California Crisis May Crunch $3.8 Billion of Jobs in Slowdown
By Michael Janofsky
Dec. 24 (Bloomberg) -- Just $5 million of work is needed to complete a new California Court of Appeals building in Santa Ana. The state may not have the money, and come July judges may be writing opinions in their living rooms.
“I’ve been on the bench for 23 years, and I’ve never seen anything like this,” said David G. Sills, the presiding justice for the Fourth District Court of Appeals, Division Three, in a telephone interview.
California’s worst budget crisis has held up $3.8 billion in spending on public works, possibly including the courthouse adjacent to Santa Ana City Hall. Sills and his seven fellow jurists had planned to move in before the lease on their temporary offices expires June 30.
“Everyone will have to work from home,” said Sills, 70, “and we’ll have to rent a place for when we hear arguments.”
Republican Governor Arnold Schwarzenegger and the Democratic-controlled Legislature are deadlocked on how to close a two-year budget gap that grew to $42 billion as job losses and stalled consumer spending reduced income and sales taxes. Schwarzenegger and Democratic leaders met yesterday without a resolution and are scheduled to continue talks through the holidays.
The California Pooled Money Investment Board, a committee that manages state spending, voted Dec. 17 to halt construction outlays for six months, which could hurt an economy that has lost more than 118,000 construction jobs in the last two years.
“The infrastructure work so vital to getting our economy back on track will lie crippled,” California Treasurer Bill Lockyer said in a statement after the vote. The board’s members are Lockyer, state Controller John Chiang and the governor’s budget director, Michael C. Genest.
Adding to Unemployment
The decision to defer spending is forcing agencies to review their projects and decide which of 2,000 under way around the state should be delayed. Among them are highways, bridges, hospitals, levees and schools and other public buildings.
California can’t afford to finance all of them and pay for such everyday needs as debt service on bonds and salaries and health-care benefits for the state’s 238,816 employees, H.D. Palmer, a spokesman for the Department of Finance, said in an interview.
Schwarzenegger has said postponing so much construction may add to California’s unemployment rate, which at 8.4 percent is tied with South Carolina as the third-highest in the U.S. behind Michigan and Rhode Island. The national rate is 6.7 percent.
About 3,000 people are working on 20 projects that Hensel Phelps Construction Co. of Greeley, Colorado, is overseeing in California, including a $110 million medical facility at the San Quentin State Prison near San Rafael, said Wayne Lindholm, executive vice president of the privately held company’s two California offices.
Overcrowding and Safety
“These people are scared,” Lindholm said. “They don’t know if they’ll be working in three months, a year, or where they go from here.”
South of downtown Los Angeles, a delay finishing a school building could put children in danger, said German Cerda, principal of South Gate Middle School. About a third of his 2,900 students are scheduled to move into the new building a half-mile away in 2012, relieving overcrowding inside and making nearby streets safer, he said.
On Dec. 2, a 14-year-old South Gate student was killed when a car stuck him a block away, an accident Cerda attributed to congestion.
“The biggest complaint we get from parents is what happens when the bell rings at 2:42 p.m. each day,” Cerda said. That’s the time that his students are dismissed and 3,000 more are leaving a high school down the street. “They don’t want to see another tragedy.”
Poor Environment
The Los Angeles Unified School District, second largest in the country behind New York City’s, has $3 billion in construction projects under way, including 35 new schools and improvements to 1,500 buildings. The goal is to reduce bus rides of 60 minutes and more and eliminate schedules that deny some children 17 days of instruction a year.
“Without the money, we have a poor educational environment for a while longer,” said Guy Mehula, chief facilities executive of the school district.
In Santa Ana, the appeals court typically handles 800 to 900 cases a year, and each of three judges hearing an appeal needs full access to the lower court record.
Without a building, couriers will have to drive cartons of files from one judge’s house to the next before they can meet somewhere to rule, Sills said.
“I haven’t the vaguest idea how we’re going to orchestrate all that, he said.
To contact the reporter on this story: Michael Janofsky in Los Angeles at [email protected].
By Michael Janofsky
Dec. 24 (Bloomberg) -- Just $5 million of work is needed to complete a new California Court of Appeals building in Santa Ana. The state may not have the money, and come July judges may be writing opinions in their living rooms.
“I’ve been on the bench for 23 years, and I’ve never seen anything like this,” said David G. Sills, the presiding justice for the Fourth District Court of Appeals, Division Three, in a telephone interview.
California’s worst budget crisis has held up $3.8 billion in spending on public works, possibly including the courthouse adjacent to Santa Ana City Hall. Sills and his seven fellow jurists had planned to move in before the lease on their temporary offices expires June 30.
“Everyone will have to work from home,” said Sills, 70, “and we’ll have to rent a place for when we hear arguments.”
Republican Governor Arnold Schwarzenegger and the Democratic-controlled Legislature are deadlocked on how to close a two-year budget gap that grew to $42 billion as job losses and stalled consumer spending reduced income and sales taxes. Schwarzenegger and Democratic leaders met yesterday without a resolution and are scheduled to continue talks through the holidays.
The California Pooled Money Investment Board, a committee that manages state spending, voted Dec. 17 to halt construction outlays for six months, which could hurt an economy that has lost more than 118,000 construction jobs in the last two years.
“The infrastructure work so vital to getting our economy back on track will lie crippled,” California Treasurer Bill Lockyer said in a statement after the vote. The board’s members are Lockyer, state Controller John Chiang and the governor’s budget director, Michael C. Genest.
Adding to Unemployment
The decision to defer spending is forcing agencies to review their projects and decide which of 2,000 under way around the state should be delayed. Among them are highways, bridges, hospitals, levees and schools and other public buildings.
California can’t afford to finance all of them and pay for such everyday needs as debt service on bonds and salaries and health-care benefits for the state’s 238,816 employees, H.D. Palmer, a spokesman for the Department of Finance, said in an interview.
Schwarzenegger has said postponing so much construction may add to California’s unemployment rate, which at 8.4 percent is tied with South Carolina as the third-highest in the U.S. behind Michigan and Rhode Island. The national rate is 6.7 percent.
About 3,000 people are working on 20 projects that Hensel Phelps Construction Co. of Greeley, Colorado, is overseeing in California, including a $110 million medical facility at the San Quentin State Prison near San Rafael, said Wayne Lindholm, executive vice president of the privately held company’s two California offices.
Overcrowding and Safety
“These people are scared,” Lindholm said. “They don’t know if they’ll be working in three months, a year, or where they go from here.”
South of downtown Los Angeles, a delay finishing a school building could put children in danger, said German Cerda, principal of South Gate Middle School. About a third of his 2,900 students are scheduled to move into the new building a half-mile away in 2012, relieving overcrowding inside and making nearby streets safer, he said.
On Dec. 2, a 14-year-old South Gate student was killed when a car stuck him a block away, an accident Cerda attributed to congestion.
“The biggest complaint we get from parents is what happens when the bell rings at 2:42 p.m. each day,” Cerda said. That’s the time that his students are dismissed and 3,000 more are leaving a high school down the street. “They don’t want to see another tragedy.”
Poor Environment
The Los Angeles Unified School District, second largest in the country behind New York City’s, has $3 billion in construction projects under way, including 35 new schools and improvements to 1,500 buildings. The goal is to reduce bus rides of 60 minutes and more and eliminate schedules that deny some children 17 days of instruction a year.
“Without the money, we have a poor educational environment for a while longer,” said Guy Mehula, chief facilities executive of the school district.
In Santa Ana, the appeals court typically handles 800 to 900 cases a year, and each of three judges hearing an appeal needs full access to the lower court record.
Without a building, couriers will have to drive cartons of files from one judge’s house to the next before they can meet somewhere to rule, Sills said.
“I haven’t the vaguest idea how we’re going to orchestrate all that, he said.
To contact the reporter on this story: Michael Janofsky in Los Angeles at [email protected].
