7-18-09

 
7-18-09
Badlands Journal
Two ideas...Badlands Journal editorial board
http://www.badlandsjournal.com/2009-07-17/007324
In the state Capitol, the conventional wisdom, what is politically possible, has bankrupted the state and put its most vital water resource, the Sacramento-San Joaquin Delta, in so much peril that the only solution this wisdom can imagine is a peripheral canal.
 Here are two unconventional ideas floating around outside the Capitol. That neither of them appear to be politically possible inside the Capitol is in itself an excellent argument for their consideration – not immediate adoption, but more careful consideration than the current attention being given to trying to float another $20-billion bond initiative for a peripheral canal in a state that now enjoys the worst bond rating in the nation, meanwhile slashing health and social services and education budgets in a state with more than 11-percent unemployment, the highest foreclosure numbers in the nation and a public education system nearly as bad as its bond rating.
 Badlands Journal editorial board
7-14-09
CounterPunch.com
How the Sun Could Shine Again in California
From Golden State to Subprime State By ELLEN BROWN
http://www.counterpunch.com/brown07142009.html
Four Wall Street banks, which received $15-25 billion each from the taxpayers, have rejected California’s IOUs because the State is supposedly a bad credit risk. The bailed out banks would seem to have a duty to lend a helping hand, but they say they don’t want to delay an agreement on further austerity measures. State legislators are not bowing quickly to the pressure, but what is the alternative?
In the latest twist to the California budget saga, Citigroup, Wells Fargo, and JPMorgan Chase (which each got $25 billion in bailout money from the taxpayers) and Bank of America (which got $15 billion) have refused California’s request for a loan to tide it over until October. Until the State can get things sorted out, it has started paying its creditors in IOUs (“I Owe You’s” or promises to pay bearing interest, technically called registered warrants). Its Wall Street creditors, however, have refused to take them. Why? The pot says the kettle is a poor credit risk!
California expects to need to issue only about $13 billion in IOUs through September, and all its Governor has asked for in the way of a loan from the federal government is a guarantee for $6 billion. Total loans, commitments and guarantees to rescue the financial sector and stem the credit crisis have been estimated at $12.8 trillion. But California has not been invited to the banquet. The total sum California needs to balance its budget is $26.3 billion. That is about the same sum given to Citigroup, Wells Fargo and JPMorgan in bailout money; and it is only about one-tenth the sum given to AIG, a mere insurance company. Corporations evidently trump States and their citizens in the eyes of the powers controlling the purse strings. California has a gross domestic product of $1.7 trillion annually and has been rated the world’s eighth largest economy. Its 38.3 million people are one-eighth of the nation’s population and a key catalyst for U.S. retail sales. When the California consumer base falters, businesses are shaken nationwide. If AIG and the other Wall Street welfare recipients are too big to fail, California is way too big to fail.
Fitch Rating Agency has downgraded California’s municipal bonds to junk bond status,triple B. Why? AIG and Lehman Brothers had A ratings right up until they declared bankruptcy. California has never defaulted on its bonds, and it cannot arbitrarily decide to default; the State Constitution mandates that debt principal and interest must be paid as promised. California bonds lost their triple A rating only when the municipal bond insurers (Ambac and MBIA) lost theirs. It was these insurers, not the State of California, that got into hot water gambling in derivatives. The State Attorney General has opined that California’s IOUs are valid and binding obligations of the State. In rejecting them, however, Wall Street may have ulterior motives. A lower credit rating can justify investors in demanding higher interest rates. The interest offered on the IOUs is substantially lower than the interest banks can get on triple B rated municipal bonds.
There may be deeper motives than that. Considering the enormous importance of the California economy to the country, and the relatively small sum it needs in loans, the refusal to support the State financially seems highly suspicious, especially when much more has been given to less creditworthy private institutions. The banks say they want to keep the pressure on California legislators to work it out among themselves, but what does that mean? The options are even higher taxes, even more cuts in services, or even more fire sales of public assets; in short, the sort of austerity measures expected of supplicants reduced to Third World debtor status. State legislators are understandably reluctant to crawl into that debt pit. Governor Schwarzenegger has refused to approve higher taxes, while Democratic leaders say further cuts in services could leave some Californians starving in the streets.
The Sun Could Shine Again on the Golden State
There is an alternative to that dark future, and perhaps it is to keep the public from waking up to it that arms are being twisted to accept the new burdens quickly. If Wall Street and the Feds won’t extend credit to California on reasonable terms, the State could simply walk away and create its own credit machine. California could put its revenues in its own state-owned bank and fan these “reserves” into many times their face value in loans, using the same “fractional reserve” system that private banks use. Many authorities have attested that banks simply create the money they lend on their books. Congressman Jerry Voorhis, writing in 1973, explained it like this:
“[F]or every $1 or $1.50 which people, or the government, deposit in a bank, the banking system can create out of thin air and by the stroke of a pen some $10 of checkbook money or demand deposits. It can lend all that $10 into circulation at interest just so long as it has the $1 or a little more in reserve to back it up.”
President Obama himself has acknowledged this “multiplier effect.” In a speech at Georgetown University on April 14, 2009, he said:
“[A]lthough there are a lot of Americans who understandably think that government money would be better spent going directly to families and businesses instead of banks; where’s our bailout?,’ they ask, the truth is that a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth.”
If private banks can leverage deposits into multiple amounts of “credit” on their books, a state-owned bank could do the same thing, and return the profits to the public purse. One State already does this. North Dakota boasts the only state-owned bank in the nation. It is also one of only two states (along with Montana) that are currently able to meet their budgets. The Bank of North Dakota was established by the legislature in 1919 to free farmers and small businessmen from the clutches of out-of-state bankers and railroad men. By law, the State must deposit all its funds in the bank, and the State guarantees its deposits. The bank’s surplus profits are returned to the State’s coffers. The bank operates as a bankers’ bank, partnering with private banks to lend money to farmers, real estate developers, schools and small businesses. It makes 1% loans to startup farms, has a thriving student loan business, and purchases municipal bonds from public institutions.
North Dakota is not suffering from unemployment or feeling the pinch of the economic downturn. Rather, it sports the largest surplus it has ever had. If this isolated farming State can escape Wall Street’s credit crisis, the world’s eighth largest economy can do it too!
To sign a petition that will go electronically to Governor Schwarzenegger and to elected officials in your State, click here. You could also try faxing this article or a letter to Governor Schwarzenegger at 916-558-3160. See http://gov.ca.gov/interact#contact.
Ellen Hodgson Brown is the author of Web of Debt: the Shocking Truth About Our Money System and How We Can Break Free. She can be reached through her website.
7-11-09
IndyBay.com
Central Valley | Environment & Forest Defense
Tulare Lake Restoration – Fiction or Fact?...Steve Haze ( stevehaze007 [at] gmail.com )
A new alternative has emerged in the debate over water in the valley. This article argues that re-establishing Tulare Lake is the smart way to go.
Tulare Lake Restoration – Fiction or Fact?
http://www.indybay.org/newsitems/2009/07/11/18607139.php
Did you know that at one time the largest freshwater lake west of the Mississippi used to be right here in the San Joaquin Valley, just down Highway 41 heading from Fresno past Lemoore over to Kettleman City and Interstate 5? And, would you believe that at one time this lake covered over 500 square miles and contained almost as much fresh water as is now stored in all of the reservoirs in California today?
For many centuries Native Americans lived peacefully along its great shores and abundant waters full of fish and waterfowl using their handmade tule reed canoes to navigate its great expanse. Until the late 18th Century they continued to live rather peacefully around the lake during the Spanish Mission period of California. Then in 1848, gold was discovered and the great multitude of outsiders from throughout the world and America showed up to seek their fortunes along the Sierra Nevada Mountains.
Within a few decades, Americans were homesteading and began farming using the life giving and seemingly infinite waters cascading from those previously gold laden mountains. And slowly into the 20th century those waters became the new gold which made a desert bloom. But, it wasn’t long thereafter that the Tulare was drained of its precious liquid gold and the lake bottom itself was farmed. And yet, in spite of it having been drained of nearly 25 million acre feet of fresh water (1 acre foot is 326,000 gallons of water that covers the area of a football field 1 foot in depth) – with the dry lake bottom farmed primarily for cotton over these many decades – this great phantom still shows on maps in California as the Tulare Lake!
Why bring up another sad story of a great environmental calamity of such historic proportions? Doesn’t that story deserve to remain buried? In this day and age of water shortages, endangered species – such as the delta smelt; and prolonged drought – what about high farm worker unemployment, poor drinking water quality and our farming communities withering in the long hot dry days? Doesn’t it seem that there are very few options to solve these many pressing problems? Isn’t that the story that needs to be told?
There are those who continue to bang the drum of “build more dams” while using negative rhetoric such as “fish versus people” and “rural cleansing” and “destruction of our way of life”. The “Water Buffalos” such as the Kern County Water Agency (KCWA) and Westland Irrigation District (WID) demand that “their water” is given to them – regardless of the consequences to others – including the potential to create irreparable harm to farm workers, farmers and farming communities in other parts of the great Central Valley – such as the Sacramento – and within the Delta region most importantly. This does not matter even if it includes an environmental collapse – and massive costs to taxpayers of some of their major schemes to building more dams and create private water banks.
And, what about the question of environmental and economic justice for people in those same small rural farming communities? Amazingly, you would think that there is agreement that the best quality water in California would be made available for drinking to those underserved communities. However, the truth be known, 95% of the purest water in California that comes out of the southern Sierra Nevada mountains is laid on the land for crops – not for people first! Yet, to hear the argument from those same water buffalos – it’s always “fish versus people” as the premise. Is it possible that it is really an argument of “my crops and commodities first – versus those people”?
What is missing from the debate on water is knowing what the real numbers are – that is, how much water do we have (supply); and whether it can be used on a sustainable basis – and, how much flows into or outside the San Joaquin Valley region. Finally, is there a way to manage our needs for water (demand) in a much more effective and efficient manner. Did you know that some of the least expensive and best water is less than $50 dollars an acre foot – yet, bottled water which is unregulated can cost over $1 million dollars an acre foot, (I’ll be happy to do the math!)?
Also, another part of the debate is being aware of the fact that under the State Constitution, water belongs to all of the people of California as part of the Public Trust and for their benefit. Thus, there may be a “legal right” for those to use water for highest and best use – but, those rights are not in perpetuity and can be challenged at any time. Good examples of this include Mono Lake and Owens River on the eastern side of the Sierra Nevada. Each was successfully litigated and now being restored based upon the public Trust and Benefit. Another example includes the recent settlement of the San Joaquin River lawsuit that spanned 18 years – and, the agreement for restoration of the river and re-establishment of the historic salmon fisheries below Friant Dam down to the Merced River. What each of these success stories exemplifies is that there are ways to overcome technical, financial, legal and political hurdles – in order to re-establish multi-beneficial uses of the people’s California water. This illustrates the ability to comprehensively accommodate our drinking water needs for rural and urban communities; our needs to grow crops for food, fiber and timber – while simultaneously maintaining a healthy economy and environment.
The restoration of Tulare Lake can continue to take us down the right path towards economic and environmental sustainability. Just like the San Joaquin River below Friant Dam, precious remnants of this phantom lake remain. And, just like those of us involved in environmental and economic justice for our underserved communities as it relates to jobs, air quality, clean drinking water – or those involved in improving the natural environment for education, recreation, plants and animals – this modest restoration proposal can contribute greatly to those same positive outcomes of creating livable and sustainable communities within the San Joaquin Valley.
However, be forewarned – there is a political train leaving the station – and another attempt to keep things “business as usual” when it comes to how our water is managed by others. This means more dams – including massive surface storage on the San Joaquin River above Millerton Lake; private water banking schemes such as the significant expansion of KCWAs – and finally, the construction of a “Peripheral Canal” around the sensitive Delta farming region within the Central Valley. And of course, all of these massive proposals will be primarily paid through mega construction bonds which the people of California cannot afford. Yet, 99% of the benefits go back to those same Water Buffalos who have been leading nearly all of our local elected officials at all levels of government blindly off a fiscal and environmental cliff.
The restoration of Tulare Lake rather than a massive dam on the San Joaquin River is a pragmatic opportunity to bring back some amount of political sanity to our water woes here in the San Joaquin Valley. For starters, you can have twice the surface storage for 1/5th the cost – or 20 cents on the dollar. Could you imagine what can be done for less than $1 billion – versus $5 billion dollars as the water buffalos propose? And, other benefits include managing the flood waters from four rivers rather than just one for beneficial use! And, how about bringing pure mountain water for drinking to our small rural farming communities in the valley? That’s what Tulare Lake restoration could do! Or, why not create connections between existing canals such as the Friant-Kern down into the Tulare Lake so water can be moved more effectively – and cost efficiently? And finally, why not restore the lake for environmental and recreational benefits? Won’t that improve the quality of life for all of our farming communities as well – and move us in the direction of environmental and economic justice for the underserved?
The following chart highlights some of the most important benefits of restoring Tulare Lake:
Unfortunately, there’s not enough space to explain all of the financial, technical and environmental details on how this would all work. However, more information is available at the following web site: http://www.sjvwlf.org
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(Steve Haze is in his eighth year of working on water resource quality and quantity challenges in the San Joaquin River through the State of California’s CALFED Bay Delta Watershed Program. He is also the Program Director for the San Joaquin Valley Water Leadership Forum which is promoting alternative approaches to managing water resources within the region – including the restoration of Tulare Lake for surface and groundwater storage. More, details of the program and how you can help can be provided by contacting Steve at: 970-6320 – or via email at: stevehaze007 [at] gmail.com )
http://www.sjvwlf.org
Merced Sun-Star
County jobless rate rises slightly in June...CORINNE REILLY
http://www.mercedsunstar.com/167/v-print/story/957189.html
Merced County's unemployment rate rose slightly in June, to 17.6 percent, according to data released Friday by the state's Employment Development Department.
That figure is up from May's 17.3 percent but still a vast improvement over this year's peak of 20.2 percent in March. A year ago, Merced's unemployment rate was just 11.9 percent.
Joblessness remains far higher in Merced compared with many other parts of the state and nation.
Unemployment hit 11.6 percent across California in June. Only four California counties had higher jobless rates than Merced last month: Imperial, Alpine, Sutter and Yuba.
Nationally, unemployment stood at 9.7 percent in June.
Merced's jobless rate rose steadily between September 2008 and this April.
Most of the jobs gained locally in June were in the farming sector, the Employment Development Department data show.
The highest unemployment rate ever recorded in Merced County was 21.7 percent in February 1996.
Modesto Bee
June jobless numbers harsh across valley...Marijke Rowland
http://www.modbee.com/local/v-print/story/785910.html
June saw the unemployment rate in the Central Valley and foothills climb again slightly, after two months of similarly small decreases.
The upward trend follows seasonal work patterns in the area and reflects the continued record-setting jobless rate in California. The U.S. Department of Labor reported Friday that 66,500 Californians lost jobs in June as the state's unemployment rate held steady at 11.6 percent.
In Stanislaus County, the rate went from 16.3 percent in May to 16.6 percent last month. A year ago the county was at 10.7 percent unemployment. Some 40,300 people were out of work across the county in June.
Surrounding San Joaquin, Merced, Tuolumne, Calaveras and Mariposa counties all saw rate increases of 0.1 percent to 0.7 percent.
Although agriculture-related manufacturing gained jobs, education and government saw losses, which are typical this time of year.
Historically, April and May have been spike months in the area's employment, while June brings a dip, to be followed by a climb later in the summer.
The larger picture remained grim as the downturn showed there were 7,500 fewer jobs in Stanislaus County than at this time last year.
"These are all indications that this is a pretty serious economic downturn we're in and not something we'll come out of quickly," said Liz Baker, a labor market analyst for the Employment Development Department.
"Economists are saying there is light at the end of the tunnel, but it's going to take us a while to get there."
Hetch Hetchy pipeline project promises jobs in valley...Ken Carlson
http://www.modbee.com/local/v-print/story/785906.html
The way is clear for the San Francisco Public Utilities Commission to make improvements to its Hetch Hetchy water pipelines in Stanislaus and San Joaquin counties, and that's expected to give a boost to the construction trades in the Northern San Joaquin Valley.
This week, the agency that supplies water to San Francisco and other Bay Area residents certified environmental studies and approved $180 million in pipeline improvements in Stanislaus and San Joaquin counties.
The work will include upgrades to the three pipelines running through the Modesto area, which transport water from Hetch Hetchy Reservoir in Yosemite National Park to the Bay Area, and construction of 11 miles of new pipeline from western Stanislaus County to a point west of Interstate 580 in San Joaquin County.
The Bay Area agency needs to upgrade a "crossover" facility in the Hetch Hetchy right of way in Riverbank, with the work to start in November, and plans to build two other crossover facilities in eastern and western Stanislaus County. These facilities allow the Bay Area agency to divert water from one pipeline to another, so maintenance can be done without stopping water flow.
In addition, about 6.5 miles of pipeline from western Tuolumne County to Emery Road east of Oakdale will be replaced, and work began in May on a $112 million water treatment plant outside Tracy.
All that work through 2013 is expected to give paychecks to more than 2,000 people in the heavy equipment, carpentry, pipefitting, painting, concrete, electrical, masonry, trucking and other trades.
The Bay Area agency says it's committed to employing local craft workers and offering opportunities to disadvantaged residents, as well as requiring contractors to use subcontracting firms in the Hetch Hetchy territory, which stretches from the Bay Area to the valley and the Sierra.
"We work closely with our contractors and the unions to make sure we are employing, the best we can, people who are unemployed in the local community," said Carol Isen, director of labor relations and community programs with the San Francisco PUC.
The commission also said it's working with the Construction Craft Training Center and other programs to create work opportunities for young and disadvantaged workers.
Local government and union leaders in the valley believe it's a sincere commitment.
"It is probably going to be almost all union labor," said Leroy Ornellas, a San Joaquin County supervisor from Tracy. "It is a lot of good-paying jobs at a time when we need it."
Union official: Jobs needed
Bill Taylor, business manager for Plumbers and Pipefitters Union 442 in Modesto, said the jobs are sorely needed. About 30 percent of the unit's 700 members are not working.
"In the last four months, it has really crashed on us," Taylor said. "We had several meetings with (the manager of the water projects) and he is pretty adamant about using local people."
Taylor expects that 75 to 100 members of the unit will work on projects such as the Tracy-area treatment plant and the Roselle crossover facility in Riverbank. Journeymen pipefitters earn $34.50 an hour and apprentices $15.50 to $31 an hour.
David Thomas, secretary-treasurer of the San Joaquin Building Trades Council, said, "The way it's set up, they will be drawing from the hiring halls in each of the counties. There will be job sites from the Hetch Hetchy (reservoir) to the Bay Area."
The pipeline improvements are part of a $4.4 billion plan to improve the safety and reliability of San Francisco's water supply. More than 80 projects are planned in Bay Area counties, as well as Stanislaus, San Joaquin and Tuolumne counties.
An initial proposal for a fourth pipeline from Hetch Hetchy across the valley ran into opposition from environmental groups and the Modesto and Turlock irrigation districts because it involved taking as much as 35 million gallons a day from the Tuolumne River. The commission eventually dropped plans to take more water in favor of increased conservation and development of water sources in the Bay Area.
The projects approved this week will make it easier to maintain pipelines that are 46 to 73 years old and to perform rehabilitation on the system, said Chris Nelson, the commission's San Joaquin Valley project manager.
Thomas is expecting things to pick up for the construction trades in the area, which are in the worst downturn he's seen since 1993. Along with the pipeline work, several energy and public infrastructure projects should boost employment in 2010, he said.
For information about the San Francisco PUC's local business enterprise program, go to http://sfwater.org/msc_main. cfm/MC_ID/35/MSC_ID/394.
Fresno Bee
Fresno County jobless rate up to 15.2%
Most gains were in seasonal farm work...Tim Sheehan
http://www.fresnobee.com/business/v-print/story/1542795.html
More people were working in June than in May, but Fresno County's unemployment rate still ticked up slightly, to 15.2%.
Figures released Friday by the state Employment Development Department indicated that more people were working in farm jobs, a typical seasonal swing in employment as agricultural work gets into high gear.
State analysts estimate the number of people working in the county was 351,000. That's up slightly from May, when the unemployment rate was 15% and 348,700 people were employed. But the county's overall labor force also grew by about 3,900 people.
Most of the county's job gains were the result of normal increases in farm work, said Steven Gutierrez, a labor market analyst for the state. Harvest work in peach, nectarine and other tree-fruit orchards is in full swing, Gutierrez said, and activity in grape vineyards also is picking up with irrigating, discing and spraying.
Among nonfarm industries, jobs in leisure and hospitality fields and in manufacturing also rose by several hundred jobs from May.
The statewide unemployment rate remained unchanged at 11.6% for June, while the national jobless rate reached 9.5%.
The unemployment rate also rose in neighboring Valley counties:
* Madera County: 13.9% in June, up from 13.7% in May.
* Merced County: 17.6%, up from 17.2%.
* Tulare County: 14.7%, up from 14.2%.
* Kings County: 15.3%, up from 14.4%.
The recession continues to drive Valley unemployment far above where it was a year ago, with job losses in key industries. Throughout the five-county region, about 4,400 construction jobs have evaporated since June 2008, along with another 4,600 manufacturing jobs and 2,700 jobs in the leisure and hospitality fields.
Sonnenschein: Judge Issues Long Awaited Decision in Water Wars...Published online on Friday, Jul. 17, 2009
http://www.fresnobee.com/547/v-print/story/1543494.html
ST. PAUL, Minn. U.S. District Court Judge Paul A. Magnuson today ruled in favor of hydropower consumers in a long awaited decision involving a multi-state, multi-year battle concerning a critical water rights issue which will have profound repercussions throughout the southeastern part of the United States.
This important energy resources case -- which has been in litigation for almost 20 years -- pertains to the primary purpose of the Buford Dam at Lake Sydney Lanier, Georgia. At issue is the statutory purpose of the dam. The Buford Dam was originally authorized by Congress for hydropower generation, flood control, and navigation. In dispute has been the use of the dam’s storage and the operation of the facility as dictated by the U.S. Army Corp of Engineers (Corps).
The lawsuit, spearheaded by groups like The Southeastern Federal Power Customers, Inc. (SeFPC) on behalf of hydropower customers against the Corps, claimed that the operations of the Buford Dam were no longer adhering to its primary purposes of hydropower generation, flood control, and navigation. Rather, the Corps was increasingly allocating storage in the Lake Lanier reservoir for withdrawals for municipal and industrial water supplies.
"This is a huge win for consumer-owned public power and electric cooperative systems in the Southeast. We applaud the judge for correctly deciding the statutory purposes of this important federal project," said Clint Vince, chair of Sonnenschein Nath & Rosenthal’s Energy & Regulated Industries Group, who has represented SeFPC for over ten years in this legal battle. “We have always believed that the Corps has overstepped its authority and today’s ruling confirms that fact,” added Vince. “Now the battle will turn to Washington and the Halls of Congress.”
Today’s decision declared, once and for all, that the statutorily-authorized purposes of the Buford Dam, as intended by Congress, are hydropower generation, flood control, and navigation. The Court’s decision clearly recognizes limits on the Corps’ discretion to operate these federal projects. The Court has stayed the case to permit the Corps to secure Congressional authorization of the Buford Dam for water supply.
Sacramento Bee
June jobless rates a downer...Dale Kasler
http://www.sacbee.com/topstories/v-print/story/2036121.html
The free fall may have ended, but the job market in California and Sacramento remained deeply troubled last month.
Another 66,500 jobs disappeared in California in June, state officials reported Friday, leaving the statewide unemployment rate stuck at 11.6 percent. The Sacramento area also checked in at 11.6 percent, a half-point increase from the month before.
It was appropriate that the Employment Development Department released the numbers on "Furlough Friday," the latest in a series of unpaid holidays for state workers. Business was slow at many restaurants and shops in Sacramento, symbolizing the depressing effect California's budget crisis is having on the economy.
The new numbers were disappointing to analysts. Hopes were raised in the spring, when the monthly statewide job losses fell from the 100,000-plus range to around 60,000. June, however, marked the fourth straight month without any further improvement. In fact, the June losses were worse than May's.
"It appeared we were beginning to turn around in April," said former EDD director Michael Bernick, a senior fellow with the Milken Institute. "Now, rather than turning the corner, we're going in the wrong direction."
The state unemployment rate for May was originally reported at 11.5 percent. That was revised Friday to 11.6 percent, which means the rate was technically unchanged in June. In any event, the rate is the highest it's been in the modern era, dating to 1976. Every major economic sector lost jobs in June.
"There's not much progress here," said Howard Roth, chief economist at the state Department of Finance. "We have to get off this 60,000-a-month plan. We just can't continue to do that."
In the Sacramento area, only 600 jobs vanished in June. But the glaring absence of hiring ballooned the unemployment rate to history-making territory. Unemployment did reach 12.9 percent in 1983, but back then the official boundaries of the region were defined differently.
Sacramento companies that normally hire in big numbers in June were far more cautious this year. The construction sector added just 500 jobs, well below the average of 1,600. Even in 2008, hardly a banner year for construction, contractors added 1,300 jobs in June.
"It's very telling," said Diane Patterson, labor market consultant at the EDD.
Retailers typically hire 800 workers in Sacramento in June; this time they hired just 200. The retail sector continues to struggle, with century-old Central Valley department store chain Gottschalks Inc. completing its liquidation sales last Sunday.
Other employers are scaling back. Numonyx Inc., a Folsom computer chip firm, laid off 46 workers in June. NEC Electronics Inc., the Roseville chip manufacturer, furloughed all but a handful of its 750 workers for two weeks in late June.
C&S Grocers Warehouse followed through on a 2-month-old threat to close its West Sacramento facility, affecting 330 workers. The first wave of layoffs took effect a week ago, according to state records.
"It's a big loss for us," said Mike Luken, the city's economic development director.
The recession has produced strikingly high unemployment rates in much of the Central Valley: 18 percent last month in the Yuba City-Marysville area, 17.6 percent in Merced and 15.5 percent in Stockton.
Stephen Levy, a Palo Alto economic consultant, said the collapse of the real estate market remains the single biggest factor behind California's problems. But the budget standoff, which has resulted in three monthly furloughs and the prospect of up to 7,000 layoffs, is making things significantly worse, said Levy, director of the Center for Continuing Study of the California Economy. That's especially true in Sacramento.
"The furloughs don't show up as job losses or unemployment," Levy said. "But in terms of money (lost) in the economy, that's a big deal for Sacramento, even if people don't get laid off."
The furloughs have cut state workers' wages by 14 percent. The state is the single-largest employer in the region.
Glynn Phillips, owner of a midtown Sacramento restaurant popular with state workers, said he reduced his usual summertime hiring this year. His restaurant, Rubicon Brewing Co., employs about 35 workers.
Although business has held up reasonably well, "we're affected certainly by what's going on with the economy and the state," he said.
The budget issue has also translated into considerable anxiety for the scores of businesses that contract directly with the state. Since July 2 they've been receiving IOUs instead of regular checks, and since July 10 most of California's major banks have refused to cash the notes, leaving many business owners scrambling for alternative sources of money.
"I'm working with my bank," said Peter Tellier of GovStor Inc., a Sacramento hardware and software vendor. "I've basically put up everything I own to collateralize a line of credit."
He's also registered with SecondMarket Inc., an online electronic trading firm that's creating a market for California IOUs. He hasn't listed his IOUs for sale, however.
Although he hasn't had to lay any workers off, Tellier doesn't anticipate hiring, either. Business is down 30 percent from a year ago. State and local government constitute his entire revenue stream.
Bernick said uncertainty about the budget is causing some state vendors to rethink expansions.
"It's hard to find businesses in the state that aren't tied to the state government," he said.
UC Davis plans to spread the budget hurt...Laurel Rosenhall
http://www.sacbee.com/ourregion/v-print/story/2035922.html
UC Davis officials are scaling the campus back, canceling some classes, increasing the number of students in others and looking at the possibility of closing the campus completely for several days in the upcoming school year.
The school must shave $34 million from its budget this year, the consequence of the state budget crisis.
The entire University of California is cutting its budget by $813 million. Regents have decided to close about a quarter of the deficit by increasing student fees and another quarter by furloughing employees.
But the rest of the budget gap must be closed by program and staff cuts at individual campuses. And that will mean many changes this year at UC Davis.
"We are trying as best as possible to screen students from these cuts, but certain things are inevitable," Chancellor Larry Vanderhoef said to the regents on Wednesday.
Math, for example, is a required class for most students – and more students will be packed into many math classes, said Bruno Nachtergaele, department chair. Math classes that normally have 200 students will have 250 instead; classes that had 35 students will now have 50.
Calculus, linear algebra and differential equations are the courses that will primarily be affected, Nachtergaele said.
This fall, UC Davis will offer 35 fewer sections of foreign languages and English composition.
The psychology department has canceled seven courses, which will affect students in UC Davis' most popular major, said department chair Debra Long. Many are introductory-level courses required before students can do upper division work.
"So students are not going to be able to get into the major or take any of the advanced classes without waiting for a quarter or two," Long said.
The psychology department is reorganizing staff who advise undergraduate students.
"That's going to make the lines much longer and make it harder for students to check on graduation and what courses they still need for their major," Long said.
Across UC Davis, 700 staff positions are being eliminated over two years, with 330 lost in the year just ended and a similar number to be eliminated in the year to come, said Kelly Ratliff, associate vice chancellor for budget. The jobs are being trimmed through a combination of layoffs and getting rid of positions that had been vacant.
Over those same two years, UC Davis will reduce its senior management staff by 39 positions and go from five vice chancellors to four. About 200 faculty positions that would normally be filled will not be, Vanderhoef said.
For departments that are able to recruit new professors, the furloughs have made it hard to attract top talent, many department leaders said.
James MacDonald, executive associate dean of the College of Agricultural and Environmental Sciences, told the story of a professor he wanted to hire at a salary of about $76,000. When she found out she'd have to take a 7 percent pay cut because of the furlough plan approved this week, she opted for a job at another university instead.
Holding onto great professors is another challenge. MacDonald said he's lost one professor to Harvard, which has begun recruiting with higher salaries and no threat of pay cuts.
Normally, colleges have money available to make counter offers when their professors are recruited to other schools. But now, MacDonald said, those funds are harder to come by.
"I really fear we're going to see a lot of this cherry picking going on. We're going to have a hard time retaining people," MacDonald said.
The furlough plan calls for UC employees to take between 11 and 26 unpaid days off in the coming year, with salary cuts ranging from 4 to 10 percent depending on pay level. It's up to each campus to figure out how to implement the plan.
UC Davis is still working out the details, said Ratliff, of the budget office. One idea under consideration is to close the campus for several days around Christmas, she said.
That would cover some of the furlough days, but employees who need to take more days would work with their supervisors to figure out the rest.
On an online discussion board, many professors continue to advocate that the furloughs should be on teaching days so that students and parents will see the impact of the budget cuts. UC President Mark Yudof has said he doesn't want them to skip class, but his plan doesn't spell out any rules.
Academic Senate Chair Bob Powell said the faculty have not come to consensus on the question.
He said he is polling professors on other UC campuses to see what they decide.
Another area affected by the cuts will be campus facilities. UC Davis is holding off on some construction projects – new buildings that had been planned for the engineering, music and veterinary departments will not be built, Vanderhoef said.
San Francisco Chronicle
Judge rules against Atlanta in regional water wars...BEN EVANS and ERRIN HAINES, Associated Press Writers. Evans reported from Washington.
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/07/17/national/a121442D56.DTL&type=printable
Metro Atlanta and its 4 million residents have almost no rights to a massive federal reservoir and must stop taking water from it within three years unless Congress authorizes continued withdrawals, a federal judge ruled Friday.
The devastating ruling against Georgia says nearly all the state's withdrawals are illegal because the reservoir, Lake Lanier, wasn't built for water supply. U.S. District Court Judge Paul Magnuson acknowledged use of the lake can't stop immediately because it is metro Atlanta's main water supply but said the state needs permission from Congress.
"The Court recognizes that this is a draconian result," Magnuson wrote. "It is, however, the only result that recognizes how far the operation of the (lake) has strayed from the original authorization."
Florida Gov. Charlie Crist called the ruling a "monumental milestone" in the 20-year water feud that has pitted his state and Alabama against Georgia. Alabama Gov. Bob Riley said it would have a tremendous impact on his state's economic future.
Riley and Crist both said they hoped it would push the states back to the negotiating table.
Georgia Gov. Sonny Perdue vowed to fight, saying he would appeal the decision while at the same time working for a favorable outcome in Washington.
"Obviously, I am deeply disappointed," Perdue said in a statement. "(Magnuson's) conclusions rely on decades-old assumptions about the construction of federal reservoirs and the role those reservoirs play in providing water supply for growing states such as Georgia."
Florida, Georgia and Alabama have been fighting over water for two decades, particularly the operation of federal dams that hold water back in reservoirs and can dramatically affect flows downstream.
The fast-growing Atlanta region relies on Lanier and other reservoirs for drinking water. But Florida and Alabama depend on healthy river flows for commercial fisheries, farms, industrial users and municipalities. The Army Corps of Engineers also is required to release adequate flows to ensure habitats for species protected by the Endangered Species Act.
Friday's ruling came in a case being heard in Jacksonville, Fla., in which Florida and Alabama challenged a 2003 water-sharing agreement between Georgia and the Army Corps that would have allowed Georgia to take far more water from Lanier over the coming decades. The deal would have allowed Georgia's withdrawals to jump from about 13 percent of the lake's capacity to about 22 percent.
Florida and Alabama argued the lake was initially built for hydropower and that providing water to Georgia was not an authorized use.
Magnuson cited a lengthy historical record of government documents and testimony before Congress to support his ruling that serving Atlanta's water needs was only an incidental purpose for the lake. He noted that Georgia officials argued as much in the 1950s to avoid having to help pay for building it.
Magnuson ordered the lake's water usage to be kept at current levels for the next three years. Without congressional action by then, he said, the lake's operations would return to 1970s levels, with only the cities of Gainesville and Buford allowed to take water. Other municipalities that get withdrawals just downstream from the reservoir would also see their water supplies drastically reduced.
The ruling could drive the states' governors back into negotiations after a series of talks in recent years failed to yield a compromise. Alabama and Florida have accused Georgia of relying on its agreements with the corps to take an unyielding position into earlier discussions.
Given Florida and Alabama's influence in Congress, it would be a challenge for Georgia lawmakers to push through legislation that even maintains Georgia's current uses, much less increases it significantly.
"It's a real wake-up call for this part of Georgia to really examine how it's using water and what's really sustainable in the long run," said Gil Rogers, senior attorney for the Southern Environmental Law Center.
Sally Bethea, executive director of the Upper Chattahoochee Riverkeepers, was stunned by the ruling.
"This is the question that has needed to be answered for 20 years," Bethea said. "In terms of water management in the Chattahoochee Basin, I'm glad we finally got a forcing factor to get all the parties together to come up with a management plan that will support Atlanta and downstream management needs."
Sen. Johnny Isakson, R-Ga., acknowledged that the state's representatives "have our work cut out for us."
But he said Congress frequently works through complicated water disagreements among states, particularly in the dry West.
"Congress is made up of 50 states, all of which have water issues," he said. "Every state has an interest in every compact because every time you set a precedent, it could have an effect elsewhere."
Indybay.org
Schwarzenegger Administration Plans to Begin Drilling for Peripheral Canal
The Department of Water Resources is planning to drill in the Delta to lay the groundwork for proposed intakes for the peripheral canal, Governor Arnold Schwarzenegger's "Big Ditch."...Dan Bacher
http://www.indybay.org/newsitems/2009/07/17/18608545.php
The State Department of Water Resources is planning to begin drilling into river bottoms of the Sacramento-San Joaquin Delta next month to obtain information for proposed intake structures and tunnels for the peripheral canal.
Although state officials claim the drilling is necessary for the state to evaluate different conveyance options under the controversial Bay Delta Conservation Plan (BDCP), fishermen, farmers and environmentalists see the plan to drill as laying the groundwork for the peripheral canal even though the project hasn’t been authorized or funded yet.
“We’re not building a canal intake now,” said Matt Notley, spokesman for the Department of Water Resources. “This is part of a survey process we’ve done for several months on land as part of the environmental review under the BDCP.”
Notley said the Department would be studying in-water soil samples at 16 proposed intake locations under consideration on the Sacramento, San Joaquin and Mokelumne Rivers. A lot of the drilling will occur on the Sacramento between Freeport and Walnut Grove, the approximate area where the canal would begin.
“None of the impact analysis itself has begun,” he stated. “All of this preliminary data gathering will be used to do the impact analysis when it begins.”
He claimed that to conduct an appropriate impact analysis for the series of conveyance options proposed under the BDCP, they need to obtain the correct and updated geotechnical data.
However, Bill Jennings, chairman of the California Sportfishing Protection Alliance, said it was “subterfuge” for DWR to start the drilling process for proposed intakes before it has been decided whether or not the canal will be built.
“It seems DWR is saying to hell with the legislators, Delta farmers and fishermen by proceeding with this drilling project,” he stated. “DWR has decided to do the engineering work for the canal before the Legislature has even decided to authorize or fund the project.”
Delta farmers and landowners are also blasting DWR's drilling project. Barbara Daly, North Delta resident and landowner and a member of North Delta CARES, says beginning the drilling is another "fatal step toward completing a bad plan to build a peripheral canal."
"The rich farming land in the Delta is going to be confiscated and our water is being traded to large Central Valley corporate agribusiness interests," said Daly. "The Delta farmers want to cooperate and find a better way to work with our state water supply, but they are being overlooked, and cooperative solutions aren’t an option to the Governor’s plan."
“There is no question that DWR is out to destroy the Bay-Delta Estuary by proceeding with this project,” said Dante Nomellini, the attorney for the Central Delta Water Agency. “They have made the decision to build the canal and are trying to portray a semblance of compliance with the law.”
He criticized the agency for taking a “piecemeal” approach to avoid compliance with the different permits required from local, state and federal agencies to conduct such a project. For example, they are not getting permits from levee districts, even though there are undoubtedly impacts to levees that will result from boring holes to explore possible intakes for the canal.
Nomellini and John Herrick, lawyer for the South Delta Water Agency, in April filed a groundbreaking lawsuit charging everyone involved with the BDCP in violating numerous environmental laws protecting fish and wildlife and requiring adequate public input.
The lawsuit by Delta farmers contends that state and federal government agency officials, water agency representatives and non-governmental organizations have violated numerous provisions of the Natural Community Conservation Planning Act (NCPA), California Environmental Quality Act (CEQA), NEPA, and the Bagley Keene Open Meeting Act by participating in the BDCP.
DWR claims that the purpose of Bay Delta Conservation Plan is to “provide for the conservation of at-risk species in the Delta and improve its reliability as the hub of the state's water supply system.”
However, the growing coalition of Delta farmers, commercial fishing groups, recreational angling organizations, Indian Tribes and environmentalists see the canal as a water grab by corporate agribusiness in the San Joaquin to increase water exports from the Delta to corporate agribusiness in the San Joaquin Valley and Southern California. They fear that the canal will only worsen the collapse of Central Valley Chinook salmon, Delta smelt, longfin smelt, green sturgeon, striped bass and other species.
The peripheral canal will approximate the Panama Canal in size and length, amounting to a "Panama Canal North." A canal designed to carry 15,000 cfs of water would be between 500 and 700 feet wide, requiring a 1300 foot right-of-way, based on an engineering report completed in August 2006 by Washington Group International for the State Water Contractors. The length of the conveyance would be between 47 and 48 miles. By comparison, the Panama Canal is between 500 and 1000 feet wide and 50 miles long.
The peripheral canal package proposed by the Governor and Legislators would cost an estimated $10 to $40 billion at a time when the state is in unprecedented economic crisis with a $26.3 billion budget deficit.
Opponents of the canal should protest this process during the public comment period now underway through July 26, 2009. DWR, the lead state agency for the “Bay Delta Conservation Plan In-water Geotechnical Drilling Project” under the California Environmental Quality Act (CEQA), has prepared a draft initial study and mitigated negative declaration, http://www.water.ca.gov/deltainit/docs/MitigatedNegativeDeclaration-DraftInitial.pdf. Comments can be emailed to mbeachle [at] water.ca.gov. For more information, go to: http://www.water.ca.gov/deltainit/bdcp.cfm.
Los Angeles Times
Southland ports' June decline in traffic 'a concern'
Unlike most major U.S. ports, L.A. and Long Beach received less cargo than they had in May...Ronald D. White
http://www.latimes.com/business/la-fi-cargo18-2009jul18,0,6130597,print.story
Cargo traffic at most of North America's busiest seaports in June crept slightly above the recession-wracked numbers recorded in May -- but not at the ports of Los Angeles and Long Beach, the nation's biggest freight complex.
Such a month-to-month decline is unusual at this time of year, port officials said. That's because June is when the ports usually see a pre-holiday retail season mini-bump in business from back-to-school products arriving from overseas.
"It's a concern. The numbers should be rising from the slow winter season all the way through to the peak holiday retail season, and they mostly aren't rising," said Art Wong, a spokesman for the Port of Long Beach.
The 12 largest North American ports received an estimated 1.06 million cargo containers carrying goods from overseas in June, according to IHS Global Insight, which tracks cargo on behalf of the National Retail Federation. That was a slight increase from the 1.04 million in import containers in May but an 18% drop from June 2008.
"Monthly numbers are rising as we enter the back-to-school season and will continue to do so as we build up to the holiday season, which is the cycle we see every year whether the economy is good or not," said Jonathan Gold, a vice president of the retailer group. "The volumes are still far below what we saw last year and it's going to stay that way until the economy begins to recover."
At the Port of Long Beach, 206,358 containers of imported goods arrived in June, a decrease from the 208,591 in May and a 28.4% drop from a year earlier. Los Angeles recorded 281,175 import containers in June, a decrease from the 304,110 in May and down more than 17% from June 2008. Exports at both local ports followed the same pattern.
Experts fear that the ports of Long Beach and Los Angeles, which receive more than 40% of U.S. container cargo, experienced weaker numbers in June because of less confidence among consumers and businesses in California, who may be buying and ordering less merchandise, respectively.
As a result, the Southland ports may be experiencing more economic malaise than others, said Jack Kyser, economist at the Los Angeles County Economic Development Corp
Another possible reason is fallout from the inability of Gov. Arnold Schwarzenegger and state lawmakers to adopt a state budget that deals with the swelling deficit, Kyser said.
"People are concerned about cuts in state programs, especially if they rely on any kind of state funding," said Kyser, who blamed the impasse in Sacramento for further dampening confidence among consumers and businesses in California.
"State governments should be a stabilizing force during hard times," he said. "This time around, it is a destabilizer."
CNN Money
Four more banks bite the dust
Two in California , one in Georgia and one in South Dakota - these FDIC closures bring the total number of failed banks in 2009 to 57...Catherine Clifford
http://money.cnn.com/2009/07/17/news/companies/bank_failures/
index.htm?postversion=2009071723
NEW YORK (CNNMoney.com) -- State regulators shut down four banks Friday, the Federal Deposit Insurance Corporation said.
The bank were: First Piedmont Bank, based in Winder, Ga.; BankFirst, based in Sioux Falls, S.D.; Temecula Valley Bank of Temecula, Calif.; and Vineyard Bank of Rancho Cucamonga, Calif.
Friday's actions bring the total number of closings for 2009 to 57.
Georgia has claimed 10 of the casualties this year, more than any other state, according to David Barr, spokesperson for the FDIC.
State regulators shut down the four small, regional banks and named the FDIC the receiver.
The FDIC entered into a purchase and assumption agreement with First American Bank and Trust Company, based in Athens, Ga. to take over all of the deposits of First Piedmont Bank. As of July 6, First Piedmont had total assets of $115 million and total deposits of $109 million.
Meanwhile, the FDIC reached an agreement with Alerus Financial, National Association, based in Grand Forks, N.D., to assume all of the deposits of the failed bank in South Dakota. As of April 30, BankFirst had total assets of $275 million and total deposits of $254 million.
Alerus Financial, National Association will take over $72 million in assets of the failed South Dakota bank. The FDIC will retain the remaining assets to dispose of later.
First-Citizens Bank & Trust Company, of Raleigh, N.C., will take over Tumecula Valley's $1.3 billion in deposits.
California Bank & Trust will take over much of Vineyard's $1.6 billion in deposits.
Friday's failures will cost the FDIC fund nearly $1.1 billion, bringing the total cost for failed banks to $13.4 billion this year. That compares with $17.6 billion in all of 2008.
The FDIC, which is funded primarily by fees paid by banks, insures individual deposits up to $250,000.
The number of bank failures so far in 2009 has more than doubled last year's total of 25.
Where the banks are failing
Bank failures - many caused by foreclosure - keep mounting...Interactive map...7-17-09
http://money.cnn.com/news/storysupplement/economy/bank_
failures/index.htm
Georgia bank failures...15
Illinois bank failures...12
California bank failures...11