Auburn’s surplus more than double the initial forecast

Editor’s note: We’re glad to hear this being reported from Auburn, where we publish the official Placer County Welcome Guide:

“The City of Auburn’s surplus for the current fiscal year is expected to be more than double what was originally forecasted.

“With a surplus of $315,650 for 2012-13, the city’s general fund balance is on its way to breaking the $3 million mark for the first time since 2008-09. That’s nearly 5 1/2 times the surplus experienced the past fiscal year, which was the city’s first since before the recession.

“This year’s surplus had originally been forecast to be $123,000.

“The financial status report given by Auburn Administrative Services Director Andy Heath showed the year’s revenues to be $963,629 more than originally forecasted along with $771,534 more in expenditures.

“Some of the surplus can be attributed to property tax and sales tax revenues coming in higher than expected with respective increases of $182,324 and $175,000.”

The rest of the article is here.

About jeffpelline

Jeff Pelline is a veteran editor and award-winning journalist - in print and online. He is publisher of Sierra FoodWineArt magazine and its website Jeff covered business and technology for The San Francisco Chronicle for years, was a founding editor and Editor of CNET News, and was Editor of The Union, a 145-year-old newspaper in Grass Valley. Jeff has a bachelor's degree from UC Berkeley and a master's from Northwestern University. His hobbies include sailing and trout fishing.
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7 Responses to Auburn’s surplus more than double the initial forecast

  1. We are starting to see this dynamic up and down the region. Most local governments have cut staff and services to the bone, so as revenue rises, surpluses are increasing and some towns and cities are starting to get their financial feet back under them.

    But there are also some disturbing trends. More rural areas, like the northern Sierra and south central Sierra counties, primarily counties that do not have an urban center to tap into for jobs, are continuing to lose population. This highlights the inherent weakness in many Sierra economies; as resource related jobs continue to decline (timber is now less than 1% of the labor force in most Sierra counties) and tourism jobs remain stable or slightly increase but suffer from low wage rates, job seekers, particularly the young, leave the region for cities.

    As the economy recovers (which all data points to it doing at an accelerating pace) we need to redouble our efforts to identify local economic development strategies that make sense for rural regions. I think there are 3-4 key drivers of economic development in rural regions that need serious attention; broadband connectivity, value added and local agriculture, expanding the quality of the visitor experience leading to higher wages in tourism related jobs, and renewable energy and energy efficiency.

    Each of these drivers alone will not be enough to turn rural economies around, but aggregately they can have a significant impact.

    Broadband connectivity opens markets for local businesses, makes their supply chains more efficient, and attracts entrepreneurs and lone eagle businesses who seek a rural environment but must compete in a global marketplace.

    Value added agriculture, or adding value through local production, processing, packaging, marketing, sales and consumption, shortens the supply chain for producers and keeps more of the value created in local economies.

    Increasing the quality of the visitor experience, through investments in the arts, culture, heritage, recreational access, interpretation, and improved service, makes the Sierra Nevada more competitive, raises wages for the largest sector of Sierra Nevada employment (hospitality and tourism) and since these are traditionally lower wage jobs, keeps the surplus in local economies.

    Renewable energy and energy efficiency convert a land base once dependent upon extraction to export production (kWh), plays a significant role in restoring rural landscapes (like thinning for biomass to electrical energy) and energy efficiency reduces costs for local residents and businesses, meaning they have more money to invest in local economies.

    I would have preferred that we think about local economic development before we slipped into the worst recession in modern history, and tried to engage local governments in that effort; but now that we are slowing coming out of that cathartic experience, it is even more important that we focus like a laser beam on how our newfound, but meager, surpluses are invested.

  2. Ben Emery says:

    It seems like bio mass projects would be a natural substitute for the timber industry. Energy, wood chip production, timber with responsible thinning, and at the same time getting government money for reducing fire danger with the overgrowth of the ground fuels.

    A couple years ago most everywhere I went and talked to people about the idea it was supported. Are the timber/ lumber companies just holding their breath like little kids and not participating because they can’t have everything their way or is there a real hold up? Or I guess is it a bad idea?

  3. Ben Emery says:

    I guess a better word for “substitute” would have been addition.

  4. stevefrisch says:

    I agree that the word should be ‘addition’. There is a sustainable yield commercial timber harvest that should be encouraged in our local forests, with the caveat that old growth, riparian areas, and special species habitat should be largely out of bounds unless there is some specific environmental benefit that can be achieved by harvesting there.

    The hold up on sustainable yield timber harvest, according to all of our sources, is really more the market dynamic rather than the regulatory environment. Although it is true that California has amongst the most stringent timber harvest regulation in the world, and that regulation adds cost, the cost added by regulation pales in comparison to the other market forces that are pricing California lumber out of the market.

    Supply is a function of both the productive capacity of forests and economic forces shaped by societal values, and different societies value forests for different purposes.

    Sierra Nevada forests just don’t have many ‘big trees’ to harvest anymore, and the diameter at breast height of the trees harvested has a huge impact on yield, and thus price per board foot to produce. It costs half as much to mill lumber from a tree that is more than 80 inches dbh than it does one 36 inches dbh, so the less 80 inches dbh timber ones has the higher the price per board foot to produce. In short, Sierra forest productive capacity has declined due to the dearth of large trees.

    Labor costs, transportation costs, and land costs are simply lower (or subsidized) in many other parts of the world, so timber cut in Canada, for example, is much more competitive than timber cut in California.

    The hold up on biomass is a combination of public policy and competition from carbon based fuels or other utility scale renewable energy sources.

    If we could value all of the ‘external’ benefit that thinning Sierra forests have, such as reduced cost of fire fighting, reduced fire insurance rates, improvements to water quality or species habitat, increased carbon capture and storage capacity, improvements to air quality, etc., biomass would immediately make economic sense. But we have no policy to place a consistent or predictable value those externalities. Because investors cannot count on these ‘ecosystem’ valuation and payments, they have to lend based on solely the commodity price of energy produced, and biomass costs are more than 3 times the cost of cheap natural gas. Because the scale is substantially smaller than utility scale renewables (typical biomass plant is 3-25 MW, typical utility scale solar is 50-500MW) the payback is much longer; that coupled with the security of the fuel supply means biomass is a riskier investment, thus private capital shies away.

    The public policy solution would be to allow the layering of sustainable yield timber harvest, biomass utilization for electrical energy facilities and other value added products, and carbon capture and storage, on the same lands; and plan for it on a regional scale.

    Unfortunately our policy makers are just to damn short-sighted to realize that if they did that they could reduce the risk of fire, improve habitat, generate electricity, mitigate the impacts of climate change, create rural jobs, and restore the forest at the same time.

    Who is standing in the way: 1) large utilities who do not want to purchase biomass power because of supply and scale issues, 2) the big renewable industry who games the rules to prefer solar and wind, 3) public land managers who make supply too unpredictable to rely upon (although this could be achieved on private lands), 4) some environmental organizations who oppose any human intervention in the forest, 5) property rights activists who see ‘planning’ at the scale necessary as a United Nations conspiracy and politicize every discussion, 6) tea party nut jobs who refuse to invest public funds in solving multiple problems at the same time because they can’t see the difference between a long term natural resource deficit and a short term fiscal deficit, and 7) our own leadership, who lacks the vision and perspicacity to break through all the bullshit.

  5. Ben Emery says:

    I know there is a group that uses the title of Sierra Biomass Task Force. Do you know if they are productive or just a title organization? Maybe we could set up a public campaign in the Sierra promoting biomass ideas such as you lay out.

  6. Ben Emery says:

    That is good to here about the organizations doing good work.

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