Santa Cruz Observer

What would it take to improve the economy?

LAST IN A SERIES

By TOM HONIG

What can be done to kick-start the local economy?

A variety of business leaders respond in a curious way that's both hopeful and skeptical.

One of the most successful local business leaders says it's time for local investment. Peggy Dolgenos of Cruzio said investment disasters nationally provide an opportunity locally: "Rather than placing money in an anonymous, far-away financial firm, which might turn out to be Lehman Brothers or Bernie Madoff, why not look for real needs, often local, that we cansee and understand, and then invest in filling the need? At Cruzioworks we have a lot of small entrepreneurial companies in our coworking space, and I've seen a lot of local talent and great ideas. There are a lot of worthy local investments that could help the local economy and could turn out to provide good returns for the investors, as well."

But some others have concerns: too many fees; too much regulation. One planning consultant said his prospective clients for local development are scared away by the city's traffic impact fee. "These fees are more tolerable when times are flush, but right now they can just eliminate small entrepreneurs from even getting started."

The most complete analysis I've heard comes from Bill Tysseling, executive director of the Santa Cruz Area Chamber of Commerce.

Essentially, Tysseling would like to see a reconfiguration of some regulatory codes that make locating in Santa Cruz more difficult than it should be. He's not saying do away with regulation -- but instead rethink them to see if they fit in with realities of today's economy. "We need a strategic shift in thinking (at the governmental level) to be actively seeking investment." He said that shift is already happening at the management level of the city's government, but other jurisdictions haven't budged.

As for planning: simplify, simplify, simplify. "Every project should be a one-stop process in which all departments have to solve issues together."

Nearly everyone I talked to about the local economy showed some optimism. These people quoted and others all talked about spreading the word about Santa Cruz -- branding the area as something attractive -- in order to attract outside investment. Yet, there are memories of an old "anti-business" attitude. 

I'll let Tysseling have the penultimate word: "The communities that succeed bring an attitude that is based on doing lots of things simultaneously. They are first and foremost public/private partnerships in which the partners are dedicated to really working together. ...They are into continuous improvement. They are good at long-term strategies too, but their emphasis is what they can do today. They have shared energy at the center but lots of relatively independent moving parts, each working toward independent goals. They have shared vision with some sparking elements -- a conference center, a concert hall, a redevelopment project -- which keep the energy up and set a standard for quality and investment.

"The problem for us is that we are in an economy, a state and a social/political era which are disorganized. We are going to have to go it alone for a while and we will have to have some excellent leadership and excellent followership."

Does that sound like Santa Cruz? No. But younger folks around here need jobs and higher wages. And maybe the times are changing.

 

The 'Santa Cruz is great' argument

THIRD IN A SERIES

By TOM HONIG

Santa Cruz's singular economy is one where a lot of people have to leave the county in order to afford living here..

Is that sustainable? Is that what local people want?

Some say that it's just what you get. Local Larry Darnell wrote to me with a story about his wife and him:

"We did the hill.  Our children were in day-care after school. Our hobby was commuting. But we lived here. We would give a collective sigh of relief every night leaving Silicon Valley behind. (My wife) Judy decided first to cut off the commute and be available more as a parent - cut off the money. I decided second, partly as a result of the earthquake and the recession. We cut our pay and got our lives back off the road."

To him, the cut in pay was worth it: "Why would a manufacturer locate here? They wouldn't. I'm working now for the largest domestic classical guitar company in the U.S., in Ben Lomond. We hired five people this year."

 Darnell and others think there's opportunity:  "Considering the wealth and intelligence here, I would have expected someone to be able to come up with a thematic promotion whether locale related or arts related to build the area's draw...."

That's a theme seconded passionately by local businesswoman Adele Talmadge. "Support year-round tourism based on sports and lifestyle opportunities. Support the world-class sporting events that come and want to come to Santa Cruz. We need to not just be a 'cheap vacation' destination -- we are so much more. Engage tech companies from Silicon Valley to have satellite offices here by inviting young professionals to experience the Santa Cruz lifestyle."

This is the "Santa Cruz is great" argument. I know this argument -- I've been here for 40 years. But there are others who would like to see change -- and it has to do with making local government work better.

NEXT: There's gotta be some changes made. 

What a growing economy could mean

SECOND IN A SERIES

By TOM HONIG

Here's a fact that reveals a lot  -- Santa Cruz residents earned $2.5 billion from outside the county last year. That's the highest in the state.

So says economist Jeffrey Michael of University of the Pacific, who prepared a unique look at the Santa Cruz economy during a speech last week sponsored by the Santa Cruz Business Council.

"You have to pay close attention to San Jose," Michael told the 50 or so audience members -- many of whom operated businesses in Santa Cruz.

The Santa Cruz economy is dominated by three areas of business: government, agriculture and hospitality. Government jobs pay well, but ag and hospitality are lower-paid. And that's why so many workers commute over Highway 17.

Of course, 30,000 or so commuters each day have an impact on more than the local economy. Most of those commuters are driving solo in their cars -- adding to significant traffic congestion and the environmental fallout from that. The role of Santa Cruz as a bedroom community doesn't really jibe with the pro-environmental image that we have of ourselves.

The need to commute also has an impact on the family life and sense of community. It's difficult for parents to be active in their children's school; it's difficult for commuters to attend local community meetings or even do volunteer work.

Could that mean that economic growth could actually improve the local quality of life? Perhaps it does, especially if Santa Cruz were able to welcome businesses that provided jobs with higher wages. That sort of thing doesn't happen overnight, but increasingly, more elected officials describe themselves as business-friendly. Even the Santa Cruz City Council is now made up of a majority of business-friendly council members. And in the 2012 election season, already at least two pro-business candidates are lining up to run for county supervisor.

Consider this pitch from the city of Santa Cruz -- taken right off the city's website:

"The great natural beauty of our area, the temperate climate, and our vast and varied cultural resources all combine to make Santa Cruz a very desirable place to live and work. We’re far enough outside Silicon Valley to enjoy our own unique identity, yet close enough to take advantage of all it has to offer.

"Most importantly, our quality of life is good for your bottom line. Our highly-educated work force offers experience, skills, and stability you can build on over the long term. Plus our environment has proven to foster creativity, a key competitive advantage in today’s global economy."

(NEXT: What some people think can be done to improve the local economy.)

Santa Cruz's strange economy

First in a series

By TOM HONIG

Santa Cruz has a very strange economy.

Those of us who live here are used to the vagaries of life in Santa Cruz -- high housing costs and low wages. Dramatic natural beauty and congested roads that would make a Southern Californian cringe. And here's another one: a small town atmosphere in a downtown that has some big-city social issues.

Most of us notice these contradictions, but sometimes it's nice to have someone from the outside give us some perspective.

The Santa Cruz Business Council featured a speaker last week by the name of Jeffrey Michael, an economist from University of the Pacific. Details of his talk are right here in a Sentinel story by business writer Jondi Gumz.

He portrayed a strange local economy: a total of $13 billion in personal income, but only $4.2 billion coming from local wages. (In fact, he said in most places, local wages are a major factor in the economy. Not here.)

What that means is that Santa Cruzans make their money either by commuting (that's the young people) or by investment income (older people.) The political implications are profound, and explain why there's a deepening divide in the political dialogue locally. Older, wealthier folks are happy in their living situation, and don't really care that much about jobs or growing a healthy local economy. Younger, more struggling people in their early working years would love not to commute over the hill; they'd rather do what the older folks do -- stay here.

Essentially, the economy boils down to this: Santa Cruz is a bedroom community of San Jose. People may not like to admit that, but it's true. 

(NEXT: The implications of our contradictions.)

A walk downtown

Downtown Santa Cruz remains the center of conversation. Some hate it; some love it. Some want it to be a pedestrian mall (even though nearly every city to have tried it has regretted it.)

It might be a cliche, but downtown is as much a state of mind as anything else.

In a Good Times column this week, I took on the issue of downtown, the mage and reality.

The image of a people-oriented society fits nicely with the idea of a pedestrian-only mall. The reality is something different: a worsening economic climate and less sales-tax revenue for an already strapped city.

Another issue is that of chain stores. Expect to hear an emotional argument against trying to attract chain stores to downtown. The theory goes that the city should limit nationally owned stores in order to protect locally owned businesses.

The reality is something different. Local store owners will tell you that a blend of retail actually helps them. More people downtown — even if they’re attracted by, say, Forever 21 or an Apple store—means more business at the locally owned store. It’s not an either/or.

Wishing, dreaming and hoping is not a smart economic strategy. A recent city-sponsored study be consultant Robert Gibbs maybe retail isn’t the last word on a strategy for downtown, but it’s not a bad blueprint.

Memo to Washington: we don't need a Senate hearing on the Penn State child abuse case

What, if anything, do Senate hearings achieve?

Certainly, there's a place for hearings before the Senate when it entails shining a spotlight on an issue that needs public attention. But when an issue is already front and center in the national consciousness -- do we really need to see our national leaders grandstanding?

It doesn't take a genius to recognize how awful the child-molestation case at Penn State really is. Everyone in America is clear on two things: that sexual assault on children is wrong, and that the failure to report a crime of that significance is also wrong.

But that doesn't keep our elected officials from wanting to go in front of the camera to express their outrage as well. U.S. Sen. Bob Casey, D-Penn., has requested a hearing before a Senate subcommittee.

He said he wanted to see how well federal laws protect children. Note to Sen. Casey: there are a lot of laws already. We poor ignorant citizens actually know that the Penn State situation is wrong and is outrageous. We don't need these senators to get up and tell us that.

We don't need any new laws here, folks. There are plenty of laws at the state level that govern child molest and the failure to report it.

Please, senators. Spare us the speechifying. We get it. Now how about doing something about the $15 trillion debt?

Shocker: McPherson to run for supervisor

     Word got around today that Bruce McPherson is re-entering the world of elective politics. He's going to run for -- not Congress, not state office -- but for a local office -- Fifth District County Supervisor. See the breaking news story on the Sentinel website.

    The main reaction is first -- "You're kidding." Then the second reaction is "That's great." But upon further review, it makes sense. Bruce is essentially a homebody. He likes being in Santa Cruz, and his time in Sacramento as state senator and later secretary of state made it difficult for him to enjoy the good Santa Cruz life.

    So now, he's eyeing local elective office. The irony here is that most politicians start with serving in local office and only then go statewide. Bruce did it differently. As most folks know, he was a reporter and editor at the Sentinel for many years, and only ran for office as a Republican after retiring from the Sentinel. He didn't start low -- he ran for state Assembly and staged a major upset against former Supervisor Gary Patton. His win was a ahocker -- registration ran almost two-to-one in favor of the Democrat.

    The post he's running for is now held by Mark Stone -- who himself is running for higher office in the state Assembly.

    It's too soon to know whether McPherson will run into opposition. But if he were to win, it could change significantly the makeup of the county Board of Supervisors. Right now, the board majority -- Stone, Neal Coonerty and John Leopold -- all come from the so-called "progressive" movement. A McPherson election could well change the political slant of the board. Additionally, Second District Supervisor Ellen Pirie has announced that she's not running for re-election, so there will be more change there.

    The best thing about McPherson running is that his experience at the state level is crucial to serving in local elected office. Local counties and cities are dependent on state dollars to a greater extent than ever, and his knowledge of how the state works -- and his contacts at the state governmental level -- will bring a payoff for his constituents.

'Occupy' movement enters a new phase

By TOM HONIG

I'm afraid that the "Occupy" movement is not going to end well.

Various movements around the country -- including the local one here in Santa Cruz -- are becoming beset with problems. A fight here, a petty theft there, a confrontation or two and accusations of health and safety violations.

Some of the occupiers are holding fast to the movement, saying that any transgressions are merely the work of a few bad apples. Unfortunately, it's the bad apples who latch on to movements like this -- and that's why even the most sincere of public movements devolve into civil tensions and general chaos.

Supporters, of course, will remind the rest of us that the problems are caused by a minority. But just like the rest of us, "Occupy" campers are judged by the worst among them. Come to think of it, the same can be said of Wall Street bankers. All those problems that led to the banking crisis of 2008 were caused by a minority of greedy high-fliers whose bad decisions almost brought down our economy.

It's always the minority of bad actors that do us in. It's just a fact of life that all of us are judged by the worst of what we do and by the worst of those we associate with.

Occupiers say that they represent "the 99 percent." That was probably true originally, but too many camps across the country are starting to try the patience of those nearby. Here in Santa Cruz, a permanent encampment is not going to be acceptable to a majoritiy of Santa Cruzans. Sanitation problems are getting worse. So is evidence of drug use and an assault here and there. 

A small group of campers marched on City Hall Monday, but they didn't pick up much support along the way. Mayor Ryan Coonerty represented the feelings of many Santa Cruzans this week when he told the occupiers: "I'm sympathetic with the protest and the issues they're trying to raise, but we also have to maintain public health and safety."

He's right -- but his words aren't going to go over well with at least some of the campers. Eventually, the camp will have to be evacuated. Some occupiers aren't going to give up their campsite willingly.

I'm afraid it's not going to end well.

Republican or Democrat -- why choose?

As a card-carrying political independent, I can't help but wonder why anyone identifies themselves as a Republican or a Democrat. I mean regular folks. Obviously it makes sense to align yourself with one or the other if you want to run for office. It's the rare candidate who can win without associating with one party or another. (Of course, in Santa Cruz it's a Hobson's choice -- Democrats are the only ones who can win.)

As for the rest of us, why associate with either party? With congressional approval at below 10 percent in the latest polls, neither party is exactly winning over the hearts and minds. And that's because they're simply not appealing to most voters. They're fighting the partisan fight -- and in doing so they're going for big dollars from the special interests.

Or, as Washington Post columnist Robert Samuelson says: "Let's banish the budget fictions of left and right."

In a devastating Post column this week, Samuelson details how both parties are avoiding any real progress on a budget agreement, choosing instead to insist on talking points -- none of which adequately address what everybody knows needs to happen: a blend of new revenue and serious cuts to entitlements. As he details, Republicans are focusing on an almost-meaningless no-tax-hike argument, while Democrats are as equally far out in left field focusing on defense cuts and tax hikes for millionaires. None of these by themselves are a solution.

Perhaps Samuelson is a voice in the wilderness. But as he argues that President Obama and the Congress could, if they wanted, "elevate popular understanding by proposing a plan justified by a vision of government's collective responsibilities and the public's reciprocal obligations."

Hmmm. That won't fit on a bumper sticker. And so far, no one from either party is talking with that level of seriousness. 

So I ask again: Why would anyone associate with either of these political parties?

Panetta Institute annual awards for public service both uplifting and depressing

By TOM HONIG

PEBBLE BEACH -- The nation's problems are not difficult to solve. But the question is whether we have the resolve.

That's the message from the annual Panetta Institute Jefferson-Lincoln Awards black-tie dinner, held Saturday night here at the Inn at Spanish Bay.

Monterey's own Leon Panetta -- the nation's defense secretary -- was an unannounced guest at the dinner, which honored former Defense Secretary Robert Gates, former White House budget director Alice Rivlin and CNN's Wolf Blitzer. The idea behind the dinner -- as it has been for 12 years now -- is to honor those who choose the middle path in either governing or in media coverage.

That middle path -- call it moderation -- seems like a concept from out of another time. And that makes the presentation and acceptance of the annual awards both inspirational and depressing. The message is this: there's a way out of our troubles -- at least some of them -- but it won't happen if the partisan wrangling continues.

Or, as Alice Rivlin says in regards to tackling the national debt, "You can do it. It's not that hard." The debt woes, she said, are "not the fault of Barack Obama or of George W. Bush. It's demographic." What she meant by that is that the demographic bulge of Baby Boomers is making our budgeting unworkable unless some changes are made. And those changes -- raising taxes and cutting entitlements -- must be made. And the reason they're not is based on pure partisan politics and the fear of office-holders to risk their re-election changes by telling the truth.

More stark was Panetta's own words. Speaking to the black-tie crowd -- several-hundred strong -- Panetta was blunt. After praising the courage and commitment of those serving in the military, he called them "the next great generation." And he reminded the audience (and, I hope, those in Congress) "If they can give their lives to their country, then why the hell can't leaders in Washington make sacrifices themselves for the good of the country."

(Photo courtesy of Paul Miller, Carmel Pine Cone)