Budget Workshop
March 6, 2008
This was the first
workshop on the 2008-2009 Budget, but it started out with a general economic outlook
for the nation, southern California and Chula Vista. It was then mentioned that
for 2007-2008 we so far have an 8 million dollar deficit. The 15 million cut in
December was not enough. We are still 
spending more
than we are taking in.
First to speak was
City Manager David Garcia. (Video
of Mr. Garcia's Federal and Southern California presentation.) He started
out by talking about the state of the National Economy. The GDP has slowed 
down considerably.
The housing downturn may have started the problem, but now other 
areas are being
impacted.
The housing situation continues to worsen
and the effect in the credit market is starting to be felt in the commercial
market as well. San Diego is the second worst market. According to the Federal
Reserve Board there is still weak but positive growth. Mr. Garcia did mention
that it is an election year and no one in Washington will use the R
word-Recession.
Next
he talked about the economic situation in Southern California. As you can see
the notice of defaults went up significantly in May and June of 2007.
Mr. Garcia drew
the line with the double arrow over the period we are now in until the end of
the year to show when the majority of these sub-prime loans will reset to a
high rate that many will not be able to pay. One of my neighbors had a loan
that was going to reset to $3,500 per month, which he absolutely could not
afford. He had to let the home go back to the bank. This is a great human tragedy,
but the bank sold the home for less to the new family, which moved in a few
months ago.
The one positive sign is
that there is still job growth. This is due to the diversification of the
southern California economy. Biotech, Wireless, Technology jobs do not seem to
be being affected, and the weak dollar is making American made products more
competitive internationally.
The graph below shows that the San Diego,
Carlsbad, San Marcos area where many Chula Vista residents work has had steady
job growth. It is second only to the Santa Ana area in southern California.
Next Mr. Garcia spoke about the economic
conditions in Chula Vista. (Video includes council comments.) The 
slide above shows
the three areas where there are great hopes of economic development-The
Bayfront, Third Avenue, and H Street.
This slide is the first
on the Chula Vista economy. There is a great hesitancy to use the word
recession, but as this slide points our SANDAG did not accurately predict the
credit crunch we are now experiencing.
Mr. Garcia emphasized that the Median
Home Prices graph shows that anyone who bought
a home since 2004 in Chula Vista now owns a home that is worth less
than they paid for it. This is a situation where many people walk away from the
home rather than wait out the market. Not at all a good situation for Chula
Vista, which has had a lot of home sales since 2004.
If the state does not do something to
provide more money to the schools and school personnel are laid off, this will
hit Chula Vista very hard since there are a large number of teachers and other
school employees living in Chula Vista from all of the school districts in San
Diego area.
ECONOMIC OUTLOOK
Our Budget Director Ed Van Eenoo presented
the Proposed 2008-2009 Budget
Ed Van Eenoo reported the cuts suggested by Employee Focus
Groups
The Council Discusses Cuts to the Council Administrative
Budget