Audience watches the San Bernardino City Council on July 18 declare a fiscal emergency and begin preparations to file for bankruptcy protection. LA Times Photo
Good Thursday morning!
The California Legislature is not in session for a summer recess.
The California Assembly has adjourned until August 6, 2012 and the California State Senate is also in adjournment.
The California Assembly’s Daily File is here and the California State Senate’s here.
On to today’s California headlines:
There is a great deal of California Water news today, but I will NOT be covering it. My lovely wife works for a large, Southern California water company and anything I would write would be seen as a direct conflict to either her employer or us.
So, on to the other California headlines:
Bankrupt San Bernardino must cut spending by a third
San Bernardino must cut government spending by a third, almost assuredly resulting in widespread layoffs or pay reductions for city workers, as it prepares to officially file for bankruptcy protection, city officials said.
Interim City Manager Andrea Travis-Miller told the City Council that it must cut $45.8 million from the $166-million budget to ensure the city remains solvent throughout the current fiscal year, which runs through next June. Crafting the austerity plan will be required as part of the Chapter 9 municipal bankruptcy process.
“By any definition, a 30% budget cut in a single fiscal year is a severe haircut. Indeed, you might even call it a scalping,” Mayor Patrick Morris said at a special council meeting on the city’s fiscal crisis Tuesday evening.
At the meeting, the seven-member council voted unanimously to suspend debt payments and freeze staff vacancies, saving $5.4 million in July alone, the first and easiest step in what’s expected to be a budgetary bloodletting in the months ahead.
Death penalty repeal pits Mayor Villaraigosa vs. former Gov. Wilson
Los Angeles Mayor Antonio Villaraigosa goes up against former Gov. Pete Wilson in a debate over the death penalty that will be coming soon to mailboxes throughout California.
Villaraigosa signed the ballot argument to be included in the official state voter guide on Proposition 34, which would repeal the state’s death penalty if approved on the November ballot. Wilson signed the “no” argument.
“Proposition 34 lets serial killers, cop killers, child killers and those who kill the elderly, escape justice,” says the argument against the measure, also signed by Keith Royal, president of the California State Sheriffs’ Assn., and Marc Klaas, who became an advocate for crime victims after his 12-year-old daughter, Polly, was murdered.
Downtown L.A.’s Underwater Home Mortgage Crisis
In many movies, downtown Los Angeles is a stand-in for New York City. Its nooks and crannies mimic that most urban of American cities, and Ramon Garcia’s condo on Seventh and Spring streets is no exception. His seventh-floor window overlooks a courtyard in the Bartlett, a 1911 bank designed by the architects who planned City Hall, and his 550-square-foot residence is smaller than a racquetball court.
But one detail would be unthinkable in New York. If he sold it, Garcia estimates he’d get $105,000 — half what he paid in 2005. While 30 percent to 60 percent of the Inland Empire’s homes have “underwater mortgages,” making that region a national symbol of the nation’s housing crisis, rarely reported is that downtown L.A. is just as “underwater” as Riverside: Its residents owe far more than their homes are worth.
“It kind of sucks, because I don’t know if it will ever be worth what I paid for it,” Garcia says.
According to Zillow Real Estate Research, 31 percent of American homes are underwater, about like the city of L.A. (Other data peg the percentage lower.) But in 90014, Garcia’s ZIP code, an astonishing 78 percent of condos and lofts are underwater. Nearly four out of every five residents in the area roughly bounded by Sixth Street, Ninth Street, San Pedro Street and Grand Avenue own places worth far less than the loan they signed.
In the United States, ZIP code 90014 is in the top 1 percent of underwater mortgages.
And it’s bad all over downtown.
ZIP codes that extend from downtown north and south into other areas are underwater, by 66 percent (90017: part of the Financial District and part of Pico-Union), 64 percent (90021: part of Industrial District, Warehouse District and part of Skid Row), 51 percent (90012: City Hall, Civic Center, Chinatown), 44 percent (90013: site of Downtown Art Walk, part of Skid Row), and 36 percent (90015: South Park, L.A. Live, Fashion District).