Republican presidential candidate, former Massachusetts Gov. Mitt Romney talks to Beverly Oncology and Imaging CEO Ruth Lopez Novodor during a small-business roundtable during a campaign stop at Endural LLC, Monday, July 23, 2012, in Costa Mesa, Calif. (AP Photo/Jason Redmond)
Good Tuesday 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.
On to today’s California headlines:
The recent bankruptcy filings of three California cities have U.S. investors worried that Fresno could be next to go down this road, according to a major Wall Street financial house.
Vikram Rai, strategist with Citigroup Inc., said bond investors are increasingly asking about the financial health of Fresno out of concern that the city will seek court protection from its debt obligations and that millions of investment dollars will be lost.
Stockton, San Bernardino and Mammoth Lakes have filed for bankruptcy protection this summer.
“Investors worry about contagion,” Rai told the Bee. “Many California cities are in a tough situation.”
Fears about Fresno in the trading world were reported in Citigroup’s investment strategy report, which this month said that “the harsh spotlight (of potential bankruptcy) has shifted to Fresno.”
Continuing to trim expenses amid growing competition and the sluggish economy, San Jose networking giant Cisco Systems (CSCO) said Monday it will lay off about 1,300 employees, a year after announcing 6,500 job cuts.
The layoffs come as Cisco’s sales have been relatively flat the past four quarters and some analysts doubted that they reflect a general weakening of the overall tech economy. However, others said the soured economic climate could have been a factor.
“We’re seeing slowing demand for IT equipment across the board,” said Brent Bracelin, an analyst with Pacific Crest Securities. Asked if it’s possible that Cisco might have to let more of its workers go, Bracelin said, “it depends on how much demand slows.”
Cisco’s own explanation gave few details.
“We are performing a focused set of limited restructurings that will collectively impact approximately 2 percent of our global employee population,” according to Cisco representative Kristin Carvell, noting that the company had 65,223 workers as of May when it reported its third-quarter earnings.
She added that the layoffs “are part of a continuous process of simplifying the company, as well as assessing the economic environment in certain parts of the world.”
Warring factions will spend untold millions of dollars on political propaganda to sway California voters on Proposition 32 this year, and while each denounces the other as a pack of scoundrels, neither likes the media’s capsule description, “paycheck protection.”
Twice before, in 1998 and 2005, voters rejected measures that would restrict unions from collecting political funds via payroll deductions, so backers came up with a new wrinkle in 2012.
They expanded it into a ban on direct contributions to political candidates from both unions and corporations, while continuing to prohibit payroll deductions without specific permission from union members or corporate employees.
That means, its sponsors say, that it’s an evenhanded restriction on both labor and management, so the term “paycheck protection” no longer applies.
ut opponents contend that the corporate restrictions have loopholes so the real effect is still to curb union political power. And they prefer the term “special protections act.”
Whatever the term, it’s clearly part of a nationwide effort by conservative groups to hamstring union political influence. Several other states have adopted similar laws, and anecdotally, they appear to have sharply reduced the political money that unions, especially public employee unions, can collect.
The real issue for voters, therefore, is whether they believe unions have an unfair advantage in gathering money from payroll deductions to spend on friendly politicians, or whether restricting such fundraising would unfairly limit their ability to participate in politics.
Faced with a crippling combination of low revenues, high labor costs and decreasing funding from the state, El Monte is moving to declare a fiscal emergency and seek a tax on sugary beverages sold within the city.
The moves come as the city attempts to stave off the financial problems facing a number of cities across California. So far this summer, three cities — Stockton, San Bernardino and Mammoth Lakes — have moved to seek bankruptcy protection, and Compton officials announced the city could run out of cash in a matter of months.
El Monte officials said they are not at the edge of bankruptcy but need the sugary drinks tax revenue as a protection against insolvency down the road. In a sign of growing concern, Fitch downgraded portions of El Monte’s debt in May.
“People are looking for who’s the next one [to declare bankruptcy]. El Monte is not the next one … not today, not now,” Finance Director Julio Morales said. “What we’re doing is financial planning. We’re trying to take the right steps.”
The declaration of a fiscal emergency, which El Monte’s council members will consider at a meeting Tuesday, would allow the city to hold a special election this fall for the tax proposal, Morales said. If approved by voters, the tax would collect one cent per ounce of “sugar sweetened” drinks sold. It could generate as much as $7 million in total annual revenues, according to a city report.
The San Gabriel Valley suburb, which has a population of more than 113,000, was hit hard by the Great Recession. Car dealerships that had provided a steady stream of tax revenues struggled. Several folded.
Enjoy your morning and Dan Walters Daily video: Parks scandal could hurt Brown’s tax measure