KeNo's Housing and Economic Portal: Saturday December 18 Housing and Economic stories

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TOP STORIES:

No Volunteers, Please, We’re Unionized - (www.city-journal.org) Petaluma is one of those idyllic small cities (population 58,000) that dot Route 101 on the way north from the Golden Gate Bridge through the wine country. But Petaluma, struggling like most municipalities in California under the current fiscal crisis, has found delivering public services—from education to public safety—anything but pleasant. The Petaluma City Schools district has trimmed millions from its budget over the last two years, as the deficit-ridden California state government has decreased its local support by 25 percent. The cuts have meant layoffs for district employees at all levels, from teachers to playground supervisors. In response, parents and concerned Petalumans have stepped forward to try to fill the non-teaching gaps, volunteering their time to maintain school services. The volunteers have worked in new roles identified by the school administration, but they’ve also stepped in to perform jobs eliminated by budget cuts. But those positions are unionized by the California School Employees’ Association (CSEA)—and that’s where the problems started. When volunteers began to help answer phones in the office and support the school librarian at Petaluma Junior High School, CSEA Local 212 president Loretta Kruusmagi immediately objected. Representing 350 clerical and janitorial staff in the Petaluma school district, Kruusmagi betrays not the least concern for the kids her union supposedly serves when she glowers: “As far as I’m concerned, they never should have started this thing. Noon-duty people [lunchtime and playground assistants]—those are instructional assistants. We had all those positions. We don’t have them anymore, but those are our positions. Our stand is you can’t have volunteers, they can’t do our work.”

Schwarzenegger Seeks $7.4 Billion More in Budget Cuts - (www.bloomberg.com) California Governor Arnold Schwarzenegger, who leaves office next month, proposed slashing state spending by an additional $7.4 billion to help ease a $25 billion deficit projected for the next 18 months. His plan would cut $886 million from the fiscal year ending June 30 and another $6.5 billion next year, including money for child-welfare programs and prisons, he said today at a press conference in Sacramento. He also would raise $937 million from various fees, including one charged to homeowner insurance policies for fire protection. The governor, who called a special budget session of the Legislature, also would divert vehicle-weight fees to pay debt service on transportation bonds to free money currently being spent on the debt and would sell advertising on state-owned highway signs. “If there is one thing we have learned over these past few years, it is that the longer we wait to tackle the problem, the larger and more difficult it is to solve,” Schwarzenegger said.

Tax Cuts Extension Will Prompt Congress to Ignore Budget Limits - (www.bloomberg.com) Congressional Democrats and Republicans are preparing to set aside their budget constraints as they negotiate the extension of income tax cuts scheduled to expire this month. Their plans to declare a budget emergency as they approve the extension of tax cuts will override a “pay-as-you-go” law that was structured to limit Congress’s ability to finance higher spending or tax relief by expanding the budget deficit. Extending all income-tax rates for two years, along with renewal of business tax breaks, relief from the alternative minimum tax and other moves such as expanded unemployment insurance could add about $750 billion to the deficit over the next decade, about $300 billion of which is beyond the deficit- expansion which the “pay-as-you-go” law would allow. For all the campaign-trail rhetoric about deficit reduction and recent attention focused on a bipartisan fiscal commission, Republicans and Democrats alike say the so-called “paygo” law won’t be a procedural or political obstacle to extending all of the tax cuts without offsets in spending.

More auto loans going to subprime buyers - (finance.yahoo.com) Consumers with less than stellar credit are getting car loans again as lenders loosen their standards, and the trend is likely to continue as more lenders get into the business. The percentage of loans going to subprime buyers rose 8 percent in the third quarter, their first year-over-year increase since 2007, according to a report issued Tuesday by Experian, a credit reporting agency. For new cars, the percentage of loans going to subprime buyers rose 13 percent over the July-September period in 2009. The increase for used cars was 3 percent. The majority of loans -- 63 percent -- still going to buyers with prime credit scores, which is defined as a 680 or above. But even that is settling into a more normal pattern. Before the recession, when credit was very loose, just 51 percent of loans were going to prime buyers, according to Melinda Zabritski, director of automotive credit at Experian. Last fall, when credit was tight, 66 percent of loans went to prime buyers. Another sign that the credit market is thawing: The loans people are getting are covering larger amounts and have longer terms. The average amount financed for new cars rose $2,530, to $25,273, over the third quarter of last year, while the average amount financed for used cars grew $977 to $16,706. The average terms rose by about a month, although the lowest tier buyers -- those with scores of 550 or less -- saw their terms rise by nearly four months.

Winchester Union Shoots Self in the Head - (Mish at globaleconomicanalysis.blogspot.com) The Clayton, Mo.-based company said that its Winchester Centerfire division in East Alton and the unit's approximately 1,000 jobs will be relocated to a new 500,000-square-foot, state-of-the-art plant to be built in Oxford, Miss. The relocation is expected to take place over several years. The union voted "no" Tuesday in the revote -- 593 to 470. The union also voted against this contract on Oct. 17 by a two-to-one margin. St. Peters said most workers refused to accept concessions because they believe the munitions manufacturer has been profitable. Winchester Union Shoots Self in the Head: Bang. Just like that, 593 out of 1063 voted that it was better to have no job than take a pay and benefit cut. Heaven forbid union members have to give up a 5th week of paid vacation. Lordy! Admittedly the 7-year wage freeze Olin demanded sounds bad, but not when the alternative is working at Walmart or wherever for minimum wages (assuming jobs can be found at all). The smart thing to do would have been to accept the contract, keep the job, and if the opportunity arose, take a better job elsewhere. Instead it's goodbye Alton, Illinois; Hello Mississippi. Olin was the sixth-largest employer in the metro-east. It will be impossible to replace those jobs.