Within the last couple of days there have been two independent pieces of information indicating a massive storm is about to come ashore and swamp the state of California. The first of these showed that tax revenues have fallen over $700 million short in just the three (3) months since Governor Jerry “Moonbeam” Brown and the rest of the Democrats passed the the state budget:
California’s revenue for the fiscal year that began three months ago has fallen $705 million below what Governor Jerry Brown and Democrats projected, approaching a level that may trigger automatic university spending cuts and higher community college fees.
September revenue came in $301.6 million below estimates, Controller John Chiang, a Democrat, said in a report today. July was $538.8 million less than forecast, Chiang said Aug. 9. Revenue in August was $135 million more than expected.
The $86 billion general-fund spending plan Brown signed in June included a series of cuts activated if higher revenue doesn’t materialize. The first, if the shortfall is $1 billion, would trim University of California and California State University budgets each by $100 million and increase community- college fees by $10 million.
With a $2 billion gap, the contraction would mean a seven- day reduction in the public-school year to save $1.54 billion and an end to $248 million in home-to-school busing subsidies. Brown’s finance department will determine in December if the cuts are needed based on revenue projections for the remainder of the fiscal year.
Think about this for a moment…three months created a 705 Million shortfall; then for the fiscal year, California is looking at approximately a $3 Billion shortfall.
The second piece of information showed up in the new port traffic numbers. In a nutshell, they cratered by an historic amount, creating a picture for a terrible holiday season for retailers. What makes this worse is that analysts had actually been raising their predictions for holiday spending ever since the back-to-school shopping season was stronger than most had expected.
But the people who work at the companies that ship and transport retailers’ goods are not nearly as optimistic about holiday sales.
When retailers expect that Americans will be crowding into their stores, their orders pile into the nation’s ports in August and September for delivery to stores by late October. But logistics companies say that is not happening this year.
“We’re concerned, because usually at this time, you see this peak,” said Richard D. Steinke, the executive director of the Port of Long Beach in California. “We haven’t seen it.”
In fact, the five busiest container ports in the United States said that imports in August 2011 were lower than or even with 2010 volumes.
In Long Beach, the second-busiest container port by volume, August imports fell by 14.2 percent from August 2010. While the port has not yet released September volumes, a spokesman, Art Wong, said it expected about a 15 percent drop from September 2010.
And its not just local either:
The reports from the remaining container ports in the top five were equally gloomy. In New York-New Jersey, the number of incoming containers in August was about flat with last year. In Savannah, Ga., imports in August fell by 4 percent. Oakland reported that August imports were down 0.9 percent from a year earlier. And Los Angeles, the nation’s highest-volume container port, counted 5.75 percent fewer containers in August than a year earlier.
When in conflict between a trade group and actual verifiable industry numbers, I have found that the latter is the course of truth.
Look on the bright side…there should be quite a bit of good merchandise through Mid-January
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