Our fiscal year ends tomorrow. Can you chip in $50, $25 or even $10 to help us reach our goal?
Kai Ryssdal: Work your way back up the economy from a small business like NicoNat, to the cities that depend on them — like our home today, Commerce, Calif. — and you start to see what all the market craziness this week and the downgrade from Friday is really doing.
Let me tell you a little about Commerce: it occupies a total of six square miles. Lots of warehouses here, light manufacturing of things like mattresses, off-road equipment, a casino that generates 40 percent of city revenues.
Jorge Rifa is one of the people responsible for managing the finances here. He’s the city administrator for the City of Commerce. Welcome to the broadcast.
Jorge Rifa: Good afternoon.
Ryssdal: So let me ask you what it means for somebody like you, whose job is to assure that this city is on a solid footing — largely by helping those businesses get by — when the United States get downgraded by S&P? What went through your mind on Friday?
Rifa: Reflect back on the uncertainty of things. Certainly like Vicent, we’re looking at the movers and shakers on a national level and trying to pick up clues from them. And when you hear the chair of the Federal Reserve, Ben Bernanke, say ‘times ahead are uncertain,’ it’s something that we have to be concerned with, and how that translates into our own local economic picture and our revenues.
Ryssdal: Translate it for me then: were you thinking about Washington or were you thinking about Sacramento, the state capital from whence a lot of things happen?
Rifa: Frankly, the bigger worry is Sacramento because Sacramento has basically put their hands in the city’s pockets and California’s cities’ pockets.
Ryssdal: Because we have such financial troubles here at the state level, right?
Rifa: Yes. We had a $28 billion deficit this year, and part of the balancing act was to eliminate redevelopment.
Ryssdal: Go ahead.
Rifa: They also balanced their budget on a $4 billion revenue assumption, and for me, it’s a matter of connecting the dots, frankly.
Ryssdal: Between what and what?
Rifa: Well, the downgrade of S&P and how that gets translated into consumer confidence, or lack of. And then what the retailers do and what business do. And then that doesn’t materialize into revenues at the Sacramento level.
Ryssdal: So let me run a phrase by you, get your reaction: double dip.
Rifa: Well, in better times, double dip was something you did with guacamole, right?
Ryssdal: That’s right, only my kids do that, but you know.
Rifa: But in this case, that is something that we’re concerned about, it’s very serious. But you’ve also got certainly a lot of people at the national level who basically are saying it’s too early to push that panic button.
Ryssdal: What do you say?
Rifa: We’ve just got to be careful. We just adopted a budget that revenue-wise — $47 million and change — is almost identical from a revenue perspective to what the council adopted five years ago. And then between, we’ve had a high-water mark of $52 million in terms of our general funds. So there’s been this $5 million swing.
Ryssdal: Well then, I guess we’ll let it go there because we’re out of time. But it’s an interesting problem for the cities and states in this country. Jorge Riva, nice to speak with you.
Rifa: Good to speak with you.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.