Sonoma County supervisors launched their budget hearings Tuesday with an economic forecast for the county — and it started with a hearty dose of uncertainty.
Robert Eyler, president of Economic Forensics and Analytics, who delivered the presentation, said:
“There is an enormous amount of fogginess after 2021.”
Factors such as the future spread of Covid-19, whether there is another federal economic stimulus package, and what social policies, such as shelter-in-place orders, are in effect will influence how the county’s economy recovers from the gut punch of the pandemic and resulting recession, Eyler said.
Take one marker of the county’s economic distress as an example of both its pain and uncertainty. According to Eyler, the county will lose between 20,700 and 48,451 jobs this year, depending on what transpires between now and the end of 2020. The most likely outcome, his analysis showed, is that the county in 2020 will lose about 30,000 jobs, and with them, $2.4 billion in state and local tax revenue.
On the other hand, home prices have not contracted and are up from a year ago in many cities in the county, tracking with California as a whole, Eyler said. That means wealth is not being sucked out of the local economy by sliding property values, although it also means that buying a home becomes harder, which may lead some people to leave.
At the same time, Sonoma County has a better civilian employment rate and a lower unemployment rate than the state.
“We’re doing better than California on average across all these fronts. It suggests that Sonoma County is evolving more quickly than other parts of the state, specifically urban parts.”
Still, the hole is deep, he said. Job losses are unprecedented statewide and locally, and any recovery is a long way out.
Eyler said in a followup interview:
“If we use the beginning of 2020 as a benchmark, we should not be all the way back to that level of employment before 2023.”
Supervisors wanted to know about subjects such as the impacts on low-wage workers, how to assist tourism and related industries, and which economic sectors they should help with financial and other types of aid.
Supervisor Lynda Hopkins asked Eyler how to respond to the way the pandemic and recession are “exacerbating socioeconomic inequities” as home prices tick upward, jobs are lost, and renters are priced out of the housing market.
“That’s why economic and workplace development together are so important at a time like this. You can’t just do economic development. You have to do workplace development and recognize that there’s going to be a displacement of folks whose jobs may not be there anymore.”
Supervisor David Rabbitt wanted to know where the county should target its economic development dollars.
“You definitely want to make sure you’re providing incentives for construction and manufacturing because those are drivers of the other parts of the economy.”
Industries such as hospitality, especially restaurants, would also be a useful place to target development funds, Eyler suggested, because of how linked economically they are to the county’s agricultural and tourism sectors.
He said county officials may have to use “a laser focus” to determine which businesses and industry sectors to support.
“But it’s very difficult politically and economically to know if this business is on the edge. Will they be able to turn the corner because of something I can’t see or do I have to bet that they’re so far gone now that they’re not going to make it, so putting that money is good money after bad?”
Supervisor Susan Gorin, the board chairwoman, asked Eyler:
“Given the duress of our entire community and the incredible needs, and everybody coming to the county for solutions, economic solutions, handouts to support rental assistance and small businesses and subsidized child care, housing — what is the best and most effective way that the county can support and move toward recovery?”
“Wow, softball question. The best thing you can do is try and generate more jobs now and later.”
The way to do that, he said, was to boost the economy and the workforce simultaneously by supporting local businesses so they have the capacity to keep hiring county residents, and to “retool and retrain” people who lose their jobs due to this recession, and whose jobs permanently disappear, so that they can find new work.
“The jobs recovery is key to getting out of recession and towards recovery.”