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Tough road ahead for local businesses in 2011

A few bright spots in economic indicators

Tough road ahead for local businesses in 2011

Stanislaus County Supervisor Vito Chiesa gives an update on the state of the county during the Turlock Chamber of Commerce Membership Breakfast on Wednesday.


POSTED February 11, 2011 8:33 p.m.

All four speakers at Wednesday’s Turlock Chamber of Commerce Membership Breakfast offered a common message: 2010 was a rough year and much work remains for 2011. But all speakers also noted unexpected bright spots, which could point toward an earlier than expected recovery.

“I think everyone still has a long way to go with a lot of challenges,” said Alliance CEO Bill Bassitt, who provided an update on the economy at the breakfast.

The event, highlighted by Turlock Mayor John Lazar’s State of the City address, also featured a State of the Chamber address from chamber CEO Sharon Silva, and a Stanislaus County update from Supervisor Vito Chiesa, whose district includes Turlock.

Bassitt pointed to an overall 1.1 percent increase in Stanislaus County jobs from December 2009 to December 2010. Stanislaus County was one of the only counties to post such a gain, especially in key money-making sectors with 2,100 new jobs in manufacturing, 100 new agricultural jobs, and flat employment in leisure and hospitality fields.

“When you look at what we're doing and how we're stacking up with the rest of the state, we're really not in that bad of a situation,” Bassitt said.

The county ranked in the top two-thirds of a national finance research firm’s employment growth rankings, while remaining below average in costs of living and doing business. According to University of the Pacific projections, personal income is up and the recession may fade by the third quarter of 2011.

“I think the recovery has started,” Bassitt said. “I think we've reached the bottom and we're turning the corner, and that's a pretty big statement for me to say.”

The “elephant in the room,” though, remains the mortgage situation, Bassitt said. Nearly 90 percent of mortgage holders are upside down, with the value of real estate not expected to return to 2006 levels until 2035.

The State of California presents another threat to businesses, Bassitt said, with the second highest business tax rate in the country – not to mention the proposed elimination of business-friendly Redevelopment Agency and Enterprise Zone programs. Stanislaus County’s Enterprise Zone created 500 new jobs last year, Bassitt said, and employed 4,762 in total.

“They're not really addressing the problems of government,” Bassitt said. “They're not cutting where the cuts should be.”

Chiesa offered a similar message about Gov. Jerry Brown’s proposed budget cuts, which he described as “moving along like a freight train with a jet engine behind it.”

Many of those cuts are expected to pass state costs along to county governments, without providing any additional funding. And, in some instances where funding may be provided, the county could not have the ability to perform a service – like housing countless state inmates which may be sent to the county jail.

“We realize that counties can provide services much more efficiently than state government can,” Chiesa said. “I think everyone realizes that. But we have to look at capacity issues, and we have to have a mandated funding source.”

Chiesa also levied complaints with the state’s property tax sharing plan, enacted through Prop 13 during Brown’s first stint as governor. Because Stanislaus County was in a better financial situation at that time, it was slated to receive fewer tax dollars in return – just 10 cents of every dollar, compared to the 63 cents per dollar San Francisco County receives. That’s millions of dollars lost to the state each year, Chiesa said.

But the area’s legislators are united to change the Prop 13 formula for the first time, meeting with Brown to discuss the issue earlier this year.

“There've been 100 times it’s been tried to get it fixed,” Chiesa said. “Now we're taking a different approach.”

Chiesa pointed to other problems at the county level, primarily with the county pension plan, but noted that tax revenues have stabilized. And unique new regional initiatives – like the regional fire authority, combining Modesto, Stanislaus County, and Salida’s police departments – have paid off big for the county, with further such efforts planned.

And Chiesa was especially excited about the first-ever Turlock Government Night, which he planned, scheduled for Feb. 24 at Turlock’s War Memorial. There, Rep. Jeff Denham (R-Ca19), State Senator Anthony Cannella (R-12), and State Assemblyman Bill Berryhill (R-26) will be joined by representatives from the Turlock Irrigation District, Stanislaus County, the City of Turlock, and more for an open town hall meeting to discuss important issues.

Even the Turlock Chamber of Commerce noted successes in a tough 2010, exceeding its budgetary goal by $14,000. Beyond fiscal concerns, Silva noted successes in securing Turlock’s Partnership Incentives Plan – a $5,000 fee break for new businesses – publishing a Chamber of Commerce magazine, and travelling to Washington, D.C. to lobby for local businesses.

“We know that we're an organization that is here for one reason and for one reason only, and that's for our businesses,” Silva said.

Next year, the chamber looks to continue its work with government, lobbying Sacramento politicians and local representatives alike to improve local economic development efforts. The chamber also expects to expand on its membership development program, offer additional internet tools for businesses, and grow its annual business summit to involve chambers from Modesto, Oakdale and Merced.

The City of Turlock is also prepared to grow this year, thanks to a strong council including newly-elected members Forrest White and Bill DeHart, according to Lazar.

“We have a mature good group of people to work with,” Lazar said. “… We're ready to move forward and do what's right for the community.”

In his State of the City, covered in depth in the article “Turlock successes, struggles and plans for the future to top Mayor’s annual addressed,” printed on page A1 of the Feb. 9 edition of the Journal, Lazar took time to point out the myriad accomplishments of 2010. He noted projects like the Public Safety Facility, the construction of the Carnegie Arts Center, the repaving of Canal Drive, and the Avena Bella affordable housing project.

But Lazar also took time to point out the number of new businesses either constructed or approved in Turlock, even in the midst of a declining economy. Lazar name-checked Peninsula Plastics, the Dust Bowl Brewing Tap Room, Wing Stop, In-Shape City, and the pending Ten Pin Fun Center bowling alley.

 “In these times when so many communities have only had bad news, we feel this is such a positive sign having all these new and exciting businesses come to Turlock,” Lazar said.

Lazar let slip that more new businesses may be coming, too, including a potential client for Turlock’s Westside Industrial Specific Plan. The City of Turlock has invested millions in the industrial park to create shovel-ready land, already wooing clients like U.S. Cold Storage.

 “We have a really high expectation of a large user for that facility, and if it's realized we're talking about upward of a 1,000 employees over the next five years,” Lazar said.

Lazar said the city will learn the fate of the development in the next three months – just as Turlock will be knee-deep in difficult budget discussions which could force tough cuts to city services or deficit spending from Turlock’s $18 million reserve. But regardless what comes, Lazar said Turlock is prepared to face 2011.

“I’m confident that we are up to the challenges ahead, and are committed to doing what is in the best interests of our community,” Lazar said.

To contact Alex Cantatore, e-mail acantatore@turlockjournal.com or call 634-9141 ext. 2005.

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