Hunkering down -- and continuing our progress

Yesterday, the Federal Reserve stepped in to halt a global sell-off, announcing its biggest rate ever -- and speculation more will come soon. Locally, the LA Times reports today that fourth quarter foreclosures in the Southland are at an all-time high -- more than double the previous record.

Some economists maintain that we are talking ourselves into a recession -- that the fundamental economy remains sound. But the voices of optomism have had to consistently revise their forecasts over the past nine months -- always downward.

The "business cycle" remains a part of our economic way of life, even though people always seem to forget that when the markets are rising and jobs are being added. For 150 years, California real estate has ridden an even more extreme roller coaster. While each boom surpasses the previous one, it often takes a decade to recover from the bust.

Mainstream economists are still predicting only a "mild" recession, with recovery in 2009. But we are in uncharted waters now. Not since 1929 have the global financial markets been so vulnerable.

It is not for lack of money. While the "gross domestic product" of the entire planet is roughly 50 trillion a year, there is another $750 trillion of paper value invested in that core economy. A huge portion of that paper value is in the form of market and credit derivatives and hedges. Cynics label this the global financial casino. In the last decade, it has fueled huge booms across the world -- with an explosion of new skyscapers in Dubai, factories in China and subdivisions in Florida. It has inflated housing prices here in California and carried the US through record energy prices. It has paid the cost of the war in Iraq -- on both sides.

But how stable are these trillions? No nation is capable of regulating the titanic waves of financial transactions across the globe every hour of the day and night. What is panic triggers a sudden dumping of American assets? We like to think this only happens to countries like Argentina, Russia, Indonesia -- and Japan. But we are now the planet's biggest debtor, reliant on countries like Abu Dhabi to prop up our tottering financial giants.

Prudence dictates that we recognize the new risks. California bet the State budget on the boom continuing -- and now finds itself facing a $15 billion gaping hole in next year's budget.

In Ventura, we are moving now to deal with falling revenues. Each department has been asked to hold expenses to 98% of this year's adopted budget. On February 25th, we will be recommending a list of projects to be postponed, cancelled or indefinitely delayed. We are also working on a balanced budget proposal for next year that continues our forward progress, but at a slower pace, redeploys resources from lower to higher priorities and pays for new investments with new sources of revenue.

Those choices will -- or should be -- vigorously debated. On January 25th, we are presenting a revised proposal for adding another six police officers and three firefighters -- and paying for it with a monthly 911 fee on residential and business phone lines. Last year, we were able to add that many sworn public safety staff out of rising property taxes. But with property tax revenues headed in the other direction, adding safety staff can't happen without new revenue.

There are lots of reasons to object to the proposal. One is that voters "turned down" a plan for adding 14 officers and 11 firefighters at the ballot box. True, that plan fell short of the necessary 2/3rds vote to raise taxes -- but 62% voted yes. Should the Council pay attention to the majority who wanted the added investment in their safety -- or the minority who wanted to hold the line on taxes?

Another objection is that a "fee" is really just a tax in disguise. There is some credence to that claim and in fact the courts are sorting that out in other cities with a similar 911 fee. But Ventura's fee will offer an "opt-out" -- if users don't want to pay for access to 911 protection, they would be able to pay instead for each use.

Finally, many Ventura voters insist that needed public safety staffing should come ahead of all other city expenses. But when it comes time to make those hard choices, it turns out that spending on parks, environmental protection and other quality of life services are also highly valued by many other Ventura residents.

On the other hand, keeping Ventura safe will be even more important if tough times are ahead. Adding staff is essential to meet our response goal of arriving on scene to a life threatening emergency within five minutes at least 90% of the time -- to save lives when it counts.

These and other choices facing Ventura deserve intelligent debate, particularly as we all cope with a deteriorating economy. Your comments -- and suggestions -- are welcome!