{"id":4994,"date":"2015-01-28T21:04:51","date_gmt":"2015-01-29T02:04:51","guid":{"rendered":"http:\/\/olduvai.ca\/?p=4994"},"modified":"2015-01-28T21:04:51","modified_gmt":"2015-01-29T02:04:51","slug":"crude-contagion-californias-kern-county-declares-fiscal-emergency-due-to-plunging-oil-price","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=4994","title":{"rendered":"Crude Contagion: California’s Kern County Declares Fiscal Emergency Due To Plunging Oil Price"},"content":{"rendered":"

Crude Contagion: California’s Kern County Declares Fiscal Emergency Due To Plunging Oil Price<\/a><\/h3>\n

At this point only an act of god, or a sudden Saudi change of heart to cut crude production by 50% (unclear which is more probable) can prevent a recession in Texas. However, one state that few thought would be impaired as a result of the crude plunge, is California. Yet as the\u00a0LA Times reports<\/a>, it is precisely California, and specifically Kern County located in the middle of the state and containing the farmer town of Bakersfield and countless oil rigs, that\u00a0yesterday declared a state of fiscal emergency during the weekly supervisors’ meeting on Tuesday.\u00a0<\/strong>The reason: predictions of a massive shortfall in property tax revenues because of tanking oil prices.<\/p>\n

Oil companies account for about 30% of the county\u2019s property tax revenues, a percentage that has been declining in recent decades but still represents a critical cushion for county departments and school districts.<\/p>\n

According to the LA Times, as a result of the plunge in crude prices which is primarily driven by the de-financializaition of crude futures and the collapse in Chinese demand coupled with a relentless and rising production quota by the marginal, junk-bond funded producers (and everyone else) Kern, the heart of oil production in California,\u00a0is facing what could be a $61-million hole in its budget once its fiscal year starts July 1, according to preliminary calculations from the county\u2019s assessor-recorder office.<\/strong><\/p>\n

\n
“It affects all county departments \u2013 every department will be asked to make cuts,\u201d said County Assessor Jon Lifquist in an interview this month. \u201cIt just doesn\u2019t bode well.”<\/div>\n

That, and there’s also demographic issues which have little to do with the crude contagion: soaring pension costs also influenced the fiscal emergency declaration, which allows supervisors to tap county reserves. Operating costs expected at a new jail facility in fiscal 2017 and 2018 factored into the decision as well.<\/p>\n

Looking at an operational deficit of nearly $27 million for the 2015-16 fiscal year, supervisors adopted a plan to immediately begin scaling back county spending rather than making deep reductions all at once in July.<\/p>\n

The Service Employees International Union Local 521 urged officials in a statement to \u201cnot adopt drastic cuts that could cripple vital community services.\u201d<\/strong><\/p><\/blockquote>\n

The union said that although temporary wage cuts and hiring freezes \u201cmay be an obvious solution,\u201d such tactics \u201care never the sole answer to economic problems.\u201d<\/p>\n

* * *<\/p>\n

Remember, no matter how bleak the facts and reality are, just keep whistling past the graveyard and just keep repeating\u00a0“unambiguously good”, “unambiguously good”, “unambiguously good<\/em>“…<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Crude Contagion: California’s Kern County Declares Fiscal Emergency Due To Plunging Oil Price At this point only an act of god, or a sudden Saudi change of heart to cut crude production by 50% (unclear which is more probable) can prevent a recession in Texas. However, one state that few thought would be impaired as […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[3],"tags":[101,3016,465,1775],"class_list":["post-4994","post","type-post","status-publish","format-standard","hentry","category-energy-2","tag-california","tag-fiscal-emergency","tag-kern-county","tag-oil-price-collapse"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/4994","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4994"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/4994\/revisions"}],"predecessor-version":[{"id":4995,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/4994\/revisions\/4995"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4994"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4994"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4994"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}