Santa Monica to Steal From Investors AND Create Slum Housing

Imagine being an investor in a restaurant. Your plan is to make money. So you price your food based on costs and a profit margin. In Santa Monica that is legal. Then make believe you are the owner of an apartment building. You want to make a profit. But, unlike the restaurant owner, the city council will set the prices you can charge?they decide, not the market, the size of your profit?or the size of your loss, and you have NO say in the matter. Just invest in the property and government takes over the revenue sides of the books.

As an investor if you have no say in the revenues, which limits the money available to keep up the property. Like New York and other cities that forced rent controls on owners, those buildings became slums. Imagine, Santa Monica having New York type slums?that is the direction of the city council.

?Councilmembers on Tuesday will consider a ballot measure that would cap rent-controlled apartment rent increases at $288 per unit annually, up from last year?s $175, according to the Santa Monica Daily Press.

The $288 rate would reportedly be a maximum increase; the Rent Control Board could decide on the any price below that on an annual basis.?

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Santa Monica to consider a measure to cap rent hikes

Santa Monica, by all measures, is a high-rent district but voters could get the opportunity to keep those prices in check if the City Council approves a measure designed to cap rent increases.

Scott Bridges, L.A. Biz Journal, 7/15/14

Santa Monica, by all measures, is a high-rent district but voters could get the opportunity to keep those prices in check if the City Council approves a measure designed to cap rent increases.

Councilmembers on Tuesday will consider a ballot measure that would cap rent-controlled apartment rent increases at $288 per unit annually, up from last year?s $175, according to the Santa Monica Daily Press.

The $288 rate would reportedly be a maximum increase; the Rent Control Board could decide on the any price below that on an annual basis.

Last year, the board enacted a first by requiring landlords to pay a portion of the fee hike. That portion was a mere $19, but if the measure passes, landlords would be required to pick up at least half of the tab on any rent increase, the Daily Press reports.

Last year?s fee increase was the board?s first in six years and, according to city officials, very controversial. Landlords threatened to sue if they weren?t allowed to pass on the entire fee to tenants, claiming the fee couldn?t be raised without voter approval.

City officials say that fees might need to be raised again, possibly as soon as next fiscal year, which is why they proposed the charter amendment to the Rent Control Board.

?Vacancy decontrol and market forces have resulted in a steep increase in median rents,? city officials told the newspaper. ?With the current registration fee and pass through, landlords are out of pocket only a tenth of one percent of the rent [1.5 percent if they forego the pass through]. Thus, landlords can likely bear an increase in registration fees and are almost certainly better situated to bear that increase than their increasingly rent-burdened tenants.?

If the Council approves the measure, it will go before the voters in November.

 

Mark Landsbaum: Water woes could lead to ‘the hammer’

The State of California can now fine you, if you water your lawn and a drop of water goes into the street. If someone thinks you are using too much water on your plants, you can be reported and you can expect a visit from the cops?since they are no longer catching and detaining illegal aliens, they have time to harass you about over watering your petunia?s.

Instead of a stick, how about a carrot. Let water be put on the free market. Allow private firms build dams and drill for wells. When government controls an item, or taxes it, we get less. We need more water, and for the people to decided where best used, not a cop or politician.

?Unlike the free market, government will either ration or impose arbitrary price penalties unrelated to supply and demand. A free market would allow supply and demand to drive prices to reflect water?s true value, and whatever rationing that resulted would be freely chosen by buyers, not capriciously imposed by bureaucrats and politicians.?

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Mark Landsbaum: Water woes could lead to ‘the hammer’

Free market would be better at solving water distribution problems than government fixes.

By MARK LANDSBAUM, LA Register, 7/16/14

In some parts of the United States, people are experiencing drought. Not everywhere, of course ? the U.S. is a diverse nation. It?s plenty wet in Pennsylvania, New York and New England, but in California and Texas not so much.

The problem is, when the going gets tough, people turn to the government rather than to what works to solve problems like drought. What works almost always is the free market?s unfettered decision-making, without government interference. Instead, what we see are schemes such as in Fresno.

The city of Fresno announced not long ago it will impose a mandatory 25 percent reduction in water use for all residents and businesses over the summer. Previously, the city urged a voluntary 10 percent reduction. Voluntary doesn?t work. People accustomed to using as much water as they please see little need to voluntarily reduce how much they use.

Unlike the free market, government will either ration or impose arbitrary price penalties unrelated to supply and demand. A free market would allow supply and demand to drive prices to reflect water?s true value, and whatever rationing that resulted would be freely chosen by buyers, not capriciously imposed by bureaucrats and politicians.

When government decides it is time to get serious, compliance isn?t voluntary. Government will monitor your water meters, spy on you hosing down your driveway and scrutinize your lawn sprinklers. When you exceed government?s standard of ?too much,? the hammer will drop. You will be fined, otherwise financially penalized or, who knows, maybe worse. Looking for an easy fix to life?s travails, you have given them the power to do this.

Government regulation, such as how much water you may use, is a blunt instrument. All government controls are.

For example, the 1 million people who the Washington Post reports are being paid either too much or too little in taxpayer-funded subsidies. The clumsy means the government uses to determine subsidies is the blunt instrument. It can’t even give away money effectively.

Nevertheless, the nation?s inclination increasingly is to turn to government?s blunt hammer to quickly fix what an unfettered free market would naturally correct. Granted, water is a complex problem, in large part because there are great quantities of it in some places and not much elsewhere, and much of it is not owned in common. Still, the problem, even during periods of drought, isn?t a lack of water, it?s the distribution of water.

If water were treated like bread or even gasoline, supply and demand would solve the problem. If users saw the price of their water soar, they would use far less of it. As prices rise, solutions like desalinization, treatment of sewage and other ?used? water and the importing of water via pipelines from distant lakes and rivers become more practical. That leads to greater demand for those alternatives, spurring investment and development, ultimately making them more affordable.

Many government agencies and quasi-public agencies like water districts eventually will resort to higher prices by imposing fines and penalties to curb use. Fines and penalties are essentially surtaxes on the price of water. No one asks the taxpayer how much tax he wants to pay.

Government?s arbitrary financial penalties are nothing like fluctuating prices in a free market, where supply and demand, not bureaucrats and politicians, determine highs and lows. The market determines the actual value of what is bought and sold. Politicians and bureaucrats determine an artificial value, greatly influenced by non-market factors, not the least of which is rewarding favored constituencies and meeting politically inspired (and entirely arbitrary) goals of ?fairness.?

Because government?s blunt instrument doesn?t correct the underlying cause of a problem, like water distribution as opposed to its alleged shortage, the best result only temporarily conceals the problem. Inevitably, the government?s interference either worsens the situation or creates a new problem.

To a blunt instrument like government?s hammer, every problem looks like a nail. The hammer-wielders aren?t likely to voluntarily lay aside their instrument and allow free markets to fix what the government has made worse. The next inevitability is that government applies more interference to fix the problem created by the previous government interference. When rationing and fines don?t solve the problem of water distribution, be prepared for the government to impose more rationing and fines.

The nature of government is the same everywhere. The government may ask for voluntary compliance, which Fresno demonstrated is a fool?s errand. But inevitably government will turn to what it does naturally ? force compliance.

Why would you be surprised that if you give people power over you, they use it?

Resorting to the uncomfortable adjustment of supply and demand wouldn?t solve the water distribution problem overnight, and wouldn?t happen without complaint. But it would work. Resorting to government?s blunt instrument will generate discomfort and complaint too. But it won?t work.

 

Million More Patients in California?25% LESS Doctors for Medi-Cal

I am the type to tell you ?I told you so?. A year ago, the California Political News and Views reported that when ObamaCare was activated, Medi-Cal would collapse. I said that millions would join while thousands of doctors would refuse to participate. In California we have added over one million people to the Medi-Cal roles?to take care of them, 25% of the doctors LEFT the system. Plus, we do not know how many still in the system refuse to add new patients. This is a medical disaster we are watching. While we may not see the full extant for another year or so (of course adding thousands of illegal aliens to the system could speed up the collapse).

Note the mainstream media is not reporting this problem?they are silent.

?According to the state Department of Health Care Services, 82,605 doctors were enrolled in Medi-Cal in spring of this year, compared with about 109,000 in spring 2013.?

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Number of Medi-Cal Providers Down by 25% in Spring 2014

California Healthline, 7/15/14

Nearly 25% fewer doctors participated in Medi-Cal during spring of this year than in the spring of 2013, HealthyCal reports. Medi-Cal is California’s Medicaid program.

The drop comes amid a significant increase in Medi-Cal beneficiaries.

Background

Since Medi-Cal was expanded under the Affordable Care Act, more than two million individuals have enrolled in the program, bringing total enrollment to 10.6 million.

Meanwhile, about 600,000 Medi-Cal applications still are pending.

Details of Provider Participation

According to the state Department of Health Care Services, 82,605 doctors were enrolled in Medi-Cal in spring of this year, compared with about 109,000 in spring 2013.

Of participating doctors in May 2014:

  • 43,760 were specialists; and
  • 38,845 were primary care providers (Guzik, HealthyCal, 7/14).

Reasons for Decrease

Providers have noted that Medi-Cal reimbursement rates are among the lowest Medicaid payment rates in the country, and that low rates could cause doctors to stop treating Medi-Cal patients because their overhead costs outstrip reimbursements (California Healthline, 6/23).

However, DHCS spokesperson Anthony Cava said the drop in participating physicians is the result of the agency’s efforts to remove providers from the program who have not:

  • Complied with the program’s updated application requirements; or
  • Billed the program in 12 months or more.

Cava added that the updated application rules “have strengthened the department’s ability to deny or terminate providers who do not comply.”

Implications for Access to Care

Cava said that the drop in participating physicians “has not resulted in a decrease in access to care.”

Further, he said the agency’s provider lists do not specify whether physicians are accepting new patients or how many they are accepting. For example, Cava said that while some physicians on the list have treated about 2,000 Medi-Cal patients, others may only treat a couple or none (HealthyCal, 7/14).

 

San Fran Bus Subsidy $9.80 Round Trip?Los Angeles is $9.00 round trip

For a bus rider, the cost of a trip across town in San Fran or Los Angeles is comparatively cheap. For the taxpayers, it is an expensive luxury. For a round trip in San Fran, the rider pays $4.00 and the taxpayers spend another $9.90. In Los Angeles it is $3.00 to the rider and $9.00 for the taxpayer. For a comparison, a train ride on the Metroliner, round trip from Simi Valley to Downtown LA and back is a cost to the taxpayers of $35. Government transportation is expensive?especially for those not using it.

The Left is so mixed up, now they want direct fares to be much higher?which would price government transportation out of the hands of the poor and middle class. The Left wants higher taxes and now want to harm the poor.

?If riders want quality service?and if our cities and metropolitan economies really need high-quality transit to be competitive?riders may need to act in their own self-interest and develop the willingness to move towards fares that match the cost of providing the service.?

Photo courtesy of skew-t, flickr

Photo courtesy of skew-t, flickr

 

Why Higher Fares Would Be Good for Public Transit

If transit is really to thrive in the United States, agencies need to reconsider their reliance on taxpayer subsidies.

Low transit fares have a long tradition in American cities. In his 1921 reelection campaign, Mayor John F. Hylan called the nickel fare a “property right” of New Yorkers, even though inflation during World War I had raised wages, and turned what had been a profitable fare for the transit companies into a fare that guaranteed ongoing losses, eventually requiring a government takeover. New York was only somewhat ahead of the national curve. In the 1960s, a variety of pressures put for-profit transit systems in terminal bankruptcy, and public subsidy of transit fares became the norm across the United States. Since then, the price of a transit ride has been a permanently politicized number.

Series

The political focus on the fare assumes that only one aspect of the overall transit experience?the price of a ride?is the overriding concern to a rider. But this isn’t always the case. With America’s transit systems woefully underinvesting in their own capital infrastructure, it is time to consider whether the interests of the riders themselves are actually served by an approach that prioritizes low fares over high-quality service. And with transportation patterns beginning to break from the car-focus of the last 60 years, it is also time to think about whether we can break from the model of pricing transit in a way that structurally loses money.

Shifting away from subsidized fares offers the promise of several benefits in return: improved and expanding services, more creative management, and the ability of even lower fares for certain riders who need them. Making such a shift would require a radical reinvention of transit as we know it today, but one that has already taken place in many cities around the world.

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Outside of a few expansion projects, America transit systems are failing to invest in their infrastructure. Even worse, the systems with the longest history and the most intensive usage are the ones at greatest risk. Why is it that the older systems?the New Yorks, the Chicagos?don’t look as good as the newer ones? It’s not actually because they’re old. Take a look at a 100-year old building in Midtown Manhattan or a 100-year-old home in Bronxville?or even Grand Central Terminal itself, now 101 years old. They certainly don’t look unattractive. That’s because they receive regular upgrades, bringing them up to the standards of new construction. In contrast, most of New York’s subway stations haven’t been comprehensively renovated in a generation. It would be like walking into a landmark office building and finding rotary telephones.

Every $2.50 swipe of your Metrocard gets matched by $3.31 in tax dollars.

It would seem, therefore, that we’re simply not devoting enough public money to transit. But consider that in 2012, $7.7 billion dollars of state and local tax revenues went to New York City Transit, not counting what when to the commuter railroads and other operations. That’s a lot?nearly $1,000 for every man, woman, and child who lives in New York City. Why didn’t it feel like enough? Because less than half of it, roughly $3.2 billion, was reinvested in the system. The majority, about $4.5 billion, was used to keep fares low by paying operating costs. On average, each New York City transit rider paid only 43 percent of the cost of his or her ride; every $2.50 swipe of your Metrocard gets matched by $3.31 in tax dollars.

What might that $3.31 have done if it had been invested in the system? Well, if the MTA could issue bonds against those subsidies, it could finance a whopping $85 billion capital plan?on top of current spending. The MTA has estimated that the bus and subway system needs $68.2 billion in investments over the next 20 years, which means that the $85 billion could not only meet those needs but exceed them. We could improve reliability by catching up on deferred maintenance, increase frequencies and speeds with new signaling, renovate virtually every station in the system to include platform doors and air conditioning, and renovate key bus routes with dedicated lanes and priority traffic signals.

Overall, it’s the kind of money that would revolutionize the experience of virtually every rider, every day, with dramatic benefits for the region’s overall economic performance.

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Now don’t get me wrong: If public subsidies were so plentiful as to allow both full investment in transit infrastructure and low fares, I’d much rather take that deal than see the excess public dollars go, for example, to building new roads. But it doesn’t work that way. Despite occasional bond issues and other spurts of investment, there is nothing in the record of the last half-century of subsidized U.S. transit that suggests long-term investments will ever be a priority. If riders want quality service?and if our cities and metropolitan economies really need high-quality transit to be competitive?riders may need to act in their own self-interest and develop the willingness to move towards fares that match the cost of providing the service.

Of course, the transit officials reading this are shaking their heads, thinking “doesn’t this guy know that transit agencies always need operating subsidies?” The facts are on their side, in one respect: No transit agency in the United States breaks even. The?average system recovers about 40 percent of its costs from fare revenues; the rest come from subsidies, as per the latest?National Transit Database. The best-performing operation is the New York subway, which covers 73 percent of operating expenses from fares. But because New York City’s buses cover only 35 percent of their costs through fares, the overall New York City Transit recovery ratio is only 43 percent. A few systems, especially the newer ones, make only 10 percent of their operating costs in fares.

System Base fare (or peak-hour fare for shortest trip) Farebox recovery ratio Subsidy per base fare Implied base fare for full cost recovery Annual operating subsidies, all sources (in millions) Proceeds from a 30-year zero-coupon bond, at 4% interest, compounded monthly?(in millions)
NYC MTA $2.50 43% $3.31 $5.81 $4,895 $85,443
bus $2.50 35% $4.64 $7.14    
subway $2.50 73% $0.92 $3.42    
SF BART $1.85 61% $1.18 $3.03 $228 $3,980
SF Muni $2.00 29% $4.90 $6.90 $493 $8,605
LA Metro $1.50 25% $4.50 $6.00 $1,051 $18,345
DC Metro   46%     $854 $14,907
bus $1.75 24% $5.48 $7.23    
subway $2.15 67% $1.04 $3.19    
Chicago Transit Authority   43%     $735 $12,830
bus $2.00 37% $3.35 $5.35    
subway $2.25 51% $2.16 $4.41    

Table by Rohit Aggarwala (National Transit Database).

But the idea that transit subsidies are an immutable law of nature is flawed. It rests on the experience of the 1960s, the last time American transit systems were organized in a way that attempted to recover operating costs. Back then, the attempt failed. As inflation drove up transit fares, riders abandoned trains and buses. Eventually, in most places, only the poor continued to use transit, and even they left as soon as they could afford a car. Many systems gave up; others adopted subsidized fares as a means of survival. As transit became associated with a poor and often disproportionately African-American ridership, low fares became, legitimately, an issue of social justice.

Thus, there were two reasons to maintain low fares and subsidize them: one, because higher fares would drive riders into their cars, and two, because higher fares would be an unjust and immoral burden on the majority of riders, who were disadvantaged and in need of social assistance.

Commuter rail system Average fare Farebox recovery ratio Subsidy per base fare Implied base fare for full cost recovery Annual operating subsidies, all sources (in millions) Proceeds from a 30-year zero-coupon bond, at 4% interest, compounded monthly (in millions)
Metro-North $7.07 62% $4.27 $11.34 $405 $7,069
Long Island RR $5.99 50% $6.00 $11.99 $642 $11,206
Metra (Chicago) $4.03 41% $5.79 $9.82 $384 $6,703

Table by Rohit Aggarwala (National Transit Database).

In 2014, both of these assumptions require reassessment. As everyone knows, America’s cities and highways have changed dramatically since the 1960s. In many places, especially in major cities, people who ride transit don’t really choose every morning whether to drive. They’ve built their lives around the transit system. Given the congestion on the roads, and the preference that many have to spend their commute time on their electronic devices rather than listening to the radio, transit is a positive choice that many riders make. And in a world of $4-or-more gasoline, the price of driving is so much higher than the price of riding that transit seems severely underpriced.

Along with the change that transit is no longer simply a last resort for those without a car, it is also no longer true that the vast majority of transit riders are poor. This isn’t to say that all riders are rich, or that no riders are poor (more on that later), but the only reason to subsidize every transit rider, for every ride, is if you assume that the vast majority of riders do, in fact, deserve public subsidy. And this isn’t the case. It is especially not the case on commuter railroads, where the average rider earns more than the average resident of their metro area, and it certainly isn’t the case in many of the gentrifying neighborhoods of our biggest cities.

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Given these social changes, how might transit fares be set in the future? The simplest way would be to add up annual operating costs, divide by total rides, and set the resulting figure as the fare. That’s a useful benchmark, but not a good approach.

Instead, the first task should be to look at what fares transit could charge given potential travel alternatives. Clearly, a slow, infrequent bus service with standing room only offers a less competitive product than a fast, frequent rail service on which everyone gets a seat. The former is a product that few would choose to take aside from economic reasons; the latter is probably far superior to driving or any other option. New transit systems that are just building up ridership would probably need lower fares, just as any new business offers introductory pricing; long-standing ones would probably be most able to capture higher prices.

This kind of thinking raises all kinds of questions that could radically reform how transit is priced. Would it make sense in New York, for instance, to have a lower bus-only fare as opposed to a universal subway-and-bus fare? Would it make sense for an express train to be priced higher than the local? Would it make sense to give a discount to outlying stations, which have some of the longest rides in the city? And would it make sense to give riders a discount if they don’t enter the Manhattan core, both because the outer ends of most subway lines are underused, and because intra-borough travel outside Manhattan is far more auto-oriented than travel into Manhattan?

Not all transit riders need a fare subsidy

A second task in setting a fair fare would be thinking about which transit riders do, in fact, deserve public fare subsidies. The goal here would be a discounted price for groups who qualify in terms of need. San Francisco’s Muni already does this, and the MTA already offers such a discount for senior citizens (even though age is not always an indicator of financial need) and for students. It should not be impossible to expand such a system to cover recipients of food stamps, the Earned Income Tax Credit, and similar indicators of actual financial need. It could even be the case that newly hired employees or others might qualify. But there is no need for the public to subsidize the well-off riders who board trains every morning in Scarsdale and on the Upper East Side.

A final task would be to ensure that government policies are doing everything possible to equalize the cost of riding transit and driving. A state law should require all businesses to offer their employees tax-exempt transit passes, and at least for state tax purposes (and, ideally, for federal taxes, too), the limit on such exemptions should be removed.

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Moving to a standard approach in which American transit systems covered their operating costs and devoted public subsidies to capital investment would bring our systems into the same pattern adopted in Singapore and Tokyo, and one that London’s fast-improving system is moving towards. While it would raise the transit fares that many riders pay?in some cases, dramatically?it might even lower prices for the neediest riders who receive the worst service today.

Cities have been poorly served by the orthodoxy that says low fares are the most important thing for transit.

It would also require significant changes from our politicians and our institutions. Paying full price would make riders less tolerant of poor customer service from the MTA, and it would require the MTA to be less subservient to politicians. It would make clear the fact that increasing the cost of driving?through parking prices, congestion charges, or other approaches?is a more effective way to nudge people onto transit than by lowering fares. And it would call into clear relief the inability of transit operators and transit unions to achieve meaningful improvements in operating efficiently.

But the benefits to every rider would be enormous. In the example of New York, the $85 billion that full-fare pricing would allow would upgrade the system, improve the quality of life of all New Yorkers, increase overall economic productivity, and make our city far more competitive against places like London and Singapore. America’s cities are at a moment of great transition in the history of transportation, and transit systems must reflect that transition as well. Cities have been poorly served by the orthodoxy that says low fares are the most important thing for transit systems. Deep down, transit riders know that you get what you pay for, and if they want better transit they need to be more willing to pay for what they get.

Union to Professional Nurses??You Work for US, Not the Patients??Strike in NorCal?

Imagine going to college and professional training for years, having twenty years of experience working with patients. Then having a highly paid high school graduate?leader of a union, telling you, ?let the patients fend for themselves, instead of a syringe in your hand, you need a picket sign.? Are professional nurses so weak minded they allow unions to own them. Worse, they pay for the strike?unions steal from their paychecks, without permission?either pay or you do not work.

Shortly, another union strike will hit hospitals and patients?and the public stands by, the nurses do nothing but chant and patients are endangered. Sick.

?Northern California hospitals. Kaiser operates the largest hospital system in the state, by number of hospitals and number of hospital beds, and is the eighth largest health system in the country.

The union is anticipating Kaiser will propose cuts at the negotiation, and leaders want to make sure nurses are ready to fight back, and, if necessary, go on strike.?

CA Nurses on Strike

Kaiser, Nurses Union Brace for Upcoming Contract Battle

KQED, 7/15/14??

Members of the California Nurses Association rallied in Sacramento in May to raise awareness around what they say are patient care concerns in California hospitals. (April Dembosky/KQED)

Going to a nurses union meeting is a little bit like going to an evangelical church service.

Contract talks begin next week on new four-year contract.

?We all have to stand up, and it?s a struggle,? says nurse Veronica Cambra, reporting a grievance at Kaiser Hospital in Fremont as though she?s giving testimony. ?And we will overcome this, okay??

The rest of the nurses respond with the passion of a devout congregation, humming ?Mmm hmmm,? and ?That?s right,? through the series of speeches.

The union heads at the front of the room interject now and then to rally the group around a unifying message.

?We?re not okay with that,? says bargaining director Debra Grabelle after a nurse complains that patients are suffering under hospital management policies. ?And we are not going to put up with that, as an organization of registered nurses, that?s not what our calling is.?

But this is no church service, and nurses are not here to worship. The California Nurses Association is rousing its troops for battle. California?s powerful nurses? union will begin bargaining next week with Kaiser Permanente on a new four-year contract for nurses at its Northern California hospitals. Kaiser operates the largest hospital system in the state, by number of hospitals and number of hospital beds, and is the eighth largest health system in the country.

The union is anticipating Kaiser will propose cuts at the negotiation, and leaders want to make sure nurses are ready to fight back, and, if necessary, go on strike.

?We are going to use the power of 18,000 of us to make sure the reason we got in this profession is fulfilled,? Grabelle says.

Big Difference From Last Contract Negotiation

Four years ago, nurses ratified the first contract proposal Kaiser offered without objection. The hospital didn?t make any cuts to wages, pensions or other benefits, and nurses didn?t push for any increases. Both sides had reason to keep tensions at a minimum, according to Joanne Spetz, an economics professor at the UC San Francisco School of Nursing.

She says in 2010 the nursing shortage was still a recent memory, and Kaiser wanted to hold on to its experienced nurses. It was also the end of a recession, and nurses didn?t want to appear greedy.

?You?re not going to get a lot of public sympathy,? she says of the union?s position. ?You don?t have a great case ? ?Oh, gee, you should give us a pay raise when everybody else in the Bay Area is basically taking pay cuts.??

But a lot has changed in the last four years. The economy has improved, especially in Northern California. A better job market ? combined with the market impact of the Affordable Care Act ? is generating a lot of new customers for Kaiser.

?One could reasonably expect into the future that there will be growth,? Spetz says. ?And if there is growth, then the nurses are doing exactly what the classic role of a union is, which is to say, ?Well, if there?s going to be increased net revenue, we should get a cut of that.??

Nurses haven?t articulated any specific financial requests yet. But they began marching months ago, framing their demands around patient care and safety. Nurses at Kaiser?s intensive care units and emergency rooms say the hospital system has been skimping on care, discharging patients who should be admitted, or closing pediatric or cardiology units, forcing patients to drive 20 miles to the next Kaiser hospital.

Nurse practitioner Rachel Phillips says she is under unrelenting pressure to see more patients in less time.

?When I first started at Kaiser, I wasn?t rushed with my patients,? Phillips says. ?I could have 30 minutes with a new patient. That time has been whittled away. We?re currently asked to see patients every 15 minutes, regardless of the complexity of their medical issues.?

Telephone advice nurses say there aren?t enough nurses staffing the call centers.

Frequently, people will abandon their call because they become discouraged, or don?t have time to keep waiting,? says Janna Burt, a nurse at Kaiser?s Sacramento call center.

Kaiser says a lot of the union?s claims are misleading or untrue.

?For 70 years, we?ve had the same mission: to provide high quality care and to improve the health of communities where our members live,? says Barbara Crawford, Kaiser?s vice president for quality.

She says Kaiser, and all hospitals, are grappling with broader economic issues affecting health care, like the overall demand for hospital care going down.

?We actually need less nurses in the hospital,? she says, adding that improvements in technology and reductions in hospital infections means there are fewer patients staying in the hospital ? on average 250 fewer per day now compared to a few years ago. She gives the example from earlier this year when her husband had foot surgery.

?He was in and out the same day, and he did not have general anesthetic, he didn?t need general anesthetic, and he did beautifully,? she says. ?I would say, four years ago, he probably would have been in the hospital four or five days.?

She says Kaiser values its nurses and that they are now needed more in the outpatient setting or for home health services, as a matter of these economic shifts and patient preferences: ?Most people really don?t want to be in the hospital. They want a choice about where they receive their care.?

The Affordable Care Act also puts pressure on hospitals to cut costs, she says. Medicare reimbursements are going down, which cuts into hospital revenues. And health reform has made the insurance market a lot more competitive, so Kaiser has to be aggressive on price.

?As consumers have opted to join us, our expectation and promise to them is that we keep their costs down,? she says.

Kaiser will also be well armed for the negotiation. In the last few years, it?s hired two key executives to deal with labor relations. Jerry Vincent joined from Walt Disney World in 2012 and will lead the talks for Kaiser. Backing him up is Kaiser?s head of human resources, Chuck Columbus, who previously worked at Ford Motor Company, and was at the helm of labor relations there when the company convinced the auto-worker union to switch from a defined-benefit pension plan to a 401(k).

Strike Threat is Sketchy PR Territory for Union

The nurses? union says it will fight any proposed cuts and is calling on nurses to be prepared to strike this fall. This is always sketchy PR territory for nurses to wade into because of the potential harm to patients. Plus, the Bay Area is still smarting from the BART strike that left thousands of commuters stranded.

?It definitely will make the public relations conversations more nuanced. It?s going to shadow the way these organizations, both Kaiser and the California Nurses Association, approach the way they discuss the strike,? says Professor Spetz.

She says the nurses have power in numbers. The California Nurses Association founded a national arm, National Nurses United, that has been gaining members across the country, most recently in right-to-work states like Florida and Texas. Spetz says this local fight likely has national aspirations.

?Given that Kaiser exists in multiple states, there may be a broader strategy of trying to demonstrate their strength, demonstrate their willingness to fight, demonstrate their political power on a national stage, which could be beneficial in trying to get representation in other Kaiser regions, as well as other states,? Spetz says.

California nurses have already been pushing Congress to pass legislation that would establish national nurse ratios similar to California?s. These require hospitals to have at least one nurse on staff for every five patients.

?Those efforts are going to be helped anytime they get some positive national view ?- or fear ?- quite frankly, of their power,? she says.

The ultimate question is what impact all this has on patients. Studies are mixed on whether union advocacy actually results in better patient outcomes. A new report from the University of Massachusetts finds patients at recently unionized hospitals in California suffer fewer heart attacks, strokes and infections. While UCSF?s research indicates that nurse ratios in California have increased nurse morale and wages, but have had no effect on patient?s health.

 

Berkeley will have to reduce spending, according to new report?Increased pension costs the Reason

The People?s Republic of Berkeley loves high taxes, job killing regulations, lots of welfare?many in town, including those in City Hall, have their brains fried from years of drug and marijuana use. It is not merely tolerated in Berkeley, it is expected. Now the reality of the pension crisis is facing city government?services will have to be cut, cops and firefighters fired, libraries closed, just to pay the pensions negotiated by the radical unions with the government as the other half of the cabal.

Taxed so high already, only spending cuts can happen.

?Due to a projected $4 million increase in the city?s pension costs between 2016 and 2017, as well as unfunded infrastructure and services, the report said, Berkeley will have to cut spending across the board. The report, written?by the city auditor, re-evaluated a 2010 audit on the fiscal effects of changes to employee benefits.?

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Berkeley will have to reduce spending, according to new report

By Madeleine Pauker, Daily Californian, 7/15/14

Berkeley will have to reduce services and employee compensation to remain financially sustainable because of unfunded pensions and infrastructure, according to a report presented at the Berkeley City Council meeting last week.

Due to a projected $4 million increase in the city?s pension costs between 2016 and 2017, as well as unfunded infrastructure and services, the report said, Berkeley will have to cut spending across the board. The report, written?by the city auditor, re-evaluated a 2010 audit on the fiscal effects of changes to employee benefits.

Recent policy changes in CalPERS, the agency that manages the state pension plan, will increase annual costs in Berkeley and other cities, ultimately decreasing pension liabilities in the long term. The report suggested that Berkeley and other California cities reduce services and compensation in order to pay these new expenses.

While the city should reduce services and compensation, cutting certain services could result in ?inappropriate risks? that would be harmful in the long term, said City Auditor Ann-Marie Hogan.

?It?s a very common practice of cutting oversight and support services,? she said. ?If they cut a position in payroll audit, the result would be that the paychecks were wrong.?

Additionally, the report recommended spending more than?$500 million on repair and restoration of the city?s infrastructure and public spaces or face larger costs in the future if the repairs are not completed.

Councilmember Gordon Wozniak said the city?s financial situation can be improved by prioritizing the creation of revenue over focusing on cutting services.

?The problem is reducing services doesn?t necessarily solve the problem,? he said.

Wozniak said the city is trying to increase development in Downtown Berkeley in order to generate additional revenue and has been working with UC Berkeley to keep campus startups in Berkeley. Laying off many workers to cut expenses would result in too high a ratio of retirees to workers for the pension system to be supported, he added.

John Ellwood, a professor at the Goldman School of Public Policy at UC Berkeley, said the traditional view of city financial planning would necessitate a reduction in services.

?Californians are unwilling to raise taxes. So if pensions go up, you have to cut more services if you?re unwilling to dramatically raise revenues,? Ellwood said.

The city government has been working with the unions in Berkeley to renegotiate labor contracts without cost of living increases and reductions in health care costs to avoid budget increases, according to Wozniak.

The city is also in the process of updating its antiquated financial system, which would allow the council to do ?better analysis with the proper tools,? Wozniak said.

?The city is trying to be more efficient and investing in (technology) to make each employee more efficient,? he said. ?We can?t change employees dramatically, and it has to be done slowly over time.?

Hogan said the city may need to spend more on analytics so it can make informed fiscal decisions.

?The big contribution that both the community and the council can make right now to maintain the good analytical capacity ? is to maintain a direct but respectful attitude when grappling with these tough issues,? she said. ?It?s important in staff morale and making difficult decisions.?

Anti-chain-store vote coming this week in San Francisco

In San Fran cops look the other way when illegal aliens are found, when drugs are found, hedonistic sex in public is observed, this is a tolerant town?except when it comes to economic freedom. If you want a choice of places to shop, it must fit liberal sensitivities, instead they harm the consumer. In San Fran there are strict limits on national companies selling in this city of sex, drugs and rock and roll (and high tech). When will the consumers demand free choice? When will the customers say they want to show at a Wal Mart?

?The Planning Department recommends changes that would:

  • Broaden the definition of what constitutes a chain store;

  • Include international locations and entitled locations against the limit of what constitutes a chain store;

  • Add new neighborhoods that require chain stores to get conditional use authorization.

  • Strengthen review criteria for new chain stores.?

  • walmart

 

Anti-chain-store vote coming this week in San Francisco

The Planning Department’s proposed changes to formula retail policy would broaden the definition of what constitutes a chain store and strengthen review criteria for new chain stores.

Annie Sciacca, San Francisco Business Times, 7/15/14

The San Francisco Planning Commission will vote Thursday to adopt rules that would make it harder for chain stores to open new locations in many areas of the city.

If approved by the Commission, and later the Board of Supervisors, the rule changes would be a victory for those who have lobbied to make it harder for ?formula retail? to enter San Francisco.

In 2004, the city began implementing legislation that required chain stores to get additional approvals to open in certain parts of the city and provide other retailers and city residents opportunities to object.

The report and recommendation to be heard by the Planning Commission come from the Planning Department, which has included many of the proposals that members of the Board of Supervisors put forward in the last year to regulate formula retail stores in their respective areas.

The Planning Department recommends changes that would:

  • Broaden the definition of what constitutes a chain store;
  • Include international locations and entitled locations against the limit of what constitutes a chain store;
  • Add new neighborhoods that require chain stores to get conditional use authorization.
  • Strengthen review criteria for new chain stores.

 

California: Far Fewer Manufacturing Jobs?But good at what we get to do

Some people do not get it. If five people are doing a great job that is nice. But fifty people want to work, and in California manufacturing that will never happen again. The author of this article appreciates that those that do have jobs are doing good work. What is really needed is the repeal of AB 32, a cut in taxes and common sense in the development of jobs. It seems that number one product of California government is building roadblocks to economic vitality.

?”Manufacturing continues to become more technologically advanced and more lean,” says economist Christine Cooper, who co-authored the study. “It means that productivity is soaring, but employment is not, so we continue to lose employment in manufacturing jobs while our output and the value of our output keeps increasing.”

Obama Jobs Tour

 

Study: As manufacturing changes, California loses jobs but keeps prowess

Brian Watt, KPCC, 7/15/14

Workers at Karen Kane sew small batches of samples in their local warehouse to test out new designs. Karen Kane can now produce its line faster in the states than it did in China. Mae Ryan/KPCC

Despite losing thousands of manufacturing jobs over more than two decades, California remains a top manufacturing center in the U.S, according to a report published Tuesday by the Los Angeles County Economic Development Corporation.

The report is entitled “California?s Manufacturing Industries: Employment and Competitiveness in the 21st Century.” Between 1990 and 2012, it says, California lost 842,180 ??or about 40 percent ? of its? manufacturing jobs. But it still contributes more to the country?s manufacturing output than any other state. With 11.4 percent of the U.S.’ manufacturing GDP, California beats Texas with 10 percent.

“Manufacturing continues to become more technologically advanced and more lean,” says economist Christine Cooper, who co-authored the study. “It means that productivity is soaring, but employment is not, so we continue to lose employment in manufacturing jobs while our output and the value of our output keeps increasing.”

While many manual jobs have gone off shore, technology gets the blame and the credit for constantly changing manufacturing.

“As we see higher technology being used in manufacturing, we do need to have targeted curriculum and training programs for the people that are gonna be operating these types of manufacturing processes going forward,” Cooper told KPCC.

Cooper adds that California still maintains?a lot of advantages in several individual manufacturing industries, including aerospace, apparel, food processing and furniture.

Jim Watson, President and CEO of California Manufacturing Technology Consulting, agrees that the manual jobs in manufacturing have gone oversees and aren’t coming back. The new manufacturing jobs in California and throughout the U.S. require backgrounds in engineering and math skills and the ability to work with computerized equipment.

But while California’s workforce needs the training to catch up, Watson says the leaders of manufacturing companies must get smarter and more aggressive about?cultivating new markets for their goods.

“The future of a lot of manufacturing in Southern California is not in California.? It?s in this global economy that?s beginning to impact everybody,” Watson told KPCC.

Watson says his nonprofit recently helped a manufacturer of security and audio equipment grow its business by selling its products in Mexico.

“It took a lot of work on their part,” Watson said. “They needed to understand the complexities of the market, how to sell to it, but it all paid off for them.”

The report points out that though California is important to the nationwide manufacturing economy, the Golden State’s own economy is more diversified, so it depends less on manufacturing than other states.

Manufacturing only makes up 10.7 percent of the state?s economic output, while the percentage is much higher in states like Oregon (32 percent) and Indiana (29 percent).

Despite losing thousands of manufacturing jobs over more than two decades, California remains a top manufacturing center in the U.S, according to a report published Tuesday by the Los Angeles County Economic Development Corporation.

The report is entitled “California?s Manufacturing Industries: Employment and Competitiveness in the 21st Century.” Between 1990 and 2012, it says, California lost 842,180 ??or about 40 percent ? of its? manufacturing jobs. But it still contributes more to the country?s manufacturing output than any other state. With 11.4 percent of the U.S.’ manufacturing GDP, California beats Texas with 10 percent.

“Manufacturing continues to become more technologically advanced and more lean,” says economist Christine Cooper, who co-authored the study. “It means that productivity is soaring, but employment is not, so we continue to lose employment in manufacturing jobs while our output and the value of our output keeps increasing.”

While many manual jobs have gone off shore, technology gets the blame and the credit for constantly changing manufacturing.

“As we see higher technology being used in manufacturing, we do need to have targeted curriculum and training programs for the people that are gonna be operating these types of manufacturing processes going forward,” Cooper told KPCC.

Cooper adds that California still maintains?a lot of advantages in several individual manufacturing industries, including aerospace, apparel, food processing and furniture.

Jim Watson, President and CEO of California Manufacturing Technology Consulting, agrees that the manual jobs in manufacturing have gone oversees and aren’t coming back. The new manufacturing jobs in California and throughout the U.S. require backgrounds in engineering and math skills and the ability to work with computerized equipment.

But while California’s workforce needs the training to catch up, Watson says the leaders of manufacturing companies must get smarter and more aggressive about?cultivating new markets for their goods.

“The future of a lot of manufacturing in Southern California is not in California.? It?s in this global economy that?s beginning to impact everybody,” Watson told KPCC.

Watson says his nonprofit recently helped a manufacturer of security and audio equipment grow its business by selling its products in Mexico.

“It took a lot of work on their part,” Watson said. “They needed to understand the complexities of the market, how to sell to it, but it all paid off for them.”

The report points out that though California is important to the nationwide manufacturing economy, the Golden State’s own economy is more diversified, so it depends less on manufacturing than other states.

Manufacturing only makes up 10.7 percent of the state?s economic output, while the percentage is much higher in states like Oregon (32 percent) and Indiana (29 percent).

 

Sand: Keeping Their Backs Up and Claws Sharp–Teachers Unions

Parents have now realized that while teachers are good, teachers that are members of unions are forced to be agents of the unions rather than of education. We love teachers, but students, parents and taxpayers clearly understand that unions harm quality education. In Los Angeles the union is already threatening to strike if a pay raise they demand is not given?of course the money to pay it does not exist?but the union says that is not their problem.

There are long lines for almost every charter school in the nation. Private schools are doing well, home schooling is expanding. Parents in California are using a new law to throw out teachers and administrators from failed schools?of course the unions are suing. In Wisconsin when teachers were freed of union chains, within three months 60% of the teachers stopped paying bribes to the unions.

Under 30% have a positive view of teachers unions!

?This result is consistent with national polls. In 2012, long before Vergara became national news, an Education Next survey found that those with a positive view of unions dropped to 22 percent in 2012, down from 29 percent the year before. Perhaps more interestingly,

The survey?s most striking finding comes from its nationally representative sample of teachers. Whereas 58% of teachers took a positive view of unions in 2011, only 43% do in 2012. The number of teachers holding negative views of unions nearly doubled to 32% from 17% last year.?

Walton_High_School_New_Classroom

 

Keeping Their Backs Up and Claws Sharp

By Larry Sand, Union Watch, 7/15/14

As the teachers unions lose popularity, some think that they will soften their positions. But as recent events show, this is very far from the truth.

A poll taken in June, right after the Vergara decision was handed down in Los Angeles, found that 49 percent of California voters think that teachers unions have a ?somewhat or very negative? impact on the quality of K-12 education, with just 31 percent saying that they have a ?somewhat or very positive? impact.

This result is consistent with national polls. In 2012, long before Vergara became national news, an Education Next survey found that those with a positive view of unions dropped to 22 percent in 2012, down from 29 percent the year before. Perhaps more interestingly,

The survey?s most striking finding comes from its nationally representative sample of teachers. Whereas 58% of teachers took a positive view of unions in 2011, only 43% do in 2012. The number of teachers holding negative views of unions nearly doubled to 32% from 17% last year.

In addition to losing favor, the National Education Association has been bleeding teachers. Due to a shrinking student population and right-to-work legislation passed in several states, the nation?s largest union has lost more than a quarter-million members over the past five years.

Some predicted that the loss of rank-and-file and stature would lead the national unions to soften their more rabid positions and become more amenable to certain reforms, but if their recent conventions are any indication, this is hardly the case. In fact, they seem to be digging in.

At the NEA convention a couple of weeks ago, Lily Eskelsen Garcia was elected president and proclaimed that her first task was to win back the public. She apparently thinks the unions need better PR, not to become more child-friendly and accountable. But as the public?s awareness of what the unions are really about grows, that strategy won?t fly. As Democrats for Education Reform president Joe Williams pointedly said, ?Eskelsen Garcia must navigate that minefield carefully because the public will smell bulls**t from a mile away.?

And indeed, there was plenty of odiferous waste at the convention. Among other things, the union faithful came up with a New Business Item (NBI) which called for the resignation of Arne Duncan, who had the audacity to tweet a positive response to the Vergara decision. (It?s ironic: As former California state senator Gloria Romero points out, the union that fights to keep every last teacher in classroom, including those who commit unspeakable offenses against children, wants to ditch Duncan for merely voicing an opinion contrary to theirs.) Other items had nothing at all to do with education but, being champions of ?social justice,? the activists came up with an NBI which proposes to inform the public about the dangers of fracking, another that calls for the end of ?food deserts? (don?t ask) and one that wants President Obama to investigate the continued incarceration of Leonard Peltier, a man who was convicted of first-degree murder in the slaying of two FBI agents in 1977.

Outgoing president Dennis Van Roekel was hardly in conciliatory mode when he blasted those whom he deems a threat to his union?s hegemony. Just a sampling of his enemies list:

The issue of privatization of more and more jobs of our education support professionals. The intrusion of for-profit players, both in higher education and K-12. Especially troubling is the increasing influence and control of huge corporations like Pearson and others. And the incredible onslaught of corporate reformers like Democrats for Education Reform, Michelle Rhee, and the like. Attacks on educators? rights and even attempts to silence our voice. And if that were not enough, our lives revolve around testing?the overwhelming amount and the offensive misuse of scores from high-stakes standardized tests.

Then last week in Los Angeles, the American Federation of Teachers convention got off to a rousing start when Reverend William Barber gave a speech that most definitely will not ?win back the public.? Setting the dial at ?hellfire-and-brimstone,? he excoriated Tea Party ?extremists,? greedy ultra-conservative ?puppets,? the Koch Brothers, the religious right, those who want to ?give vouchers to the wealthy,? all the while singing the praises of a green economy and healthcare for all. Clearly he was appealing solely to the left, while insulting and ignoring the majority of the membership which leans slightly to the right.

Not to be upstaged, AFT president Randi Weingarten joined the trashing of the Vergara decision:

When we last met, we didn?t know that a court decision in California would reignite the perverse rallying cry of so-called reformers: that the only way for students to win is for educators to lose.

And then, referring to Harris v Quinn ? a SCOTUS decision which held that homecare workers could not be forced to join a union ? she said,

And while many of us rejoiced when marriage equality was upheld by the Supreme Court, sadly that court has become Supreme Court Inc., ruling in favor of corporate interests while diminishing the rights of voters, women and working families.

Then she, too, blasted all her b?te-noires: Democrats for Education Reform, Jeb Bush, Eli Broad, ALEC, Govs. Snyder, Walker, Corbitt, Jindal and Brownback, the Walton family and ? what would a union leader diatribe be without them? ? the Koch Brothers. But she didn?t join the ?Dump Duncan? chorus; instead, she just chastised him over his pro-Vergara stance. But two days later, AFT approved a resolution calling for him to resign ?if he does not improve under a plan to be implemented by President Obama.?

Edu-pundit Andy Smarick suggests that teacher union leadership appears to be defiantly marching their members toward Waterloo.

There is an alternative, though it might seem implausible in the current environment. First, the appeal of Vergara could be halted. Instead of relitigating the case, unions might work with the California legislature to rewrite the challenged laws so they primarily protect students not jobs. Second, the national unions and their affiliates could seek to amend tenure and seniority rules in other states so Vergara-inspired lawsuits don?t get off the ground.

Smarick?s alternative suggests that the teachers unions become more conciliatory and flexible. They won?t. Despite losing members and the dissatisfaction of the more conservative rank-and-file, the union hardcore is doubling down. As Stanford?s Terry Moe rightfully asserts,

Unions are unions. They are in the business of protecting jobs: that is why their members join, that is what their members expect them to do, and that is what they actually do. If you expect them to do something else?to represent children or to represent the public interest?you will be wrong. Don?t expect a cat to bark.

They?ll just keep hissing and baring their claws.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network ? a non-partisan, non-political group dedicated to providing teachers with reliable and balanced information about professional affiliations and positions on educational issues.

Drought impact study: California agriculture faces greatest water loss ever seen

One month ago we were told that the cost of the ?drought? and government water policies was going to be $1.6 billion. Now that number has been upped to $2.2 billion. From 15,000 to over 17,000 jobs will be lost?my guess is that is being low balled. Too many farms are fallow and many just closed down. The worse news is that illegal aliens already here will probably lose their jobs to the illegal aliens just imported by Obama. Imagine illegal aliens angry at losing their jobs to newer illegal aliens!

The drought exists, the lack of water is because of government policies?no new water storage facilities in more than forty years, protection of bait (delta smelt) and conservation policies to push people out of the State (but thanks to Obama to be replaced with criminals from Central America).

??We have to do a better job of managing groundwater basins to secure the future of agriculture in California,? said Karen Ross, Secretary of the California Department of Food and Agriculture, which largely funded the UC Davis study. ?That?s why we?ve developed the California Water Action Plan and a proposal for local, sustainable groundwater management.?

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Drought impact study: California agriculture faces greatest water loss ever seen

UC Davis, 7/15/14

A new report from the University of California, Davis, shows that California agriculture is weathering its worst drought in decades due to groundwater reserves, but the nation?s produce basket may come up dry in the future if it continues to treat those reserves like an unlimited savings account.

The UC Davis Center for Watershed Sciences study, released today at a press briefing in Washington, D.C., updates estimates on the drought?s effects on Central Valley farm production, presents new data on the state?s coastal and southern farm areas, and forecasts the drought?s economic fallout through 2016.

The study found that the drought — the third most severe on record — is responsible for the greatest water loss ever seen in California agriculture, with river water for Central Valley farms reduced by roughly one-third.

Groundwater pumping is expected to replace most river water losses, with some areas more than doubling their pumping rate over the previous year, the study said. More than 80 percent of this replacement pumping occurs in the San Joaquin Valley and Tulare Basin.

The results highlight California agriculture’s economic resilience and vulnerabilities to drought and underscore the state?s reliance on groundwater to cope with droughts.

?California?s agricultural economy overall is doing remarkably well, thanks mostly to groundwater reserves,? said Jay Lund, a co-author of the study and director of the university?s Center for Watershed Sciences. ?But we expect substantial local and regional economic and employment impacts. We need to treat that groundwater well so it will be there for future droughts.?

Other key findings of the drought?s effects in 2014:

  • Direct costs to agriculture total $1.5 billion (revenue losses of $1 billion and $0.5 billion in additional pumping costs).?This net revenue loss is about 3 percent of the state?s total agricultural value.
  • The total statewide economic cost of the 2014 drought is $2.2 billion.
  • The loss of 17,100 seasonal and part-time jobs related to agriculture represents 3.8 percent of farm unemployment.
  • 428,000 acres, or 5 percent, of irrigated cropland is going out of production in the Central Valley, Central Coast and Southern California due to the drought.
  • The Central Valley is hardest hit, particularly the Tulare Basin, with projected losses of $810 million, or 2.3 percent, in crop revenue; $203 million in dairy and livestock value; and $453 million in additional well-pumping costs.
  • Agriculture on the Central Coast and in Southern California will be less affected by this year?s drought, with about 19,150 acres fallowed, $10 million in lost crop revenue and $6.3 million in additional pumping costs.
  • Overdraft of groundwater is expected to cause additional wells in the Tulare Basin to run dry if the drought continues.
  • The drought is likely to continue through 2015, regardless of El Ni?o conditions.
  • Consumer food prices will be largely unaffected. Higher prices at the grocery store of high-value California crops like nuts, wine grapes and dairy foods are driven more by market demand than by the drought.

Groundwater a ?slow-moving train wreck?

If the drought continues for two more years, groundwater reserves will continue to be used to replace surface water losses, the study said. Pumping ability will slowly decrease, while costs and losses will slowly increase due to groundwater depletion.

California is the only state without a framework for groundwater management.

?We have to do a better job of managing groundwater basins to secure the future of agriculture in California,? said Karen Ross, Secretary of the California Department of Food and Agriculture, which largely funded the UC Davis study. ?That?s why we?ve developed the California Water Action Plan and a proposal for local, sustainable groundwater management.?

Failure to replenish groundwater in wet years continues to reduce groundwater availability to sustain agriculture during drought — particularly more profitable permanent crops, like almonds and grapes — a situation lead author Richard Howitt of UC Davis called a ?slow-moving train wreck.?

?A well-managed basin is used like a reserve bank account,? said Howitt, a professor emeritus of agricultural and resource economics. ?We?re acting like the super rich who have so much money they don?t need to balance their checkbook.?

To forecast the economic effects of the drought, the UC Davis researchers used computer models, remote satellite sensing data from NASA, and the latest estimates of State Water Project, federal Central Valley Project and local water deliveries and groundwater pumping capacities.

The analysis was done at the request of the California Department of Food and Agriculture, which co-funded the research with the University of California.

The report?s other co-authors include UC Davis agricultural economists Josu? Medell?n-Azuara and Dan Sumner, and Duncan MacEwan of the ERA Economic consulting firm in Davis.

California produces nearly half of U.S.-grown fruits, nuts and vegetables and nearly a quarter of the nation?s milk and cream. Across the nation, consumers regularly buy several crops grown almost entirely in California, including tomatoes, carrots, broccoli, almonds, walnuts, grapes, olives and figs.

About UC Davis

UC Davis is a global community of individuals united to better humanity and our natural world while seeking solutions to some of our most pressing challenges. Located near the California state capital, UC Davis has more than 34,000 students, and the full-time equivalent of 4,100 faculty and other academics and 17,400 staff. The campus has an annual research budget of over $750 million, a comprehensive health system and about two dozen specialized research centers. The university offers interdisciplinary graduate study and 99 undergraduate majors in four colleges and six professional schools.