Proactive and prepared are not words that get associated very often with government officials, however, San Francisco is trying to change that.
Officials are drafting an "economic resiliency plan" for the city of 865,000 people in order to try and ensure that it can withstand a financial downturn, similar to what was experienced during the dot-com collapse and the the financial crisis. A tech boom spurred by companies like Twitter, Uber, and Airbnb has helped San Francisco to an unemployment rate that was just 3.1% in April, the lowest since 2000 – before it all hit the fan with the dot-com collapse – and median home values of $1.1 million Bloomberg reports. Although mayor Edwin Lee released a record $9.6 billion budget proposal, officials claim they haven't forgotten a $460 million shortfall after the financial crisis in 2010 that forced 1,600 job cuts, along with the closing of city-owned recreation centers, reductions in street cleaning and a program that subsidized meals for seniors. In addition, $79 million had to be taken from a rainy day fund, and the cities of Stockton and San Bernardino filed for bankruptcy.
The plan will be released in about eight months, and will offer a step-by-step action plan aimed at protecting jobs and industries, as well as spell out how to best spend tax dollars and federal stimulus funds during a downturn.
"The impacts of the last economic downturn resulted in near double digit unemployment with thousands of residents out of work and our small businesses left struggling. We must not take for granted the vibrancy of our economy. Now is the time to plan." Mayor Lee said.
Of course, very few states are preparing for the inevitable time when the market corrects itself, and the real economy gets squeezed just as it did in 2008 if not much worse. That would of course involve discipline and making difficult decisions in the short-term, which nobody is willing to do anymore until it's entirely too late.
Dan White, senior economist at Moody's adds "I haven't seen many cities or countries focusing on this, especially from a stress-testing perspective, which scares me a little bit. Cities, states and all manner of local governments should absolutely be preparing themselves for a downturn."
There are a few more outliers who seem to be at least minimally planning for a downturn in the economy. New York's mayor Bill de Blasio proposed a budget beginning July 1 that includes at least $7 billion in reserves to protect against an economic slowdown – "New Yorkers know how easily things can turn. It's troubling to think what might happen if economic difficulties around the country and the world came to rest here"
In Utah, Bloomberg reports, officials last year began taking the extra step of applying scenarios from the Federal Reserve's stress tests to state budgets in order to see how elements such as soaring unemployment or a declining GDP might affect spending on Medicaid, higher education and social-service programs. It is unclear if Utah also built in bailout funding from the Fed as a cash flow stop-gap during such a time.
"It's sound budgeting. Just like families have to live within their means, so does the government" said Kristen Cox, executive director of the Utah governor's Office of Management and Budget.
Now is a perfect time for San Francisco to start this process, and we recommend it is implemented sooner rather than later, as the second tech bubble has in fact already burst, and those home prices everyone points to as a sign of a booming economy, those will be plummeting soon enough.
The post San Francisco Questions “Vibrancy Of Our Economy”, Drafts ‘Economic Resiliency Plan’ appeared first on crude-oil.top.