Local Group Gives SB County Economic Wellness Grade of D+

— By Sam Goldman (Noozhawk staff writer) 

Santa Barbara County isn’t sitting so pretty right now, according to a recently released report by the organization Reason in Government.

The report by the Santa Barbara-based nonprofit says that inadequate government handling of significant fiscal issues, combined with insufficient public-private partnerships, have held back economic development in the county and will hamper residents’ quality of life if not satisfactorily addressed.

Despite improvements in some metrics, the report claims, economic vitality is still considerably below what it was in the years prior to the recession.

Reason in Government released the document Wednesday and rated the economic wellness of the entire county with a D+.

“Although there are a handful of bright spots, such as rising median household income, Santa Barbara County is not economically healthy,” the report read.

“Its unemployment rate is high by historical standards, its poverty rate is much too high by any standard, its public finances are weakening at the county and city levels, its labor mix and business formation lack vitality, and its lack of housing drags down the overall economy in several ways.”

Reason in Government was founded in 2015 and says it advocates for the “radical center” politically.

The organization describes itself as supportive of the free market, civil liberties and more reasoned and effective governing, and says government “should be ‘fiscally conservative’ and ‘socially liberal’ in outlook and action.”

“The economic forecasts that were coming in late last year were very optimistic in a way that I didn’t think tracked necessarily with the public mood,” Reason in Government president Brian Goebel told Noozhawk. “I wanted to dig into the data and see what was really going on.”

Despite being home to many civically minded people, he said, “I think there’s a lot of complacency in the county.”

The report, “Grading Santa Barbara County’s Economic Wellness,” based the D+ grade on the average grades of 10 different metrics related to economic health and vitality. It gathered most of its data from 2015 U.S, Census tests and local government budget data.

The 10 measures were primarily compared to what they were in pre-recession days, which the report argued was a fair benchmark for economic health, as well as to Sonoma County, another coastal county it said is similar to Santa Barbara County in population and labor force, but is doing much better overall in those 10 metrics.

Reason in Government rated the 10 measures, along with whether it believes they’re improving or not:

» Unemployment rate: D+ (↑)

» Poverty rate: D- (↔)

» Median household income: A (↑)

» County and municipal finances: D (↓)

» Number of firms: C- (↔)

» Labor mix: D (↓)

» Median value of owner-occupied property: D- (↑)

» Housing units per resident: D (↓)

» Ratio of median household income to median rent: D (↓)

» Income dedicated to rent: D+ (↑)

The report found Santa Barbara County to be an expensive place to live and in need of more workforce housing. It found the poverty rate to be higher than the national average and that it has fewer “21st century economy jobs” than in years past.

The county’s most promising measure, median household income, was found to be “rising faster than the national average and is well-above the level achieved in 2007.”

Of greatest concern were county and municipal finances.

Despite “very little debt and a strong bond rating, (the county’s) overall finances are seriously imbalanced largely as a result of policy choices made by earlier Boards of Supervisors,” the report stated.

“Economically sensitive revenues are growing slowly while expenses have vastly outpaced population growth and long-term liabilities have risen astronomically.”

The county’s cities, it argued, were in even worse shape collectively.

With local governments’ mounting pension liabilities, the report said, substantial reforms should be taken up immediately to alleviate what it said is an increasing burden on the rest of public finances, which ultimately hampers residents’ quality of life.

Another significant fiscal issue affecting residents’ well-being is local governments’ increasing backlogs of infrastructure maintenance.

Goebel, who has practiced law and advised the head of U.S. Customs and Border Protection, contends that these big-time issues were seen ahead of time, but were challenged by digging out from the recession and balancing infrastructure spending with other investments and costs, including pensions and essential services.

The report advocated for much stronger public-private partnerships, like those being pursued by the county Economic Vitality Team, to facilitate economic innovation and development and to tackle complex issues like water security and workforce housing.

It also called for aggressive efforts to stimulate business formation and growth, and for philanthropists to further step up their game to better tackle poverty and social injustice.

The report said there were gaps and inconsistencies in city and county budget and financial data, and encouraged local governments to improve transparency by more consistently publishing more budget and financial data.

Goebel estimated that, if local powers were to implement the report’s recommendations, improvements in the grades it assigned those 10 variables could expect to be seen over an 18- to 30-month window.

County Executive Officer Mona Miyasato characterized economic growth countywide as moderate overall and stable.

She noted the county is home to big-time employers such as UC Santa Barbara, Vandenberg Air Force Base and Cottage Health, which provide stable, good-paying jobs, and that governments should continue pursuing partnerships with the business, nonprofit and philanthropic communities to tackle important issues.

“Everyone said when you’re coming out of a recession like this, it’s going to be a slow path out, and that’s what we’re seeing,” she told Noozhawk. “We recognized that early on.”

The report’s pre-recession benchmarks are not necessarily suitable for measuring today’s economic wellness, she said.

“The landscape really changed post-recession: for government, for our residents, for nonprofits, for businesses. And so I think that you have to look at the post-recession world with a different lens in general.”

Like Goebel, however, Miyasato said meeting a variety of basic obligations during the recession made keeping up with deferred infrastructure maintenance difficult.

The pension predicament, she added, was the result of decades of past decisions up and down state and local government, as well as past performance on the pension fund.

The county Board of Retirement “has taken actions that will entail paying down most of the county’s pension debt by 2031,” she said.

“They’ve made strides over the past several years to reduce risk to ensure greater stability of the pension fund. We’re not kicking the can down the road. We’re addressing our debt now.”

— Noozhawk staff writer Sam Goldman can be reached at sgoldman@noozhawk.com. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.