Construction Industry Collapse Hits San Diego Region Hard
Wednesday, February 18, 2009
The once booming construction industry in the San Diego region has collapsed taking jobs and money with it. KPBS Metro Reporter Katie Orr looks at the effect on workers and the region. It’s the third part of our series Rough Water: Navigating San Diego’s economy.
A few years ago electrician William Stedham had regular work building Thurgood Marshall Middle School in Scripps Ranch. Stedham stands outside the school which sits back from the road on a small hill.
William Stedham: These are all three stories building where we had to wire each, every classroom and all the lightening with the efficiency lighting. And then all the labs here, we put in high tech cabling for communications, for computers.
Stedham has been in construction his whole life and says building the school was great. It provided steady work, reliable hours, and decent pay. But he noticed things changing last year and in the summer he lost his job.
Stedham: You know, my wife and I, we had a three month surplus and we made that stretch as long as we could. And now… getting a haircut in a luxury.
Stedham and his fellow construction workers are looking for new projects. Housing developments that once provided jobs and fed the local economy stopped being built. And cities that were depending on those projects for revenue are now struggling financially. Chula Vista was hit especially hard when the boom went bust. Mayor Cheryl Cox says in good times, the city saw building applications for 35 hundred homes a year.
Cheryl Cox: It began to ramp up, probably in the early 2000’s and stayed at a high for a good four or five years. But then the fall was precipitous. It didn’t fall from 35 hundred to 3000 to 25 hundred to 2000. It went straight down.
And so did the city’s reserve fund, 30 million dollars reduced to less than 10. Cox says the city was using a lot of one time money for expenses that happen every year. She says the stock market collapse further pinched Chula Vista
Cox: Sales tax drops off, property taxes drops off. Combined with contractual agreements with four bargaining groups that promise them another four percent per years. Well, it’s a recipe for what we’re facing now. And we’re certainly in peril. I believe we are in a fiscal emergency.
The Chula Vista city council agreed and is asking voters to approve a one percent sales tax increase to help cover expenses. Services have already been cut dramatically. The state’s troubled finances are putting more pressure on cities like Chula Vista. They’re also squeezing San Diego County’s budget. Board of Supervisors Chair Dianne Jacob says the state provides 75 percent of the county’s spending money.
Dianna Jacob: But after, after a decade of sham budgeting, the state’s finances have been mismanaged to a grinding halt.
Jacob says falling sales and property taxes have also lead to a deep drop in county revenue.
What started as problem within the housing and construction industries has spread throughout the economy. Local, county and state governments are facing large budget shortfalls and rising expenses. UCSD Economics professor Ross Starr says this financial meltdown has hit the region especially hard.
Ross Starr: This recession is very heavily concentrated on residential construction. Residential construction was robust in San Diego during the expansion. Turning it off means San Diego is hit rather more heavily.
Starr says past recessions have typically centered on the manufacturing industry, which San Diego isn’t as dependent on. He says he believes this is the worst it’s been for the region since 1991 when the defense department slashed spending in the post cold war era. There may be hope in the Federal Stimulus package. Economists say the bill could contain funds for construction projects that could put some people back to work. That could, in turn, help governments get back on track financially.
Katie Orr, KPBS News