STATE OF CALIFORNIA

California State Government News

August 26, 2013

Poverty in California

California has more citizens in poverty = 6.1 million, and more children in poverty than any other State. California also has the highest percentage of its population living below the poverty line. According to a new type of Census Bureau calculation that takes into greater account cost of living, California now has a poverty rate of 23.5 percent.

The Public Policy Institute of California has released a statistical analysis of the issue of poverty in California. Among it findings were that poverty rates continue to soar in the aftermath of the Great Recession but have not yet reached the peak of the 1990s Latinos and African Americans have higher poverty rates than other groups and poverty varies widely in with education level. In addition, most poor families in California are working and poverty varies greatly across California’s counties.

A chart was produced that shows the poverty rates in most California counties. Four countries: Merced, Tulare, Imperial and Fresno have poverty rates over 25 percent, and another seven counties have poverty rates over 20 percent. The full report can be read here.

http://www.ppic.org/main/publication_show.asp?i=261

Filed under California Economy by

August 22, 2013

Global Warming already impacting California

The California Environmental Protection Agency has released a somewhat depressing report describing how climate change is already impacting California. The report was issued by the he Office of Environmental Health Hazard Assessment and evaluated 36 indicators of Climate Change in California. Among the indicators they tracked were impacts on physical systems- including sea level and Sierra Nevada snow melt, biological systems – including humans, animals and vegetation and impacts on climate change – such as average temperature and extreme heat events.

Some of the impacts California is already experiencing: reduced spring runoff from the Sierra Nevada, more acidic waters in Monterrey Bay, shorter winter chill periods required to grow fruit in the Central Valley. Ocean warming may have been responsible for a drop in Chinook salmon population during the past decade. Even insects have been effected – butterflies in the Central Valley are emerging from hiding earlier in the spring. Small mammels in the Sierra Nevada have been migrating to higher ground.

Humans are of course impacted also. Since glaciers in the Sierra Nevada have been shrinking spring runoff from snow melt has declined and this affects both Central Valley farmers and hydroelectric plants that rely on this snowmelt to produce power. The less than cheery report warns that we can expect more heat waves, wildfires and higher sea levels.

Filed under Environment and Climate, z9-Uncategorized by

August 21, 2013

Governor’s GO-Biz Office starts promoting economic initative

Governor Brown will apparently be taking his economic development plan on the road. According to to a report in the Sacramento Business Journal, representatives of the Governor’s Office of Business and Economic Development, known as GO-Biz. will be on hand to describe their economic initiatives at an event sponsored by several Sacramento Business Associations:

“We’re excited to talk about these updates for economic development in the state,” GO-Biz director Kish Rajan said. “As we’ve seen lately, the Golden State’s economy has been coming back strong over the past year. But with (the governor’s initiative) we now have new, dynamic tools to increase that momentum and put our foot on the accelerator for economic development in California.”

A few months ago, Govornor Brown signed legislation that eliminated the state of California’s enterprise zone program and replaced it with new economic stimulus tools. Those programs include a manufacturing sales tax waiver, a hiring tax credit and recruitment incentives. The full plan can be found at this link.

As described on their website: “The Governor’s Office of Business and Economic Development (GO-Biz) serves as California’s single point of contact for economic development and job creation efforts. GO-Biz offers a range of services to business owners including: attraction, retention and expansion services, site selection, permit streamlining, clearing of regulatory hurdles, small business assistance, international trade development, assistance with state government” To learn more about this office visit: www.business.ca.gov.

Filed under Economic Development, Governor Brown by

August 20, 2013

Is Cisco shrinking?

What was once one of California’s brightest stars seems to be having a diminishing impact on the California economy. Cisco recently announced that is will be firing 4,000 employees, even though it has been growing at a good clip and seems financially healthy. As reported by Business Insider, with this most recent announcement, the company has shed 12,000 jobs in just the past two years alone:

“This isn’t the first layoff that Cisco announced this year. In March, a mere five months ago, Cisco said it was firing 500 people. Prior to this new round of 4,000 firings, Cisco had cut 8,000 jobs. So that’s 12,000 jobs gone in the two years since Cisco’s CEO John Chambers began his turnaround”

Cisco employs 74,135 employees worldwide with about 17,496 work in California – mostly in the company’s Bay Area headquarters in San Jose, so this “workforce reduction” represents about five percent of Cisco employees. Little explanation was given, According to a statement given to a Business Insider reporter by a Cisco spokesperson:

“During the earnings call on Aug 14th, Cisco announced actions to align resources to our top opportunities, balance expenses to revenue, drive efficiencies in the business, and invest in growth. These actions include prioritizing R&D, aligning new and existing talent to growth areas and a workforce reduction impacting approximately 4,000 employees, or ~5% of our workforce.”

They also quoted CEO John Chambers as giving the reason for the move in a call with analysts. “We just have too much in the middle of the organization,” he told them.

While this is obviously not good news for the California economy or for the Cisco employees, in financial terms the company is doing quite well. For the fourth quarter, Cisco reported $2.27 billion in profit, up from $1.92 billion, for the year-earlier quarter and revenue was up 6% to $12.42 billion from $11.69 billion.

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Filed under California Economy, Information Technology by

August 16, 2013

Legislation could provide incentive for small businesses investments

Legislation has been introduced by state Senator Ted Lieu, a Torrance Democrat that would allow taxpayer to defer all the profits from selling certain kinds of small business stock.

According to a report in the Sacramento Business Journal, Senate Bill 209, would provide a 38 percent deduction or a deferral of all of the profits made from selling qualified small business stock. This is defined as shares issued by “C” corporations with gross assets of less than $50 million and they must do at least 80 percent of their business in specific industries.

The tax deduction is intended to encourage investment in startup corporations looking for venture capital. The proposed tax break is generous but not unprecidented. Not long ago, California allowed investors to deduct 50 percent of income made from selling qualified small business stock from state taxes, but a court decision rules that this tax deduction discriminated against certain types of investments.

This resulted in some companies being expected to pay retroactive taxes, however the Franchise Tax Board has decided to not enforce this pending legislation to address the issue.

Filed under California Legislature by

August 15, 2013

Average House in Silicon Valley now over $1 Million

While it certainly isn’t news to the people who live in Silicon Valley, the price of housing has sky rocketed there, and my have reached a kind of “tipping point” with news that the average price there is now over a million dollars. For the last four months, the average price of a single-family home in Santa Clara Count yhas been more than $1 million, according to rdata from MLS Listings, a service for real estate agents.

Accordning to a report by NBC news, brokers are saying that tech growth is the main driver of demand in Silicon Valley and that most of it comes from executives at Apple, Google and other established companies. Another big factor, however, is growing demand from China. Realtors say wealthy Chinese buyers are pouring into Silicon Valley and buying up multimillion-dollar properties. They say the buyers are increasingly nervous about the Chinese government and economy and are looking for a safe haven.

Silicon Valley now leads the nation in the number of homes sold for $1 million or more, according to Realtytrac. Sales of $1 million-plus have more than doubled in many communities in Silicon Valley this year, toppling even luxury areas like Beverly Hills or Miami.

Filed under Real Estate and Housing, Silicon Valley by

August 13, 2013

California Exports Over $15 Billion in June

California exports held flat in June, the most recent month when such statistics are available, but given the problems in many economies this is considered to be a respectable number.

California businesses shipped merchandise valued at $15.23 billion in June, according to an analysis of U.S. Commerce Department figures by Beacon Economics. That is up an insignificant 0.3 percent from $15.18 billion in June 2012. “June was another of those ‘apparently up but actually down’ months,” says Jock O’Connell, Beacon Economics’ International Trade Adviser. California’s exports of manufactured items rose from $9.71 billion last June to $9.81 billion this June. Meanwhile, the state’s exports of non-manufactured goods also edged up, from $1.59 billion to $1.64 billion.

According to their report, the data revealed some a few other interesting facts. “While it may seem counter-intuitive, California’s merchandise export trade with Europe has been up nearly 13% over the latest three months,” O’Connell says. By contrast, the state’s exports to the Far East declined by 3.2% during the same period, despite a 16.9% jump in the value of shipments to China.

The Beacon analysis noted that the year-over-year increase was basically canceled out by inflation, the June numbers were up substantially from shipments valued at $13.25 billion in May this year. With imports, California took in $32.03 billion in June, down about 1.3 percent from $32.47 billion in June last year. Since many goods entering California go to other states, so exports are generally considered a more accurate measure of the state’s international trade, which seems to be holding steady.

Filed under California Economy, Manufacturing by

August 8, 2013

University of California to offer free public access to research

The University of California = the largest university system in the world and considered by many to be the most influential will now be making its research results available to the public for free. This decision came after a long battle with the for-profit publishing industry which charges both for publishing articles in journals and then charge again for access to those journals.

As reported by TechCrunch Universities pay millions for access to their colleague’s research, with subscriptions costs up to $40,000 for a single journal and publishing costs many times more for more prestigious closed-access journals. “It’s still ludicrous how much it costs to publish research,” said molecular biologist at the University of California, Berkeley, Michael Eisen.

The San Jose Mercury News reported that the policy will apply to 8,000 faculty members and roughly 40,000 papers they produce each year “on subjects such as planetary magnetic fields, modern Israeli fiction and a host of other topics”. Legislation approving this initiative passed the California Assembly in spite of significant opposition for industry lobbyists, but the fate of the bill is largely irrelevant as the UC system has taken the matter into its own hands. “Taxpayers pay for this research, and we the people, we own it,” said Mike Gatto, D-Burbank, who co-authored the bill with Republican Assemblyman Brian Nestandet. “So it just makes sense to cut out the middlemen who charge taxpayers for something we already own.”

The “Open Access” movement already had signification momentum. The White House is on board and has pledged a significant $100 million to promote open access and to require all federally-funded research to be free of charge. More than 175 research institutions around the world have approved similar initiatives including Duke, Emory, Princeton, Wellesley and the University of Kansas and some schools or departments, such as the Harvard Business School and the Stanford School of Education, have also joined in. With the University of California now giving its stamp of approval, open access may now become the “defacto standard” for public research throughout the world.

Filed under Education and Training, University of California by

August 5, 2013

California Centers for International Trade Development receive Presidential Award

The White House has given an award to the California Centers for International Trade Development (CITD) in recognition of their contributions to the increase of U.S. exports.

The Presidential “E” Award was created by President John F. Kennedy in 1961, to recognize persons, firms, or organizations that contribute significantly to increasing United States exports. The Department of Commerce’s International Trade Administration manages this award program and has recognized more than 2,500 firms since it began. The award was presented n Washington, D.C. to California Community Colleges Board of Governors member Dr. Debbie Malumed and Jeff Williamson, CITD’s statewide director.

There are nine Centers for International Trade Development across the state. The centers are supported by grants through the Chancellor’s Office’s Workforce and Economic Development division. Programs are in place that provide industry-specific education, training and services contribute to workforce development.

“It is programs such as the CITD that are strengthening the economies of local communities, creating jobs, and contributing to the worldwide demand for ‘Made in the USA’ goods and services.” said U.S. Acting Secretary of Commerce Rebecca Blank on conferring the award.

For more information on CITD programs please visit their website.

Filed under Economic Development, International Development by

August 2, 2013

China hasn’t paid Hollywood studios since last year

California movie studios haven’t been paid for movies shown in China since late last year, according to an exclusive report by The Hollywood Reporter. This situation only gained wide attention recently because because China will likely become the largest moviegoing market in the world before too long and the studios have been quiet about it because they want to preserve the relationship

The dispute apparently centers on a new two percent value-added tax that the Chinese want the studios to pay. For their part, the studios claim that the additional payment would violate a World Trade Organization agreement that was made just last year between the U.S. and Chinese goverments.

According to the Hollywood Reporter estimates: Warner Brothers is owned about $31 million for Man of Steel, The Hobbit: An Unexpected Journey and Jack the Giant Slayer; Sony is due about $23 million for Skyfall and After Earth ; Paramount would be owed roughly $30 million for Into Darkness, G.I. Joe: Retaliation and Jack Reacher; Disney’s Iron Man 3 made more than $121 million in China, which would mean a return of more than $30 million for the studio, while Oz the Great and Powerful would mean about $5 million in payments.

Several other movies are in he middle of their run, and some studios are still owed money for 2012 titles as well. For example, Fox hasn’t received payment for Ang Lee’s Life of Pi, a check that’s expected to earn about $23 million.

Movies are, of course, one of California’s primary exports, and in a country where bootlegging and copyright infringement is commonplace, it is difficult to understand China’s justification for withholding payments. If the situation was reversed, and California suddenly decided to stop payments for Chinese manufactured goods, it is hard to imagine that it would be considered acceptable by the Chinese. This seems like a case where China is using its market size leverage to an unfair advantage, and it is certainly something trade officials and policy makers should keep an eye on.

Filed under China, Hollywood, Media and Entertainment by

August 1, 2013

California could reap gains from immigration reform

The University of Southern California has release an analysis of immigration reform that suggests that authorization and citizenship for undocumented immigrants could lead to improvements in the state’s economy. The analysis reviewed two studies: a report by the Center for the Study of Immigrant Integration (CSII) that estimated that immigration reform would pump about $4.6 billion into California’s economy, and a report by the Center for American Progress that estimated about 8 billion would be added to the California economy through immigration reform.

While small compared to the total size of the California economy, there is thought to be a multiplier effect as these many of new citizens will be of lower income and will be more likely to spend their paychecks than to save them. According to the report, social issues should also be considered: “children of undocumented parents face greater barriers to accessing social services and programs and tend to have more negative social, economic and health outcomes.” About 1.5 million children in California live with at least one undocumented parent, which is an amazing 16% of children in the state.

In order to possibly curb the negative social, economic, and health outcomes these children tend to face, the report emphasized that the state should begin by legally incorporating their parents and reforming immigration law in a way that that grants them greater economic opportunities. The Study concluded that immigration reform could economically benefit both the undocumented immigrants and the state’s they call home. The full report can be read at this link: http://csii.usc.edu/documents/whats_at_stake_for_the_state.pdf.

Filed under California Economy, Immigration by

July 31, 2013

Microbusiness is a major job creation engine in California

Small companies in California have had a far greater impact on job creation than previously estimated, and this has been going on for an number of years. According to an analysis issued by Small Business California, businesses with less than five employees, sometimes called “microbusinesses”, were the state’s main engine of job growth between 2003 and 2010. These firms added 719,729 positions over that time period, while all other small businesses lost a combined 460,368 jobs during the same time frame.

California’s microbusinesses added jobs even during the depths of the recent recession, creating 120,818 positions between 2008 and 2010. Larger businesses, including firms with more than 500 workers, lost a combined 1.02 million jobs in those years. The report was based on an analysis of data from the U.S. Small Business Administration, Office of Advocacy and can be viewed at this link http://www.smallbusinesscalifornia.org/1.pdf

It is possible that the role of microbusiness has been far greater than previously estimated and this should provide some serious food for thought for economic development professionals and those responsible for business policy formation in California.

Filed under California Economy, Small Business by

July 26, 2013

California might benefit from White House Manufacturing Initiative

The Obama Administration has launched a new program called rogram the “Investing in Manufacturing Communities Partnership” (IMCP) and recently held their first and only meeting in California. This roundtable event in Woodland was sponsored by the White House and the USDA and attracted about 125 people.

As part of a national manufacturing strategy. 25 communities around the country will be awarded $200,000 each to create an implementation strategy for this program. In addition, a half dozen or so communities will be awarded up to $25 million each next year from the U.S. Commerce Department for manufacturing strategies that are ready to be implemented.

According to a report by the California Economic Summit, a public-private partnership group called Innovate North State proposed concentrating on five industries: agriculture, cleantech, health, web and information technology as well as manufacturing. They have identified 100 manufacturing companies in the northern part of the state, and are planning to submit a proposal to the IMCP.

Filed under Economic Development, Manufacturing, U.S. Government by

July 25, 2013

California shark fin ban now in effect

California’s law that prohibits the sale, possession, trade, or distribution of shark fins went into full effect on the first of this month ending the Chinese custom of serving shark fin soup in California restaurants.

The legislation went into effect in January, but had exemptions allowing the sale of previously obtained shark fins until the end of June. Anyone now caught violating the law could face a penalty of up to six months in jail and a $1,000 fine.

the law caused a controversy between environmentalists, concerned about the declining shark population and some Chinese-Americans, who want to continue to honor this Chinese tradition. The soup is an expensive delicacy, has been popular in China since the Ming Dynasty, and is often served during weddings, banquets and other Asian ceremonies.

As reported in the Los Angeles Times, however, it is thought that close to 73 million sharks are killed for their fins each year. Many, are obtained by the process of finning – slicing the fins from live sharks and throwing the disabled animals back into the ocean, where they drown. The market for shark meat is nowhere as great as for the fins, the Times reported, and demand for the fins has reduced some shark populations to 10% of historical levels.

Filed under Agriculture and Food, China, Environment and Climate by

December 4, 2012

Made in California legislation introduced

Senate Majority Leader Ellen Corbett has introduced legislation to create a “Made in California” program that would allow manufacturers to better market goods produced in Californiam=, according to a report in the
Sacramento Business Journal. Modeled after the successful “California Grown” program, which highlights agriculture products produced in California, the legislation would extend that marketing strategy to all goods produced in the state.

Filed under California Government, California Legislature, Manufacturing by

October 22, 2012

China investment in California predicted to soar

China’s direct foreign investment in developing economies is on the increase, and California could be uniquely situated to benefit from this, according to a report by Rhodium Group, a New York based economic think tank.

Already, about $1.3 billion of Chinese money has flowed into the California from 2000 to 2011, and this amount to increase to between $10 billion and $60 billion by the year 2020. “Just as Chinese exports exploded in the last decade—from $250 billion in 2000 to nearly $2 trillion by 2011—China’s OFDI is poised to skyrocket in the years ahead”, according to the report.

It went on to conclude. “California, with its long history with China, the most sizable Chinese American population in the country, and more inward investment deals from China than any other state, is in a position to lead the nation in attracting Chinese investment in the decade to come”. The full report can be downloaded from a link on this page:

http://rhgroup.net/reports/chinese-direct-investment-in-california

Filed under California Economy, China, Economic Development by

September 25, 2012

California Plans to Reopen International Trade Offices

Governor Brown signed legislation in September that will open some international trade offices for the State. The legislation authorizes the Governor’s Office of Business and Economic Development — also called GO-Biz — to work with nonprofit organizations to operate these offices, using state funds or private donations, according to a report in the San Francisco Daily Times. GO-Biz will partner with the Bay Area Council and hope raise a million dollars by the end of the year for this purpose. It is probably that a trade office in Mexico will be the next priority of this program.

At one time, California had twelve offices in various parts of the world but these were shut down in 2003 for numerous reasons: questions about their effectiveness, mismanagment and political corruption, questions, a scandle involving fabricated “success stories”, and the budget crises of the time.

Govern Brown had previously announced his intention to reopen ab outpost in Shanghai to promote trade and commerce with California. “The office will encourage direct investment and further strengthen existing ties between the world’s second and ninth-largest economies,” Brown said in statement before meeting Chinese Vice President Xi Jinping in Los Angeles in February.

Filed under Economic Development, Foreign Relations by

January 25, 2011

California Unemployment still going up – now at 12.5 percent

The California unemployment rate rose to 12.5 percent in December, up from 12.4 percent the previous month, The Los Angeles Times noted. California’s unemployment rate is now among the highest in the country, trumping the national unemployment rate by nearly 2 percent. California employers added just 4,900 jobs in December, the Employment Development Department reported, after adding 30,500 the month prior. The biggest losses were seen in the government sector, which shed 15,400 jobs. Overall, California has added a total of 87,500 jobs in 2010. The openings came mostly from professional and business services; education and health; and leisure and hospitality. Although the additions are not enough to lower the unemployment rate, it is an improvement compared to 2009 when the state lost 836,000 positions.

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January 21, 2011

UCLA Forecast cautiously optimistic about California Economy

Economic activity is increasing across a number of important sectors in California, according to the latest UCLA Anderson Forecast for California. The outlook for an expansion of the workforce shows momentum building into 2012, according to economic models presented by UCLA Professor and Senior Economist Jerry Nickelsburg. He suggested that statewide unemployment would drop to 11.4% by the end of this year and 10.3% in 2012. It is presently, 12.4% “The forecast also suggested that the unemployment rate for some of the hi-tech driven coastal communities could fall as low as 8.5% next year, and to 7.4 percent in 2012.” Professor Nickelsburg reported that job creation has been positive, especially in coastal California, for much of the calendar year, while inland communities are still under high unemployment pressure. However, job creation still remains below levels expected in a well-functioning job market. Even with a large deficit, looming record pension debt, and high unemployment, “California is economically much better off than the 10 most populous states – maybe even Texas,” Nickelsburg also indicated that the data does not support the mass exodus of businesses to other states outside California, which is suggested may be a myth.

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January 13, 2011

California Exports Surging, but not adding to Job Growth

In November, Calilifornia posted its 13th consecutive month of year-over-year increases in export trade according to Beacon Economics, which analyzed foreign trade data from the U.S. Commerce Department. California businesses shipped abroad in November $12.49 billion in goods, exceeding by 14.1 percent the $10.95 billion shipped in November 2009. It was California’s best November ever in inflation-adjusted terms, Jock O’Connell, Beacon Economics’ international trade adviser, said in a news release.

The good news was tempered somewhat by the fact that California did not quite keep pace with the nation as a whole which boosted its merchandise exports by 19.4 percent. Also, California has a relatively high percentage of re-exports, which are items previously imported into the United States that have had no significant value added prior to being shipped abroad. “California’s numerous trading companies do a superb job sourcing goods from around the world and matching them with foreign customers,” O’Connell said. “That’s why California’s re-export trade leaped by 36.3 percent in November.” Exports of goods manufactured in California, meanwhile, increased just 6.7 percent. Overall U.S. manufactured exports, in contrast, jumped 16.7 percent, O’Connell reported.

California made up 11.1 percent of all U.S. merchandise exports in November, but just 9.6 percent of its manufactured exports, Beacon reported. California’s exports of nonmanufactured goods represented 12.4 percent of the nation’s exports of those goods, but fully 19.8 percent of the nation’s shipments of re-exported goods came from California.

As a result, California’s export trade has a less immediate positive impact on the state’s economy and on its propensity for job creation, O’Connell said. “California manufacturers have become exceptionally efficient in increasing output without adding new hires,” O’Connell said in the release. “And the goods they produce tend to be of increasingly higher value. That’s why it is possible for the value of our manufactured exports to rise without there being a commensurate level of job growth.”

That also explains why California lost 4,400 manufacturing jobs between November 2010 and November 2009, based on seasonally adjusted numbers from the California Employment Development Department, despite California adding 110,900 jobs overall, O’Connell said.

Filed under California Economy, Freight and Logistics by

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