The City of Fresno announced today that the City has to layoff 225 employees.
This is going to be a huge blow to a lot of people, but it is almost certainly
necessary due to the current economic climate. Cities get the bulk of
their revenue from two sources: (1) property taxes and (2) sales taxes.
When property values decrease and the economy is stagnating (and sales
are, therefore, lower) both of these revenue sources shrink. During the
past two years, we have had an almost unprecedented decline in property
values. Fortunately, the run-up in property values was limited by
Proposition 13, so only non-residential property and homes that had been sold had the
inflated values. With that being said, the financial hit has been pretty
drastic. At least Fresno is taking bold and decisive action, unlike Los
Angeles, which seems more bent on taking political shots than actually
solving the problem.
I anticipate that many of these laid off employees will have a difficult
time finding re-employment, at least at their previous income level. Many
will likely need to file bankruptcy, whether it be to get rid of credit
card debt or to save a home (and maybe strip a second mortgage) in Chapter
13. Hopefully, those former employees, like the City itself, will be able
to reinvent themselves and come out of the current crisis in a better
financial position than they are in today.