The next round
This newspaper ran a political cartoon the other day depicting a couple of young men fiddling around with a malfunctioning mechanized figure meant to represent the year 2020. One of them observes, “Darn thing hasn’t worked properly from day one,” while the other adds, “Have you tried unplugging it and plugging it back in again?”
That pretty much sums up 2020 in a nutshell: Regardless of which side of the political aisle you happen to be, everyone is hoping for a hard “reset” so that we can start over.
The chances aren’t looking good so far.
Almost from the day the COVID-19 pandemic began and stay- at- home orders were issued by state and local governments, we’ve seen record unemployment, failing businesses and a rollercoaster stock market.
After around a decade of economic expansion, SARS-CoV-2 came to wipe out all the benefits of stability and growth.
Employment management authorities saw the unemployment rate grow to double digits in all California counties, including those where joblessness has not been a problem. Various studies indicate that less educated and lower income workers were more affected by the rise in unemployment, as well as those who belong to minorities like Hispanics and African Americans.
The risky temporary economic reopening in some regions of the state and the country provided a slight improvement with the creation of few million jobs. However, the increase of COVID-19 cases has forced many of these areas to dial back to greater restrictions.
This has all gone to show the return to normalcy that all of us are hoping for is going to prove a tough row to hoe.
Unemployment and the decline in economic activity puts pressure on government entities because of a corresponding drop in tax revenues.
Without a doubt, this will force authorities to reduce expenses, including capital projects and human resources.
At San Diego State University- Imperial Valley, according to sources from within the institution, a good part of the staff is expected to be dismissed over the coming weeks and months, as most classwork is projected to remain online at least through the balance of the year.
Similar scenarios will play out locally and elsewhere as the pandemic drags on.
In our case, several governments have adopted budgets classified as balanced. That does not mean they will remain as such, but budgets are documents that can be adjusted over time to reflect economic and financial realities.
The main source of income for the state is personal income tax. The closure of millions of sources of employment leaves California’s coffers in poor condition.
In addition, real estate locally is a source of income for municipal governments and for special districts, such as school districts. As real estate values collapse under the weight of the pandemic, property tax payments will also fall, slashing municipal income.
Inevitably, this will force a reckoning regarding local government spending. This usually means the dismissal of personnel, unless authorities have money reserved or saved, or that they have a magic formula to keep their personnel intact.
Unless the pandemic miraculously passes the same fast way it came into our lives, the situation is not going to improve. Quite the contrary, I fear. I hope I’m wrong.