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Citizen feedback important as Phoenix City Council debates more cuts, food tax

One Tuesday, January 12, the Phoenix City Council is discussing the current budget outlook at a Work Study Session, set for 2 p.m. in the Council Chambers, 200 W. Jefferson St., in downtown Phoenix.  Review and download the meeting notice (note the meeting will now be in the Council Chambers) and the staff memo explaining the depth of the ongoing budget crisis.  In a nutshell:

  • The expected budget deficit for the remainder of this fiscal year and for FY 2010-2011 is $245 million, even after $156 million in cuts a year ago.
  • The elimination of all programs and departments not related to public safety would still not allow a balanced budget.
  • Because state-shared revenues are distributed on a two-year delay, the City faces at least several more years of cuts or no-growth budgets, even if local sales tax collections start to rebound next year (at the earliest).
  • While this budget document refers to the City’s general funds, a variety of other funds that rely on sales tax collection have the same budget issues, including Transit 2000, Phoenix Parks and Preserves Initiative, Prop 1 Public Safety, and the Phoenix Convention Center.

Two related newspaper articles are available:

While there will be a series of budget hearings over the next six weeks to discuss specific programmatic recommendations, Tuesday’s work study sessions will be an excellent opportunity to weigh in on the general direction budget cuts should take, or whether the Council should consider increasing revenues.  For more information about the City’s budgeting process, click here.

Phoenix, Los Angeles lead list of job losers

Shedding jobs, not pounds...

[Source: G. Scott Thomas, Phoenix Business Journal] — Los Angeles continues to suffer the nation’s worst employment losses, with 220,000 of its jobs disappearing during the past year, but Phoenix was hit with the biggest percentage drop, according to a report issued Wednesday morning by the U.S. Bureau of Labor Statistics.  Phoenix lost 8.0 percent of its job base during the past year.  The runners-up for that unhappy distinction were Detroit (down 7.8 percent) and Boise, Idaho (down 7.6 percent).

Los Angeles registered the largest raw decline of any labor market between September 2008 and the same month this year.  New York City and Chicago were close behind with respective year-to-year losses of 216,400 and 207,800 jobs.  Ninety-nine of the nation’s 100 biggest markets experienced declines.  The sole exception was the McAllen-Edinburg area on the Texas-Mexico border, which added 3,100 jobs in the past 12 months. [Note: Read the full article at Phoenix, Los Angeles lead list of job losers.]

Arizona expected to lose jobs for another year

[Source: Howard Fischer, Capitol Media Services] — Arizona will continue to lose jobs for probably another year, the state Department of Commerce predicted Thursday.  Senior economist Jack York said the number of people working at the end of this year will be 178,500 less than when the year started.  That translates to a loss of 6.8%.  Both those figures set new records — and by large margins.  The biggest loss in pure numbers was recorded last year when the number employed dropped by 57,400.  And in pure percentages, the biggest drop was at the end of World War II when employment declined by 2.9%.

State officials figure that most of the jobs that they predict the state will lose this year already are gone. But they are figuring another 70,400 will be out of work by the end of the year.  But that won’t be the bottom: York said job losses will continue through at least the first half of 2010.  He predicted, however, that hiring will pick up in the third quarter of the year, spurred by federal stimulus projects, war spending and even some increased consumer spending.  That late-year boost, York said, should limit year-over-year losses in 2010 to 17,400.

York was less willing to predict just how high the state’s jobless rate, currently 9.1%, will go before subsiding. But Lisa Danka, a deputy assistant director at the agency, said double-digit figures would not be surprising.  The last time Arizona’s jobless rate topped 10 percent was July 1983.  Not surprisingly, York said state’s beleaguered construction industry will continue to suffer, with the 2009 job losses likely hitting close to 50,000.  Part of that, he said, is related to the fact that population growth has slowed.  [Note: Read the full article at Arizona expected to lose jobs for another year.]

Recession rising like Phoenix with area delinquencies surging

[Source: Brian Louis, Bloomberg] — Drive up to the Peaks Corporate Park in north Scottsdale, Arizona, and the only person you’ll encounter at the luxury office complex is a security guard.  The development was planned to offer executive suites with views of the McDowell mountains, neighbors such as General Electric Co. and a location just minutes away from Jack Nicklaus’s Desert Mountain golf courses.  Plans to lure tenants haven’t materialized and today the complex in this city next to Phoenix is empty, the entrance blocked by a traffic barricade.

Delinquencies in the Phoenix area on loans backed by office, industrial, retail and apartment properties have risen more than five-fold since March, according to data compiled by Bloomberg.  The Phoenix region has the second-worst U.S. delinquency rate, behind Detroit’s 10 percent.  In Phoenix, the economic recovery looks a lot like a recession.  “A commercial recovery in markets that are heavily dependent on construction will be slow, which means the overall recovery will lag the nation as a whole,” said Susan Wachter, a real estate professor at the University of Pennsylvania’s Wharton School in Philadelphia.  “These are more volatile markets and getting back to normal could take years.”

Phoenix and other southern and western cities such as Atlanta, Houston, and Dallas grew because they offered an affordable lifestyle to middle-class Americans, said Edward Glaeser, an economics professor at Harvard University in Cambridge, Massachusetts. That growth has slowed.  The Phoenix area’s population is forecast to increase 1.6 percent in 2009 from 2008 and 1.8 percent in 2010, according to a forecast by Scottsdale, Arizona-based real estate and economic consulting firm Elliott D. Pollack & Co.  That’s the slowest growth since at least 1990.  Employment may fall 6 percent in 2009 and another 1 percent in 2010, according to the firm.

The real estate crisis has brought economic growth to an end.  Arizona had the highest unemployment rate since 1983 in July at 9.2 percent, according to the U.S. Bureau of Labor Statistics.  The rate fell to 9.1 percent in August.  Single- family building permits in metropolitan Phoenix may fall to 5,973 this year, down 81 percent from 2007, according to a consensus forecast of real estate and consulting firms and universities compiled by Arizona State University’s W.P. Carey School of Business.  “The economy in Phoenix is in tatters right now,” said Matthew Anderson, a partner at Foresight Analytics LLC in Oakland, California.  “It’s now really hit the skids.”  [Note: Read the full article at Recession rising like Phoenix with area delinquencies surging.]

Moody’s lowers ratings outlook on City of Phoenix to negative

Phoenix City Hall

[Source: Wall Street Journal] — Moody’s Ratings Service lowered its ratings outlook on the city of Phoenix, Arizona, to negative, citing ongoing revenue declines and expected tax-base losses in the city, which will weaken its credit profile.  Arizona’s largest city, and the fifth most populous in the U.S., is in the midst of a severe recession that began with the housing crisis and now includes most other sectors of the economy.

Unemployment has been less of a burden in the city, reaching 8.7% in July, compared with 9.5% for the state and 9.7% for the nation.  But a weak job market combined with the potential for more foreclosures means many consumers in the area will severely limit their discretionary purchases well into 2010, Moody’s said.

The ratings agency said that, despite the city’s efforts to maintain fiscal stability during the recession, the outlook cut reflects Moody’s expectation that finances will remain under pressure for the foreseeable future, given those broader economic concerns and uncertainty about the region’s next economic expansion.  Moody’s has Phoenix at Aa1, which is one notch under Aaa.  The outlook change affects about $2.4 billion of debt.

Earlier this month, Moody’s lowered its ratings outlook on Arizona’s Aa3 issuer rating, which is three notches under Aaa, to negative.  The ratings agency cited similar concerns about revenue underperformance.  Despite those concerns, once the housing market levels off, Moody’s said Tuesday, Phoenix will resume its above-average long-term growth due to its high-skill office jobs and high-tech manufacturing sector.  The city continues to develop a number of revitalization efforts, including a convention-center expansion, light-rail construction, and development of a downtown campus for Arizona State University.  Moody’s said those efforts and ongoing population increases should help the city recover at a faster rate.  [Note: Read the full article at Moody’s lowers ratings outlook on City of Phoenix to negative.]

Worsening USA unemployment


This ain’t pretty for anyone

Geography of Jobs

[Source: TIP Strategies, Austin, TX] — This animated map provides a striking visual of employment trends over the last business cycle using net change in jobs from the U.S. Bureau of Labor Statistics on a rolling 12-month basis.  TIP Strategies used this approach to provide the smoothest possible visual depiction of ongoing employment dynamics at the MSA level.  By animating the data, the map highlights a number of concurrent trends leading up to the nation’s present economic crisis.  The graphic highlights the 100 largest metropolitan areas so that regional trends can be more easily identified.  For more information and to view the map animation, click here.

Arizona tops nation in construction job loss

[Source: Phoenix Business Journal] — Construction employment in Arizona dropped 2.8 percent in July, and is down 28 percent since last year, the largest year-to-year hit among states, according to a report issued Friday by the Associated General Contractors.  Total construction employment in Arizona stood at 136,700 in July, down by 53,000 jobs since July 2008.  Nevada took the second largest hit with a year-over-year loss of 25.1 percent.  Louisiana, among only two states with gains, stepped up the most with a 3.6 percent increase in construction jobs.

“There aren’t a lot of places construction workers can turn to avoid the steep layoffs sweeping the construction industry right now,” said Stephen E. Sandherr, the group’s CEO.  “Sadly, construction workers are feeling the full impact of declining state spending, a near halt in office and retail construction and stimulus spending that – with too many programs – has yet to materialize.”  [Note: Read the full article at Arizona tops nation in construction job loss.]

Axe falls on Arizona Republic staff (again)

[Source: Adam Klawonn, The Zonie Report] — If you’re a news junkie like me, then please take a moment of silence today for the latest round of laid-off staffers at The Arizona Republic, which has undergone major changes over the past two years as its parent company, Gannett Corp., deals with a failing business model.  Gannett’s stock price, once in the 80-dollar range, went up 9 cents this morning to $3.18 per share.

This once proud, family owned paper has continued its ungraceful downward spiral as core advertisers — homebuilders, automakers/dealers and retailers, among others — cut back on their advertising budgets and spend what’s left on the Web.  The newspaper charges at least $329 per inch of dreary black-and-white advertising but offers a variety of pricey online advertising options.  Conversely, Facebook fan pages are free, and for $329, you could run a pretty killer online ad campaign yourself.  You get the picture.

Back to the layoffs.  The 20 names cover a variety of departments -– from news to sports to graphics and more -– that affect the daily digest you may receive of just what the heck is going on in Arizona.  Recently, information has been more important than ever as the state Legislature makes cuts that affect us all.  [Note: To read the full blog entry Axe falls on Arizona Republic staff (again)]

Jobless rate climbs in Phoenix, statewide

[Source: Phoenix Business Journal] — Unemployment was up in Phoenix and Arizona in June, the metro jobless rate rising to 8 percent from May’s 7.9 percent.   The jump was even higher across the state with 8.7 percent of the work force unemployed, up from 8.2 percent in May and the highest it’s been since the early 1980s peak approaching 11 percent.  That translates to a loss of 49,400 jobs, according to a report from the Arizona Department of Commerce.

Tucson’s jobless rate gained one-tenth point to 7.9 percent, while the Yuma area felt the most stress at 19.8 percent, up from 18.8 percent in May.  Prescott stood at 9.2 percent and Lake Havasu-Kingman stood at 9.7 percent.  The Flagstaff area came in with the lowest rate in the state at 7.4 percent, up from 7.2.

Nationwide June unemployment stands at 9.5 percent, up from 9.4 in May and 5.6 percent a year ago.  In June 2008, the statewide unemployment rate was 5.5 percent and the Phoenix rate was 4.8 percent, the report said.

Statewide, losses mounted in manufacturing, trade, transportation and utilities, information, professional and business services, educational and health services, leisure and hospitality, and government sectors.  Natural resources, construction, financial and miscellaneous services, however, gained jobs.  [Note: Read the full article at Jobless rate climbs in Phoenix, statewide]