ARTICLE
Questions still continue on how quickly we will see a California Economic Recovery. The California COVID-19 restrictions on business and the fact that we’ve not been able to travel, socialize, or engage in normal spending activity since Thanksgiving has put a yellow caution flag on a quick recovery. However, the economy has seen some positive signs of growth due largely to the distribution of goods, technology, and home sales. Homebuilding and infrastructure projects are underway throughout the state, generating a solid recovery in construction activity. By late February or March, construction employment will have completely recovered from the precipitous decline caused by the pandemic in April, May, and June. The state’s manufacturing sector has now completely recovered. The 2020 calendar year ended with 9.4 million fewer jobs in the entire U.S. compared to December 2019. California ended up with 1.4 million fewer jobs than in December 2019.The December jobs report was negative for both the U.S. and California. The economic sectors that contributed to the downbeat report continue to be concentrated in leisure/hospitality and local government. That does not bode well for Santa Cruz County. The restrictions on food services, travel, and attractions produced the free fall in leisure, recreation, and hospitality revenue and employment. This has contributed principally to City and County governments grappling with major declines in tax revenues. Both the City and County are looking at deficits into the foreseeable future. At the Santa Cruz City Council meeting on Tuesday, the Council unanimously passed an 18-month work plan. You can see the resolution here: City Recovery Plan. The staff report reads, “In June 2020, the City Council considered and discussed the convergence of the novel coronavirus (COVID-19) pandemic and the City’s 1-3 year broad-based strategic plan process. This discussion resulted in a shift in focus to a 12-18 month Interim Recovery Plan (IRP).” In watching the discussion at Tuesday’s Council meeting during which the item passed unanimously it was clear that the City staff was trying to align its economic recovery plan with the realization that many of the projects and programs noted in the report are ongoing over multiple-year projects. The start-stop process can upend some very critical projects throughout the city in every city department. The great unknowns are relative to the business community’s ability to navigate through the regulatory scheme to move already-approved projects through the timelines outlined in the staff report. The recovery process in Santa Cruz needs to proceed with caution as many of those programs and projects will rely on state and federal funding. In other words, what is happening in Sacramento and Washington, DC can play a critical role in the City’s recovery plan. California suffered the most severe business restrictions in the nation during December and January, and generally for most of the 2020 calendar year. I am guessing that restrictions will be gradually eased as clear evidence of fewer COVID-19 cases emerges in California this year. All counties are now in the purple tier of business restrictions after the stay-at-home mandate was ended by the Governor’s office on January 25th. If the downward trend continues for Santa Cruz County, there is a good chance we’ll move into a red tier in the next two to three weeks. The targeted increase to get people vaccinated in our County in all age groups will go a long way to a quicker recovery. It will bring back some confidence to the consumers, employees, and our businesses. I also hope that as the number of people receive vaccinations, the number of positive cases will decline. Though the level of daily cases is still high, we are finally seeing a clear abatement over the last two weeks. We need to maintain a cautious approach and we are waiting but not holding our breath while we continue to follow COVID-19 guidelines. Presenting a credible outlook for the U.S and California today requires knowledge of how the coronavirus will evolve in 2021. I’d like to think the pandemic will simmer slowly into the early summer. However, we had that same hope nearly a year ago, in March of 2020. Right now, travel bans are still in effect. Rigorous testing for airline passengers entering the U.S. is now required. Effective January 26th, the CDC now requires all air passengers including U.S. citizens to present a negative COVID-19 test, taken within three calendar days of departure. U.S. resident spending is expected to grow this year, for housing, food, clothing, autos, gasoline, furnishings, and healthcare. The unknowns include education, entertainment, recreation, and personal care. When business restrictions are largely lifted, most consumers will return to pre-pandemic behaviors, though some reticence toward high human contact activity will remain. Consequently, we don’t anticipate airline, cruise ship, or tour bus travel to recover quickly. Now the COVID-19 relief package that the California Legislature passed and the Governor signed will help those in the lower and very low income levels. California lawmakers on Monday cleared the way for 5.7 million people to get at least $600 in one-time payments, part of a state-sized coronavirus relief package aimed at helping those with low-to-moderate incomes weather the pandemic. Gov. Gavin Newsom said he signed the bill into law on Tuesday, one day after it passed the state legislature by a wide margin. Fewer people will get these payments as compared to the federal relief checks Congress approved last year. But state lawmakers are aiming the money to reach the pockets of people who were left out of those previous payouts, including immigrants. People who are eligible for the money should get it between 45 days and 60 days after receiving their state tax refunds, according to the Franchise Tax Board. The payments are part of a broader aid package the state Legislature approved Monday worth $7.6 billion. It includes more than $2 billion in grants for small businesses, waives about $25.6 million worth of business fees for struggling restaurants and hair salons, and provides $30 million in aid for food banks and another $5 million for diaper banks. Most people will get their checks by claiming the California earned income tax credit on their individual income tax returns. In general, this covers people who earn $30,000 a year or less. Each year, more than 20% of people who are eligible for the credit don’t claim it, according to the nonpartisan Legislative Analyst’s Office. The spending plan lawmakers approved Monday includes $5 million for “outreach” to let people know how to apply for the money. Some may question these expenditures while we haven’t finalized our tax collections season. Expenditures of this level before we have a final state budget in June may upend the implementation of these funding services to needy Californians.
Questions still continue on how quickly we will see a California Economic Recovery. The California COVID-19 restrictions on business and the fact that we’ve not been able to travel, socialize, or engage in normal spending activity since Thanksgiving has put a yellow caution flag on a quick recovery. However, the economy has seen some positive signs of growth due largely to the distribution of goods, technology, and home sales.
Homebuilding and infrastructure projects are underway throughout the state, generating a solid recovery in construction activity. By late February or March, construction employment will have completely recovered from the precipitous decline caused by the pandemic in April, May, and June. The state’s manufacturing sector has now completely recovered.
The 2020 calendar year ended with 9.4 million fewer jobs in the entire U.S. compared to December 2019. California ended up with 1.4 million fewer jobs than in December 2019.The December jobs report was negative for both the U.S. and California.
The economic sectors that contributed to the downbeat report continue to be concentrated in leisure/hospitality and local government. That does not bode well for Santa Cruz County. The restrictions on food services, travel, and attractions produced the free fall in leisure, recreation, and hospitality revenue and employment. This has contributed principally to City and County governments grappling with major declines in tax revenues. Both the City and County are looking at deficits into the foreseeable future.
At the Santa Cruz City Council meeting on Tuesday, the Council unanimously passed an 18-month work plan. You can see the resolution here: City Recovery Plan. The staff report reads, “In June 2020, the City Council considered and discussed the convergence of the novel coronavirus (COVID-19) pandemic and the City’s 1-3 year broad-based strategic plan process. This discussion resulted in a shift in focus to a 12-18 month Interim Recovery Plan (IRP).”
In watching the discussion at Tuesday’s Council meeting during which the item passed unanimously it was clear that the City staff was trying to align its economic recovery plan with the realization that many of the projects and programs noted in the report are ongoing over multiple-year projects. The start-stop process can upend some very critical projects throughout the city in every city department. The great unknowns are relative to the business community’s ability to navigate through the regulatory scheme to move already-approved projects through the timelines outlined in the staff report.
The recovery process in Santa Cruz needs to proceed with caution as many of those programs and projects will rely on state and federal funding. In other words, what is happening in Sacramento and Washington, DC can play a critical role in the City’s recovery plan.
California suffered the most severe business restrictions in the nation during December and January, and generally for most of the 2020 calendar year. I am guessing that restrictions will be gradually eased as clear evidence of fewer COVID-19 cases emerges in California this year. All counties are now in the purple tier of business restrictions after the stay-at-home mandate was ended by the Governor’s office on January 25th. If the downward trend continues for Santa Cruz County, there is a good chance we’ll move into a red tier in the next two to three weeks.
The targeted increase to get people vaccinated in our County in all age groups will go a long way to a quicker recovery. It will bring back some confidence to the consumers, employees, and our businesses. I also hope that as the number of people receive vaccinations, the number of positive cases will decline. Though the level of daily cases is still high, we are finally seeing a clear abatement over the last two weeks. We need to maintain a cautious approach and we are waiting but not holding our breath while we continue to follow COVID-19 guidelines.
Presenting a credible outlook for the U.S and California today requires knowledge of how the coronavirus will evolve in 2021. I’d like to think the pandemic will simmer slowly into the early summer. However, we had that same hope nearly a year ago, in March of 2020.
Right now, travel bans are still in effect. Rigorous testing for airline passengers entering the U.S. is now required. Effective January 26th, the CDC now requires all air passengers including U.S. citizens to present a negative COVID-19 test, taken within three calendar days of departure.
U.S. resident spending is expected to grow this year, for housing, food, clothing, autos, gasoline, furnishings, and healthcare. The unknowns include education, entertainment, recreation, and personal care. When business restrictions are largely lifted, most consumers will return to pre-pandemic behaviors, though some reticence toward high human contact activity will remain. Consequently, we don’t anticipate airline, cruise ship, or tour bus travel to recover quickly. Now the COVID-19 relief package that the California Legislature passed and the Governor signed will help those in the lower and very low income levels. California lawmakers on Monday cleared the way for 5.7 million people to get at least $600 in one-time payments, part of a state-sized coronavirus relief package aimed at helping those with low-to-moderate incomes weather the pandemic. Gov. Gavin Newsom said he signed the bill into law on Tuesday, one day after it passed the state legislature by a wide margin.
Fewer people will get these payments as compared to the federal relief checks Congress approved last year. But state lawmakers are aiming the money to reach the pockets of people who were left out of those previous payouts, including immigrants. People who are eligible for the money should get it between 45 days and 60 days after receiving their state tax refunds, according to the Franchise Tax Board.
The payments are part of a broader aid package the state Legislature approved Monday worth $7.6 billion. It includes more than $2 billion in grants for small businesses, waives about $25.6 million worth of business fees for struggling restaurants and hair salons, and provides $30 million in aid for food banks and another $5 million for diaper banks. Most people will get their checks by claiming the California earned income tax credit on their individual income tax returns. In general, this covers people who earn $30,000 a year or less.
Each year, more than 20% of people who are eligible for the credit don’t claim it, according to the nonpartisan Legislative Analyst’s Office. The spending plan lawmakers approved Monday includes $5 million for “outreach” to let people know how to apply for the money. Some may question these expenditures while we haven’t finalized our tax collections season. Expenditures of this level before we have a final state budget in June may upend the implementation of these funding services to needy Californians.