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Recession Reality Check: Boxer Preps for Obama

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Welcome to California. We lost 100,000 jobs this past year, unemployment has hit a 14-year record at 8.3 percent (8.9 in LA County) and around 189,000 homes were lost to foreclosure in the first three quarters of 2008. That's why Senator Barbara Boxer released a report today--entitled "The Realities of Recession in California"--that has the results of interviews with every county in the state and a group of select cities.

"This report is a reality check on the economy--things are not good, but change is coming," Boxer said in an e-mail newsletter. "I am going to focus like a laser beam on saving and creating jobs, which is the backbone of any economy."

All this builds up to working with Congress and President-Elect Barack Obama. “As a former County Supervisor, I know that our local officials are on the front lines of this recession," she said in the report. "The information they have provided is so important to me as I begin to work with this new Administration to address our economic challenges and promote growth and stability throughout our State.”

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The reports for LA County and City of Los Angeles are below.

LOS ANGELES COUNTYPopulation: 10,363,850
Unemployment rate: 7-9%
Foreclosure filings Jan-Nov 2008: 140,763 (1 per every 24 households)
Local Contact: Sharon Harper - Chief of Staff to County CEO William Fujioka
Boxer Staff Member: Adolfo Bailon
Date Contacted: December 2, 2008

The County of Los Angeles currently has sufficient one-time reserves to offset losses in sales tax, deed transfer and property tax revenues in fiscal year 2008-09. State reductions to date have impacted the County's budget by $137.6 million, significantly affecting programs such as CalWorks, In Home Supportive Services, Medi-Cal Administration, and mental health programs. However, there have been no County employee layoffs to date.

Over $80 million in County projects were deferred in October of 2008 and officials are looking at another $158.5 million in deferrals to be presented to the Board of Supervisors on December 16, 2008. The availability of credit has also become an issue as officials have been limited to issuing short term notes and are unable to fund major capital programs, which require long-term bonds.

The County Assessor's Office indicates that as of Nov. 30, 2008, there are 29,954 foreclosures out of 111,411 reappraisal transfers indicating a foreclosure rate of 26.89%. This compares to a rate last year of 9.85%. Sales tax revenues for "Public Safety Augmentation", "Realignment" and unincorporated County sales tax have been declining, year over year, since fiscal year 2006-07, resulting in actual and budgetary losses of $37.7 million.

Officials have noted an increase in crime in areas with high foreclosure rates. Specifically, fire hydrants have been forcibly removed in the Antelope Valley and Fire Department Connections have disappeared in contract cities such as Pomona.

CITY OF LOS ANGELESPopulation: 4,045,873
Unemployment rate: 7.7%
Foreclosure filings Jan-Nov 2008: 5,939 (1 per every 36 households)
Local Contact: Jim Clarke - Director of Federal Relations, Office of Los Angeles City Mayor Antonio Villaraigosa
Boxer Staff Member: Adolfo Bailon
Date Contacted: December 2, 2008

The City of Los Angeles currently has a budget shortfall of $130 million, primarily due to the weakening economy. Of the City's overall $130 million shortfall, $75 million is directly attributed to reductions in sales and business taxes, documentary transfer tax, parking tax, and transient occupancy tax. Mayor Villaraigosa has directed all City departments to develop 6-month budgets with a mandatory 3-percent reduction. Public safety agencies such as police and fire are only required to decrease their 6-month budgets by 1-percent.

In an effort to reduce additional spending, City officials instituted a managed hiring process, which allowed departments to hire only those positions deemed critical to public safety or revenue generating. This process resulted in over 700 positions being left vacant.

Several neighborhoods are experiencing an increase crime related to vacant and abandoned properties. The City of Los Angeles has also been allocated over $32 million in Neighborhood Stabilization Funds through the Economic and Housing Recovery Act of 2008. These funds will be issued through the Community Development Block Grant program and used to redevelop communities with high foreclosure rates.

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