Coastal Post Online


August 2002

Battening Down The Hatches For Marin's Soft Economy

By Karen Nakamura

While the stock market is reeling with scandal and prices are plunging at a rate comparable to the market crash of 1929, Marin County, like so many other counties across the nation, is facing its own monetary crisis. However, those of us who consciously patronize locally owned businesses may be less vulnerable to the current collapse of big business than other areas. Communities who have structured their tax revenues around the Enrons and Andersons of the world are now facing loss of revenues and high unemployment. So where are the chips falling in Marin?

The difference between local ownership and big business is that locally owned businesses tend to recycle their profits back into the community in the form of taxes, donations and community activism. Locals serve on government boards, volunteer at local charities and coach little league. Big businesses are owned by stockholders and run by boards more interested in the bottom line than their standing in the community. As Americans have seen too frequently, local earnings in the form of profits are sucked up into a faceless conglomerate only to evaporate in one day's downturn on the stock market.

The reality is that most of our affluent citizens have had a vicious bite taken from their savings. In an attempt to pick up the pieces, they're pulling back, reducing costs to replenish shaky retirement and investment funds or to pay huge mortgages. This pull-back is trickling down the food chain, from frequent sales signs in store windows to less patronage at restaurants. Summer jobs are not as plentiful. Some of our most valued businesses are feeling the pinch or folding. An example is Autodesk. Its support of the digital arts and other worthy causes in Marin is well known. It recently announced its CEO is taking a salary reduction and other expenses were being cut.

A local home health agency said business was definitely down. Requests for care providers are 40% of what it was last year. Speaking anonymously, the manager added, "We used to get a lot of 24 and 12 hour shifts. Now we're getting calls for 2-4 hour shifts. Much of our business is caring for the elderly. About 70% are on fixed incomes and were heavily invested in safe stocks such as PG&E for any extras. That's almost gone now."

John Ortega, acting director of the non-profit Canal Human and Economic Development Association in the Canal works with residents to increase their income. Many are immigrants. He has seen a great change in the work force.

"Even though the numbers are down, day labors are holding their own. What's changed is many of the regular workers have left the area. Some of the new day laborers are those who've lost permanent jobs. Off those who have left, some may be working in the fields but a lot of it has to do with an inability to afford housing in the county. Many have moved to the East Bay and are traveling back and forth every day.

Restaurants are laying off or not hiring. Homeowners are cutting back on gardening hours. Almost every place where you find immigrant labor is being hit. People have just moved out. They've got to eat. The streets in the Canal are quiet whereas a year ago they were vibrant. One sign of this displacement is the reduction in money being sent back home to Mexico and Central American. The four check cashing businesses that serve this segment have all seen a loss of revenue due to the decrease."

One of the few moneymakers is real estate and its related industry. Investors are pulling savings from 401ks and scrambling to protect their funds. Prices shot up by at least 7% in the past year as people bought anything from that first home to apartment complexes. The rush has been so horrendous many professionals fear a bubble burst similar to the stock market. Rent costs have stabilized as dot-commers and the work force move on but splashy housing such as The Lofts and those in the old Macy's building are still not filled. The average $1600 to $2200 a month for two bedrooms these places frequently charge is increasingly beyond the range of renters.

How are county and city services doing? Demands could well increase over the next year and create a threat to the financial health of Marin. California readers may have noticed that vehicle registration has been cheaper the last few years. The difference is the repeal of Vehicle License Fees (VLF) in 1998. Before that, these fees were sent directly to the cities and counties of California to cover numerous services those cities and counties deemed important.

However, according to Ken Nordhoff, City of San Rafael financial officer, despite the repeal of VLF and its revenue, services have not been effected. The difference is that the lost revenue is now "back filled" from the California State General Fund. For every $100 cities received from VLF, the city now receive $33. The remaining $67 is then "back-filled" by the state. That means distribution control is dictated by a politically motivated legislature, which does not always coincide with the needs of local communities. In these days of uncertainty and billion dollar losses in state revenue, this distinction could be vital. Nordhoff would like to see that control back in the hands of local entities. "VLF represent the city's third largest revenue source. With the huge cuts in the state budget, we're vulnerable to being cut." While the new state budget will increase VFL, it looks like distribution control will remain with the state.

But Margie Goodman of State Senator John Burton's Marin office says that the programs will remain funded. "Interestingly, we haven't had one call either way. I don't know if its because the voters trust Senator Burton, [who is sponsoring the fee increase bill,] has a handle on the situation or what. However, it's interesting that we haven't gotten a call either way. We always expect to hear from constituents on any issue, especially one where taxes are being raised. John has said, however, that he's not going to balance the budget on the backs of the poor and needy."


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