BUSINESS Chamber Trip Economy on JOURNAL to Australia + Fiji P. 5 Moderate Growth Path P. 9 INSIDE THIS ISSUE: Workplace Mental Health P.7 | Home Sales are Solid P.9 | Public Retirees Pensions P.17 Update on “The Salinas Plan” 32 Unpopular Recommendations to Avoid Future City Bankruptcy by Kevin Dayton, Chamber Board We’ve all heard of companies reorganizing their debts under Chapter 11 problem even more acute. of the U.S. Bankruptcy Code. And sometimes we hear about companies filing Recessions Lead to Local Government Bankruptcies for bankruptcy under Chapter 7, which means the companies go completely out of business. Notice in the chart above that Vallejo, Stockton, and San Bernardino went bankrupt during the so-called “Great Recession” of the late 2000s/ But do you know about Chapter 9 bankruptcy? This is the law for municipal early 2010s. When businesses were prospering, elected officials in these governments (such as cities and counties) that can’t pay off their debts. three cities could not resist imprudent spending on programs and projects. They go bankrupt to reorganize their debts, just like a business that can’t They also agreed to excessive financial commitments for employees. pay its obligations. When the economy slowed down, these cities couldn’t collect enough revenue Two of the most notorious Chapter 9 bankruptcies in recent American in taxes and fees to pay their bills. history were Orange County, California in 1994 and Detroit, Michigan in 2013. Ten years later, the American economy has experienced the longest period In recent years federal courts have also declared these three California cities of sustained growth in its history. Just like in the mid-2000s, some experts to be bankrupt: say there’s no reason to worry about recession. But a few naysayers recommend California Cities That Have Recently Gone Bankrupt that cities such as Salinas plan for a future economic slowdown and restrain their spending. Salinas At Risk When Recession Comes Suppose the recession comes in 2020 or 2021. Which California local governments won’t be able to pay their bills? ➟ City of Salinas Deficit Forecast $195 M Average Gap = $6.3M per year; $63.2M cumulative The City of Salinas has managed to avoid bankruptcy despite two financial $175 M $ 13.0 $10.9 crises in the 21st century. Will it be able to slip through a third financial crisis $ 9.5 $ 8.2 without bankruptcy? $155 M $ 7.1 City of Salinas Deficit Forecas$t6.0 It depends on the commitment of the community to make broad sacrifices $195 M $ 4.5 Average Gap = $6.3M per year$ ;2.$68 3.2M cumulative now. Right now, it does not look promising. $ 1.2 $175 M $135 M $ 13.0 $ .1 Gap $10.9 $ 9.5 When the Salinas City Council approved its most recent budget, it assumed $ 8.2 $155 M $ 7.1 $ 6.0 that the city would spend $1.1 million more in the upcoming fiscal year than it $115 M $ 4.5 $ 2.8 $ 1.2 collects in revenue. It also assumed that by Fiscal Year 2028-29, the city would $135 M $ .1 Gap spend $13 million more than it collects in revenue. For the next ten years, $115 M $95 M the city would end up spending a total of $63.2 million more than it collects. According to the staff analysis of the budget outlook, costs of salaries, $95 M $75 M pensions, health insurance, and workers’ compensation are the main reason $75 M FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY for this projected budget shortfall. A recession will not cut these expenditures, 2019 2020 2012029 1 2022022 0 2023 20220214 2022025 2 2026 20220273 20282024 2025 2026 2027 2028 but it will cut the revenue that was anticipated to pay for them, making the Revenues ReEvxpeenduiteurses ExpPLANend -i tContinuedures on page 6 OCTOBER 2019 www.SalinasChamber.com 1 KICKTHE CPAP OUT OF BEDED, NOTYOUR PARTNER! Breakups can be hard, but this one won’t be. Our recommended rebound: THEORALAPPLIANCE. -Small, comfortable, portable, and lightweight -Noelectricity required -Easy to travel with: can be worn onanairplane, -Can sleep on your side, stomach or back in ahotel, or while camping -Nonoise, hose or replacement parts e Giveusacall to reserveyour ed TiTimem Limit Y * SALINASVALLEY THERAP FREE Sleep Evaluation DENTAL CARE SLEEP FER Abetter experience. Abetter choice. OFOF with our sleep specialist (831) 273-1773 *SomeSome rereststririctctioionsns mamayay applypply.C. Callall fofordr details.etails. For information or ano-obligation sleep screening visit SalinasValleyDentalCare.com/SleepSolution 2 www.SalinasChamber.com OCTOBER 2019 2019 EXECUTIVE COMMITTEE ■ Chair - John Bailey Introducing the Blue Zone Alternative Dispute Resolution ■ Chair-elect - Andrea Bailey Way of Life to Monterey County Chevron ■ Past Chair - Jim Bogart by John Bailey, Chamber Board Chair Grower-Shipper Association ■ Vice Chair, GRC - Kevin Dayton You cannot walk, run or bike going on Salinas City Center Improvement Assn. past 252 Main Street in Salinas City wherein ■ Vice Chair, Finance - Bill Hastie Center without feeling the buzz we debate Hastie Financial Group emanating from the new Blue Zones the solutions to our community’s ■ Vice Chair, Events - Julie Ann Lozano Project headquarters. Salinas Valley challenges, it is important to MBS Business Systems ■ Chamber members Salinas Valley remember that we also have many Vice Chair, Membership - Kristy Santiago KION TV Memorial Healthcare System, Taylor positive role models throughout our Farms and Montage Health are community who are working hard to 2019 BOARD OF DIRECTORS ■ leading a community-wide approach make this a better place to live. The Kalah Bumba (Consultant Community/Health) to encourage higher quality of life Blue Zones Project and its leaders and ■ Esteban Calderon (Comerica Bank) throughout Monterey County. A volunteers are such role models. They ■ Raymond Costa quick 3-Minute test available on apps. are educating our community of the (RHC Management, dba McDonald's) bluezones.com gives an eye-opening benefits of healthy food and great ■ Frank Geisler (Geisler3) survey before calculating your life wine, exercising and forging strong ■ John Haupt (Haupt & Associates) expectancy, and provides a sobering social connections. That’s something ■ Albert Maldonado (MP Express Printing) reminder that improving one’s daily everyone can support. ■ Rodney Meeks (Credit Consulting Services) choices, and attitude, may improve We at the Salinas Valley Chamber ■ Tom Meyer (1st Capital Bank) longevity for our whole community. work hard to collaborate with others ■ Kathy Miller (Aera Energy) With so much local planning taking we are pleased to see the focus on and will continue to grow our close- ■ Krishna Patel (Valvoline Instant Oil Change) place throughout Monterey County reducing events and situations that knit circles of support across Monterey ■ Brandon Patterson (Brandon D Patterson - to improve the walkability of our trigger negative physical, mental or County. We welcome you to visit Blue Windermere Valley Properties) emotional responses. Even though communities and an increased focus Zone’s Project headquarters to learn ■ Starla Warren on our food and social networks, there are many difficult discussions more about the Blue Zones Project. ■ (Monterey County Housing Authority Development Corporation) CHAMBER LIAISONS ■ Peter Kasavan (SPARC) Partisan Breakdown of California Voters ■ Matt Huerta (Monterey Bay Economic Partnership) By County 10 Largest Cities LEGAL COUNSEL ■ Matt Ottone PROFESSIONAL STAFF ■ Roxanne Noble Boss Membership Director ■ Sydney Allred Member Services Coordinator ■ Phillip Saldaña Operations & Accounts Manager ■ Paul Farmer CEO & Chief Member Advocate CREATING A STRONG LOCAL ECONOMY PROMOTING THE COMMUNITY PROVIDING NETWORKING OPPORTUNITIES POLITICAL ACTION REPRESENTING THE INTERESTS OF BUSINESS WITH GOVERNMENT [email protected] (831)751-7725 OCTOBER 2019 www.SalinasChamber.com 3 Please join the Salinas Valley Chamber of Commerce as we celebrate Legacy of Leadership Saturday, October 26, 2019 Salinas Rodeo Grounds Presenting Sponsor 6:00 pm Reception & Silent Auction $125 per person 7:00 pm Dinner and Awards Ceremony www.SalinasChamber.com Brian Holaday Sherrie Isaac Barbara Balen�ne and Ollie Lowe Candi DePauw Vern Horton 4 www.SalinasChamber.com OCTOBER 2019 CHAMBER TRIP - Australia + Fiji by (and with) Chamber CEO Paul Farmer Life is to be lived. Consider joining us for this phenomenal trip! Raise your hand if you want to go to Australia. I see you, there. Australia is definitely a “bucket list” trip for many people. Personally, I have only heard people rave about the country and its people. I’m excited that the Chamber’s first trip in 2020 Chamber Trip 2020 will help you experience this fantastic (open to anyone) destination for yourself. The international trips coordinated by the Chamber have become so popular that now we’re offering two trips per year. Australia + Fiji (Note: you do NOT have to be a member Departing April 28,2020 of the Chamber to join in on the fun). Our first trip for 2020 is to Australia and the second trip (in October 2020) will be 12 Day Journey of a Life�me to Spain. We are still working on all of the time, exploring on your own. details for Spain. Includes 9Breakfasts, Hotels, Airfare, Tours Our “Australia + Fiji” 12-day tour is Australia AND Fiji offered at the fantastically low rate of It’s no wonder why Australia is among $3399. If you’ve got the time and a few Highlights: Experience Sydney & Melbourne, the top tourist destinations in the world: extra bucks, you can add another three days friendly people, beautiful beaches, to visit the Great Barrier Reef and Cairns Australia’s 2 iconic ci�es. See the Sydney Foster’s Lager and those cuddly koalas for another $899. and kangaroos. We’ll be visiting the two Opera House from a harbor cruise.