ARCHIVES

ARCHIVES

2008

By Mike Hodgson/Associate Editor

There’s not much doubt the big story of 2008 was the foundering economy on national, state, county, local and personal levels in a perverse example of the trickle-down theory.

It was such a big issue that most political pundits credit it for the election of Barack Obama to the presidency.

The economic breakdown was sparked when a wildly overinflated housing market began leaking in 2002 and continued to deflate.

An out-of-control financial industry, corporate greed, consumers addicted to living on credit cards and other forces combined to create a perfect economic storm that sent a financial tsunami around the world.

While the national economy staggered, California’s economy fell into recession while legislators failed to deal with a structural budget deficit.

Drowning in red ink, the state prepared to slash funding to local jurisdictions already struggling to provide ever-costlier services as property tax revenues plummeted and sales taxes flatlined.

Failing major financial institutions and auto industry giants sought government bailouts, leaving current and future taxpayers to pick up the tab for overpaid mismanagement.

Retail corporations eliminated stores, laid off workers or went belly-up, and thousands of small businesses shut their doors.

In the end, families and individuals were the big losers — victims of a vicious cycle of job losses, wage cuts, rising prices and stock market losses that wiped out retirement funds.

The South County was not immune. As early as January, the county, cities and school and special districts foresaw growing revenue losses and began planning ways to cut their budgets.

In April, anticipating a $4 million loss in state funding, Lucia Mar Unified School District cut staff, raised facility rental rates and froze hiring. By November, trustees would decide to sell two district-owned properties to raise revenue.

On Sept. 23, the governor finally signed a 2008-09 budget with a $24 billion deficit — despite cutting $10.3 billion from education and human services, boosting revenue $9.6 billion mostly by eliminating business tax breaks and borrowing $4 billion.

Nipomo residents learned their community could not become a city anytime soon because major commercial developments needed to generate city revenues are on hold, stymied by a lack of financing.

Construction slowed to a crawl, and local agencies began feeling the loss of development impact fees. Officials said that could delay public improvements and raise utility rates — another blow to beleaguered consumers.

In November, the UCSB Economic Forecast Project issued a grim prediction for the county: construction at a standstill, home prices in freefall, foreclosures climbing and retail sales declining.

The prediction for the county includes a total of 3,500 jobs lost from 2007 to 2010, with unemployment at 7 percent by next year and personal income falling 6.5 percent by 2013.

Even worse, analysts said, the resulting social toll will be heavy: more crime, more divorces, more suicides and fewer people with health insurance.

A few weeks later, local social services referral agencies reported calls from people seeking help with housing, utilities and food had risen as much as 400 percent under the weight of the sagging economy.

mhodgson@theadobepress.com