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Crude Contagion: California's Kern County Declares Fiscal Emergency Due To Plunging Oil Price
At this point only an act of god, or a sudden Saudi change of heart to cut crude production by 50% (unclear which is more probable) can prevent a recession in Texas. However, one state that few thought would be impaired as a result of the crude plunge, is California. Yet as the LA Times reports, it is precisely California, and specifically Kern County located in the middle of the state and containing the farmer town of Bakersfield and countless oil rigs, that yesterday declared a state of fiscal emergency during the weekly supervisors' meeting on Tuesday. The reason: predictions of a massive shortfall in property tax revenues because of tanking oil prices.
Oil companies account for about 30% of the county’s property tax revenues, a percentage that has been declining in recent decades but still represents a critical cushion for county departments and school districts.
According to the LA Times, as a result of the plunge in crude prices which is primarily driven by the de-financializaition of crude futures and the collapse in Chinese demand coupled with a relentless and rising production quota by the marginal, junk-bond funded producers (and everyone else) Kern, the heart of oil production in California, is facing what could be a $61-million hole in its budget once its fiscal year starts July 1, according to preliminary calculations from the county’s assessor-recorder office.
"It affects all county departments – every department will be asked to make cuts,” said County Assessor Jon Lifquist in an interview this month. “It just doesn’t bode well."
That, and there's also demographic issues which have little to do with the crude contagion: soaring pension costs also influenced the fiscal emergency declaration, which allows supervisors to tap county reserves. Operating costs expected at a new jail facility in fiscal 2017 and 2018 factored into the decision as well.
Looking at an operational deficit of nearly $27 million for the 2015-16 fiscal year, supervisors adopted a plan to immediately begin scaling back county spending rather than making deep reductions all at once in July.
The Service Employees International Union Local 521 urged officials in a statement to “not adopt drastic cuts that could cripple vital community services.”
The union said that although temporary wage cuts and hiring freezes “may be an obvious solution,” such tactics “are never the sole answer to economic problems.”
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Remember, no matter how bleak the facts and reality are, just keep whistling past the graveyard and just keep repeating "unambiguously good", "unambiguously good", "unambiguously good"...
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State of Fiscal Emergency, bitchez
Blowback's a bitch when the Mulatto Messiah tries to punish Putin by convincing Saudi Arabia to flood the market with Oil.
Whoa. Big news. Meredith Whitney's muni blow up prediction gets a second or third life!
Chinese demand is not collapsing, they are just getting their oil from Russia now instead of the Middle East.
There are also many other things in the works. New nuclear, gasified coal, gas plants, etc. Coal plants are getting shut down and at the same time public transit is being swapped over to a mix of CNG and electric as much as possible. The 2022 winter olympics are more or less guaranteed at this point, and it's a great excuse to purge a bunch of the pollution and cut back on imported oil.
I wonder if my buddies' $456,000/year pension is at risk; after all he put in a solid 20 years of service as a lifeguard out there.
If he saved a bankers kid, he should get a bump up in pension just because.
those mudholes are dangerous.
I'd write something snarky, but yes the mudholes in Bakersfield are dangerous. Also, it couldn't happen to a nicer bunch of democrat porkers. Since most of those cali gov's were balls deep in VC tech funds, I can only assume we are just nipping at the start of a very fun game of redemption drama.
If these small towns roll up into a huge blowback in Tom's Govenor ambitions, then that alone is a great blowback for a once great state, crippled by stupid excesses.
Ask about the Fire Fighter pensions out there!
"out there" isn't so out there any more. this is just a few mountains away from Wait What's back yard... which is to say, if THIS city cuts Wait What's weekly street sweeping and public space beautifucation programs they're gonna see riots!
http://transparentcalifornia.com/
Search California public employee salaries & pensions
Try looking up governor Brown's salary and nothing comes up. I wonder why.
Maybe they should just form a new country and secede. The plot of a new book just out:
Kern County: The Path to Secession and New Constitution
http://www.amazon.com/Kern-County-Path-Secession-Constitution/dp/1427655...
Sounds perfect...that way they can be bankrupt all on their own.
Soul Glow, pal, weren't you talking about some major bank(s) that are long oil going down this quarter?
If that's true, obviously much more pain to come.
or faux emergency - this is about "property tax"; the county does not have tax revenue directly from oil-
how could falling oil prices affect property tax values that fast? something not right
My county in Texas does. I pay property taxes on my (tiny) royalties. The state collects the severance taxes through the O&G operators. The operators also pay their property taxes on the royalties from their working interests.
Could be different in Cali, but it seems doubtful that the Golden State would miss a chance to tax.
And it's gone
Shit gettin' real. Not much time left.
Lower oil prices to punish the communists or was it Russia? LOL.
So cut government spending....mmmmmkaaaayyyy?
BLASPHEMY!
Indeed! Putin slashed Russia's budget by 10%. Big cuts across the board. That's how it is done. But then now a days Russia is the capitalist country!
Typical gov't. bureaucracy facing resource constraints: "It affects all county departments – every department will be asked to make cuts.”
Of course there's never any discussion of priorities or whether the county should have all of those departments, and which represent endeavors that the county shouldn't be involved with in the first place.
You know, like we do in real life.
"liberalism ends where inconvenience begins"
NEVER! They'll just point their guns at us and demand MOAR until we say no.
They'll claim those guns are to protect the children and pass new laws every day in that vein.
But underneath those new beneficent laws, is an excuse for the road pirates to get in your business, and extort some money so they can continue their lavish life styles and pay scales with pensions the private sector people can only dream about.
It helps when you have the guns and the 'legal' authority to use them to get money from people who cannot legally resist the theft.
America? FUCK YEAH!
but, but, but - everything is supposed to be sunshine and roses in the El Dorado state, no?
the state was attempting to balance the budget with funds borrowed against the collateral of gold nuggets (which were then rehypothecated). unfortunately those gold nuggets were stolen from Wells Fargo yesterday. doh!
It's going to a tough year for the SEIU goons.
couldn't happen to a more deserving collection of shit stained fucktards
crap. mrs. questions and I have unfinished .gov business with that county.
and very, very sad to report, the place is full of towns where dreams appear to go to die.
nice enough people, don't get me wrong. But the whole area has that tinge of regret, despair and resignation going for it I last saw in Tampa, Fl.
oh, and DO NOT drink the water in Ridge Crest.
Low oil prices and cheap gas....
Folks living under Stalin and Adolf thought they had it rough, but they were just fooling themselves.
Here - in America - we're forced to pay pathetically low prices at the pump.
THE HORROR!!!
Gov. 'MoonBeam' Brown announces that he intends to restore the planes and helos he used in his otherwise disastrous 1981 malathion spraying of CA medflies, for use now in a modified Bernanke bombing of adversely affected CA financial disaster areas: Californians - Be careful what you wish for.
With most counties around here (Commiefornia) teetering at the edge of Chapter 9 perhaps this becomes an opportunity to beat down the union benefits and pensions before the next housing collapse.
I'd love to see a tax CUT for once.
c'mon, what about your high speed rail?
The state could've opted to subsidize Jet Blue for a much faster, easier commute.
But NO. Jerry Brown and his cronies have to embezzle money somehow and need a project to hide it behind.
How in the hell can it be 'High Speed' when it stops in Fresno and Bakersfield...and other stops along the way?
That's like buying a 500 HP Corvette so you can be the first one to the next red light.
California used to be paradise on earth. How very far they have fallen.
Cheap oil and nobody is enjoying it? WTF.
Make the food cheap and people will be starving.
This is sooooo stupid. All they need to do is conviscate all the excess profits from that Ivanpah installation, and Shazaam!! Problem solved!
Alternate title: When the Nanny State Goes Bankrupt
May have to tax the undocumented citizens more. Or cut some benefits to welfare baby factories.
No, not them! Every welfare baby factory creates jobs for 1 Obamacare adminstrator, 1 social worker, 1 EBT technician, 2 HUD case workers, 0.1 AAPL employees (for the phones), and several corrections department employees. We couldnt just walk away from all that GDP!
You are absolutely right - I remember now that I failed the adult education in common core math - if that's the correct name.
I had the wonderful experience of driving through Bakersfield after dark on my way from Norcal to Socal. Holy mother of God it was THE ghetto of ghettos. I haven't even mentioned illegals YET.
Add the welfare sucking tweakers. Nobody thinks about this area - California is the largest agricultural state in the country, probably the world.
They closed up military bases (thanks Clinton!). Then let's add the "Delta Smelt" and this so called "drought". Add the lovely recession.
AND!
EVERYBODY in that country I believe owns a lifted gas guzzling truck.
But fear not, the admin of Kern County (whose supposed to be somewhat Republican?) might have signed some interest rate swap deals with JP Morgan like all of the other government institutions have.
According to the Bakersfield Californian newspaper, Kern County has a $2B underfunded pension fund for county employees (county population is around 825,000).
Perhaps at some point over the last few years of $100/bbl oil, they should have considered contributing to the pension fund. So now they will make the familiar choice between screwing retirees or firing public workers.
My prediction: pain.
OR they could just tax the shit outta the homeowners in the area.
I believe California has prop 13 passed from a long time ago, to keep these pubes from jacking up property taxes.
When did any politician ever look ahead further than the next election?
When did any voters reward any politician for looking past the next election or at all dealing in reality?
Thank the California government for making it so expensive to run a business in the first place. No fat left to cut. If Apple computer moved out of the state, they could cut their prices 20% and probably still have the same margins.
But prez oby made oil prices lower for citizenry and stock market all time high for crooks ?
Could we please consider doubling the SPR? Like now?
As usual, ZH must grasp at straws to find something negative to say about falling oil prices and how California must feel the pain… just like TexAss.
LOL…
California is in full recovery mode (with Brown in charge) while dingleberry goofball “conservative” states are dropping like flies.
Once again, like clockwork, the ZH BS narrative proves to be 180 degrees incorrect. It’s really quite amazing.
LOL is right!
It must be the nearly legal dope making you claim such!
I went through San Bernardino about 6 years ago and they couldn't shut down businesses fast enough. I'm from the Southeast and I've NEVER seen a grocery store close its doors, but I walked into one in SB and bought a few 50% off bottles of wine and then RAN back to the car to avoid the unsavory characters walking about in the parking lot. I haven't been back to California since. I guess that's what this dopenose means by "recovery".
My friend is a cop in San Bernardino...I've been on a ride a long. He made me wear a bullet proof vest. I felt like I was in Beirut.
Went on a ride along in one of the helicopters. Spent time there (San Berdoo) in the 60's as a kid. It's even more depressing from the air.
No amount of cannabis can make someone that delusional.
That post is the territory of a hard core cokehead or a drunk. Maybe a meth smoker, but they usually can't focus long enough to read an article or type a reply.
Weed? NFW.
Doin' lines purchased with stolen fiat? Most likely.
$423.3 billion in debt. When you get to a cool $1 trillion I recommend selling.
Recovery? Brown a genius? You my friend are a dope
Put down the crack pipe and step back slowly.
Kern invested in Mexican invasion, loan fraud, public housing and municipal bonds, a recipe for a lousy return, they'll have a permanent deficit regardless of oil prices, they poisoned their own water supply with factory farm waste too.
The US CONGRESS MAJORITY LEADER Kevin McCarthy is from Bakersfield CA. (thanks Kev for sacrificing Bakersfield for Latinos and screwing Russians).
Wait till ZIRP ends and 50% of Kern Co property tax revenues evaporate.
Is Kern overvalued? you tell me:
http://www.zillow.com/homes/for_sale/Bakersfield-CA/fsba,fsbo,new_lt/350...
I say "yes" if you define "overvalued" as more than replacement cost. Can you build for less in the current market? yes.
BTW about 100% of the buyers in Bakersfield are high end oil workers and poor Latinos.
And that's if interest rates DONT go up, BTW that oil field was dying 30 years ago, there's less oil there now that costs lots more to get.
I bet Bakersfield's bond debt has undisclosed interest rate swap triggers too, as interest rates go up they get punished and downgraded triggering more punishment.
Wow...that's some cheap freakin real estate!
Russia's economy is in tatters, says the stupid nigger shoe shine boy who repeats cap from his handlers like the mindless moron he is.
All I know is gas is fuck'n cheap around here. Never thought I would live to see $1.84!
Gas has gone UP about 15 cents the past few days here in Dallas to about 1.85.
Here too. Mabye the bottom has been reached?
Removed duplicate post.
Not too long ago (late 70's), $1.84 was expensive.
Who in their right mind will work for dollars or any other fiat currency when it's value can be so easily manipulated.
That Chicago song should have been "I'm feeling dumber every day..." ROFL.
I thought $1.84 was expensive in 2003.
As long as they've got an endless supply of drinking water. . oh wait , fucked on that score as well. Time to sell up and move to the windy city 'cause water's plentiful there for those who can afford it. Still Nancy P and the gang 'll think of something. Heard Texas is a friendly place who'd welcome . . . .
No worries. They'll have plenty of flouride and chlorine though. Drink up!
What I don't understand about California is where do their deficits go? Every year, they have a $20 billion deficit, and 2 months later, you don't hear a peep about it.
Who is actually stupid enough to lend money to that fucked up state?
Pay the pensioners with trucknutz! Problem solved.
So when does a 27 to 61 million annual deficit threaten any government budget? The fed injects 3000 new millions into our system every day. The seiu is unfortunately correct, there are far more creative ways to keep the illusion alive than to begin behaving responsibly.
Party on.
Prolly just a beginning of what is to come to many moar counties and state corporations. How to survive the hunger games may not be to far off.
Just another distraction from THIS?
http://americanprosperity.com/top-brasss-official-report-finds-obama-sec...
http://www.examiner.com/article/latest-benghazi-documents-may-be-a-smoki...
Fucking SEIU purple fuckfaces: "To not adopt drastic cuts that would cripple vital community services." Fuck you, SEIU! These are the same cocksuckers that wanted to unionize the CALWORKS babysitters! CALWORKS is the money they rip from the taxpayers wallets and give to the plethora of poor moron women, to babysit each others kids! What a fucking scam! Look up the 2012 or 2013 CALWORKS Benefit Model. In unmarried adult, with two children, pulls in $36k a year in benefits! And that doesn't even inside Section 8 housing, or all the "Lifeline" utilities and the ever present Obama Phone. Adding all that up, and it easily exceeds $50,000 a year! They're dumb, but not that dumb. Why work, when some taxpaying jerk will pick up the tab ?
"At this point only an act of god"
...of course you have to have the right god.
right now i think they are all busy fighting in syria, et al.
California and the Inland Empire in economic crisis again--bullish for anti-depressants/anxiety big pharma, mass murders and ammunition--outside of the obvious "ring of fire" around military bases and the Military Intelligence Complex of Maryland, D.C., and Virginia, California leads the nation in gruesome shooting sprees:
http://latimesblogs.latimes.com/lanow/2008/12/the-death-toll.html
http://timelines.latimes.com/deadliest-shooting-rampages/
California and the Inland Empire in economic crisis again--bullish for anti-depressants/anxiety big pharma, mass murders and ammunition. Outside of the obvious "ring of fire" around military bases and the Military Intelligence Complex of Maryland, D.C., and Virginia, Californicators lead the nation in gruesome shooting sprees:
http://latimesblogs.latimes.com/lanow/2008/12/the-death-toll.html
http://timelines.latimes.com/deadliest-shooting-rampages/