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PD Editorial: The good news: Local economy goes coastal

Published: Wednesday, January 23, 2013 at 7:00 p.m.
Last Modified: Wednesday, January 23, 2013 at 5:02 p.m.

A year ago, Jerry Nickelsburg of the UCLA Anderson Forecast described California’s economy as a tale of two states — divided roughly along the path of the San Andreas fault.

For coastal areas — from Marin County to San Diego — the recession had long since passed, replaced with strong employment gains, rising housing prices and accelerated growth. Inland areas, however, continued to be plagued by high unemployment, large inventories of vacant buildings and slow growth.

“You are kind of right in the middle,” Nickelsburg told a Sonoma County audience.

But this year, it’s a different story. “The line has shifted,” he told a crowded audience at the 2013 State of the County breakfast in Rohnert Park on Wednesday. “It goes to the east of Sonoma County.”

In fact, Sonoma County is outpacing the rest of the state in terms of employment gains, he said, and rivals North Dakota, the state with the highest overall job increases in the nation.

“Enormous progress has been made here,” he said.

It was the most optimistic economic overview that Sonoma County has heard from Nickelsburg in some time. It’s also just the latest in a series of upbeat news concerning the county, which has seen a significant drop in foreclosures and an increase in home sales and prices in recent months.

Nevertheless, Nickelsburg predicted slow growth for the county, albeit slightly ahead of the state and the rest of the nation. Nickelsburg predicts sluggish growth of between 1 percent and 3 percent for the nation while continued worries about Europe and still-unsettled issues about the “fiscal cliff” block a stronger recovery.

The public is clearly tucking more away into savings and paying down debt as the nation’s consumption rate hovers around 2 percent.

Meanwhile, Sonoma County faces other challenges, as was underscored at the breakfast at the Doubletree Hotel. For example, despite strong employment gains of late, the county has recovered only 17,000 of the 27,000 jobs that have been lost since 2008.

In addition, David Rabbitt, the chairman of the Board of Supervisors, told the audience that due largely to declining revenue from the state gas tax, the county faces a $900 million backlog in road infrastructure needs over the next 10 years. This despite the fact that the county was able to nearly double its budget allocation for road repairs, bringing it up to a total of $15.5 million this year.

In addition, the county faces a surge in retirements in the coming years, both in the public and private sectors. Ben Stone, the executive director of the the Sonoma County Economic Development, said roughly 25 percent of those in the local health care industry are eligible for retirement. Overall, the holders of 40,000 of the county’s 170,000 jobs are now or will be eligible for retirement in the next four years. “We are facing what they call a silver tsunami,” Stone said.

The county also faces ongoing challenges in dealing with cost-cutting and in confronting escalating pension costs, as demonstrated by an informational picket by county labor unions outside the breakfast. Labor groups are now in negotiations with the county over contract reductions.

Nevertheless, the news about Sonoma County continues to be more hopeful as the local economy shifts more coastal. It’s a move in the right direction.

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