Finally! It is the coming of the Messiah! Wait, that isn’t it. It is the end of the world. Nope, that isn’t it either. Ah, the California Budget debates are over and the State Legislation has approved the budget and is passing it to the Governor for his signature. Well, the budget may be balanced and we may be getting some help with the stimulus package from the Fed but we are still in for a long, slow ride to recovery.
Interesting note in the news today about California and housing. Homes are affordable enough for about 60 or so percent of the people in California and that includes parts of Los Angeles. The bigger issue is can people qualify for the homes if they are laid off or don’t have the higher down payment requirements which are in the neighborhood of 20%.
I am inclined to think that once all the noise about the Depression is over and if we all aren’t all sleeping under the trees or fighting for a dry spot under a freeway overpass we will find that the average price for homes will float down about 6% a year for the next few years and maybe in five years it will be bottomed. I am going on record with this after conversations with some people in the bank repo business and of course, there are exceptions to every rule. One major exception is any place where there is a killer school system. People will do what they can to keep themselves in a neighborhood where it is safe and their children can go to school. There are still a lot of places like that in California and of course all about the nation.
What do the super rich do about things like that? They don’t worry about it because they live in gated communities and they have their kids either tutored privately or they go to expensive private schools, or at least until their stock portfolios are dried up. Speaking of which, I don’t expect any kind of super rally for a long period of time and I sold my CAT stock and took my losses and my lumps. Sometimes you win and sometimes you lose and the important thing is to have enough cash to be able to invest (or speculate) another day.
Now that I have been rambling all over the place let’s get back to talking about California. From what I have heard, a lot of services will continue the way that they are meant to and that hopefully will be good for those of us with special needs families. The reason isn’t though because of California. It is because abou 9 billion dollars in Federal stimulus money will be heading our way. Hopefully that will continue to fund school supported special needs programs. Be vocal people. If we don’t talk, nobody else will.
What about Hollywood?
The motion picture industry starts to get some incentives in 2011 (if I got the year right from what I read) with the following three items in the package that will be signed tomorrow:
1. Studio film projects shooting for less than $75 million can apply for a tax credit amounting to 20% of all “qualifying production expenses” — essentially below-the-line costs.
2. Independent film productions of $1 million-$10 million and all TV series relocating to California will qualify for a 25% tax credit.
3. Productions must locate in the state for 75% of shooting days or spend three-fourths of a project’s budget in California.
It is just enough to keep middle or average productions in-state so that the cast and crew can go home and sleep in their own beds in their Valley homes or condos. Some other states have some lavish incentives but those will draw super blockbusters only if they also fit their location needs. State estimates suggest that every $100 spent on production in California returns about $285 in economic output. The state projects the program should be cost-neutral because of benefits in business retention. Others think it will add more. Hey, I think anytime you can keep jobs close to home you are doing local economies a blessing.
Considering California is about the equivalent of the eighth largest economy in the world (according the State itself) we are probably also one of the most cash broke economies. We need to work on generating state income to support state programs so we can continue to function and try to recapture being the world trend setter in making money as well as style.
No word on State refund checks. I am hoping those will start going out as soon as possible.
Be safe people!
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Kim Isaac Greenblatt
California Budget Passed To Be Signed Friday