territory, and we were asking which city would go bankrupt next.
In some places – like here in Silicon Valley – today’s booming housing markets, extremely low unemployment rates, and seemingly abundant disposal income can make it seem like the recession never even happened at all. That is nonsensical.
The reality though is that this latest recession impacted communities throughout the state in markedly different ways. Last year, five California cities were among the nation’s top 10 large cities with the highest unemployment rates. Oakland was second only to now-bankrupt Detroit. Fresno, Sacramento, Los Angeles, and Long Beach followed.
Even as the state’s coastal areas have started to recover, the state’s inland communities continue to struggle.
Statewide, real income per capita declined by nearly $3,000 between 2007 and 2010. It was just 2% higher (about $700) in 2013 than in 2007. Historically, the real income per capita would have grown 14% during that length of time.
Some may wonder why lately, Governor Brown seems to both boast and lament about the condition of California’s economy. His approach seems not as much paradoxical as it does reflective of the Golden State in 2015. Nothing about this recovery suggests that it is broad, stable, and lasting.
The budget’s revenues are driven by a temporary tax increase levied on the volatile personal income (including capital gains) of the wealthiest Californians. Regardless of whether you favor a more or less progressive tax system, the state’s current tax structure is undeniably unstable.
Outside just a few pockets of the state, unemployment remains high.
We have a new Rainy Day Fund, but that will not be fully-funded for years.
Because this economic expansion has been long (five and a half years) but sluggish, analysts are now trying to anticipate when our next contraction will hit.
In light of all this, caution and unease as we assess the future of our economy and state is normal. More than that, it is wise. It is the way our policymakers should approach every single state and local budget because economic slowdowns and crises happen. There is no reason why we should be caught off-guard when the economy refuses to do our bidding.
Just a few years ago, contentment turned into panic when the weight of unpreparedness grew too heavy. Today, we risk forgetting that the recession even happened and that for many, its effects remain readily apparent. Knowing what we know now, that should be a risk none of us is willing to take.