One area few people talk about when it comes to the recession is how the downturn is affecting the communities where they live. In California, the effects can be spotted in some places, and the consequences of these effects will linger long after the recession is officially over.
The issue in California is the number of empty storefronts and commercial buildings. Due to the still controversial Proposition 13, cities in California do not obtain the majority of their revenue from property tax. Instead sales taxes are the lifeblood of the cities. This has translated into a pattern where every city wants as many shops and stores as possible in order to maximize the potential tax revenues. To a city in California an empty storefront represents a drain on the city coffers as they still have to provide services, but are receiving reduced revenues.
I do not have pictures, but I do know that several communities in San Diego country are seeing an increase in "For Lease" signs in their shopping districts. The cutback on consumer spending has resulted in closed stores. Cities, which were counting on the sales tax revenues they were receiving, are now straining to maintain services. This problem is only made worse by the recent decision by the CA state legislature to withhold some of the property tax revenue that normally would be provided to the cities and counties to help them meet their budgetary needs.
The closed storefronts form a quiet, but important storyline that few are discussing when they talk about the economy. Employment is an issue, as are the questions of how manufacturing reacts to the potential increased costs of Cap-and-Trade, and the proposed restrictions to providing health insurance to workers. However, consumer spending still drives the US economy, and the fact that so many stores have closed signals a definite slowdown in consumer spending.
It will be worse in California due to the way that cities obtain the money they use to pay for services. Although few cities have spoken loudly about it, many cities are going to be looking to cut back on services they provide in the near future, and that will have an effect on communities.
The economy is going to recover. People still need goods and services. Despite all the advances in knowledge man has achieved, no more efficient method of distributing those goods and services has been found other than trade, so in time the markets will recover and reform. However, at this time the recovery seems to be struggling to find its footing and we will have to wait to see when and how the markets will respond to the changes that occurred due to the recession.
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