Fiscal Health

CA Governor Newsom is set to sign the 2019-20 budget any day now!

budget photo.JPG

With California’s new fiscal year set to begin July 1st, Governor Newsom is expected to sign into effect the $214.8-billion state budget by the end of the week.  Highlights of the budget include the following:

  • Putting safeguards in place for the next recession – The budget will set aside $15 billion to build reserves and pay off unfunded liabilities, with $1.2 billion of this being placed in the Rainy-Day Fund.

  •  Addressing the cost of living in California – The housing crisis will be addressed through a $1.75 billion allocation used to help stimulate housing development via planning and production grants for local governments, expand state’s housing tax credit program and loan program for mixed-income housing, and help provide opportunities for innovative housing projects on excess state property.  $500 million of the $1.75 billion will be directed at eliminating impediments to mixed-income housing development

    The budget addresses healthcare costs by expanding subsidies for middle-income earners to aid in the cost of obtaining healthcare through Covered California; and expanding Medi-Cal coverage eligibility to young adults ages 19-25. The budget will also look to extend paid family leave, increasing it to 4- month of leave for parents after the birth of a child.

    Education is addressed via a larger investment in K-12 schools, expanding the Earned Income Tax credit, providing funding to cover 2 -year community college tuition for first time full time college students, and providing additional funding to Cal State and UC schools to prevent future tuition hikes. 

  •  The fight against homelessness – The budget will allocate $1 billion in funds to provide additional aid, services, advocacy and programs to the homeless population.  This also includes a $400 million increase in grant for families enrolled in the CalWORKS program.

  •  Emergency preparation – The budget will allocate $769.6 million, providing funding for California Office of Emergency Services, California Department of Forestry and Fire Protection, California Conservation Corps, and the General fund for various updates and improvements. The budget will also provide $39.9 million to disaster preparedness, response and recovery efforts.

This budget seeks to enhance the quality of life for all Californians by preparing for the possibility of a recession repeat from the past, resolving the current problems that exist, and strategically investing to ensure a better future.

The Day After Thanksgiving


Often referred to as Black Friday, the day after Thanksgiving used to be the busiest day of the year for shopping in retail stores. It was the launching point for the critical holiday shopping season, which accounts for 30% of annual retail sales. Recent trends show decreasing store turnout for the retail market’s biggest shopping weekend – from 133 million people shopping in stores in 2014 to 102 million in 2015

Now consumers seem to be “navigating from the physical to the digital,” according to Fortune. Online shopping grew 19% from 2014 to 2015 for the holiday weekend, reaching $6.1 billion in 2015.

While huge numbers of people still shop in stores, online shopping is a trend that continues to grow faster each year. Black Friday is still a big event, but shoppers research and buy products online in ever-increasing numbers.

Will we see another large drop-off in store shopping this year? If recent trends are an indicator, shoppers will fill their mobile shopping carts, and Black Friday will just be another option. What could this mean for local sales tax revenues and the retail real estate market?

Written by Brett Poirier, an Analyst at RSG

Build It, and They Will Prosper?

Copyright 2016 Kelly Wilson, Creative Commons License This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Copyright 2016 Kelly Wilson, Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Do sports stadiums generate net economic benefits for the community? 

The consensus is generally no. Economists say that sports teams spur little new spending in the community. 

While stadiums are limited in use, politicians and developers claim that a stadium is a win for local communities. Proponents say that sports facilities improve the local economy by creating construction jobs, generating new spending, attracting tourism and multiplying local income and job creation. Advocates argue that new stadiums spur so much economic growth that subsidies are offset by revenues from ticket taxes, sales taxes, and property tax increases.

These arguments may overstate the benefits of stadiums. Economic growth takes place when a community’s resources become more productive. Increased productivity can arise from economically beneficial specialization by the community or from local value added. Building a stadium is good for the local economy only if it is the most productive way to make capital investments and use its workers.

Still, there are non-economic benefits, such as community pride and cultural activity. Some projects, such as the NFL Rams’ return to Los Angeles, which occurred with limited financial obligations for Los Angeles taxpayers, provide a valuable lesson in how to attract sports teams and new stadiums based on a market’s strength rather than subsidies.

Calculating the economic and fiscal impacts of a development is crucial when deciding on whether or not a project should break ground. RSG has extensive experience in projecting tax revenue from projects and can help determine if a sports stadium or other large municipal investment would be a good idea in your community!

Written by Jeff Khau, a Senior Analyst at RSG

Could Now Be the Time for a CRIA?

Copyright American Planning Association Creative Commons License This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Copyright American Planning Association
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

AB 2492 extends Community Revitalization and Investment Areas to wealthier regions of the state, without much change to financial benefits of these tax increment financing (TIF) districts.

Last month, RSG discussed the limited financial benefits of Enhanced Infrastructure Financing Districts, one of several newer tax increment financing tools that provide limited benefits similar to redevelopment financing. Community Revitalization and Investment Authorities (CRIAs) are similarly structured and provide these tools AND opportunities for other community development tools. These characteristics have attracted some of our clients to evaluate their benefit. As it turned out, most of California could not benefit from a CRIA given the narrow socioeconomic requirements. 

However, just this week, the Governor signed Assembly Bill (AB) 2492 (Alejo) into law that makes changes to CRIAs, so we took a hard look at these changes and how they affect cities looking for help on community development projects. As it turns out, AB 2492 primarily expands the net on eligibility for CRIAs, but fails to provide much needed new capital to communities.

Here are the main changes:

  • More communities qualify – a greater number of lower income neighborhoods qualify because AB 2492 allows wealthier areas of the state to identify CRIAs in areas that have a median income less than 80 percent of the city or county median income, not just the state;
  • More flexibility - Added flexibility in measuring what parts of communities qualify by allowing the use of census tracts and/or block groups;
  • Any California Environmental Protection Agency-designated “disadvantaged community” automatically qualifies for CRIA - this certainly helps some very low and low income neighborhoods that would otherwise not qualify under the old law; and
  • Some added financial benefit – in addition to tax increment generated by the CRIA, special districts may now have the authority to allocate funds from certain tax and assessment revenues to the CRIA.  Cities and counties already had this ability.

We would love to see more done to make these districts more attractive by:

  • increasing the amount of tax increment revenues,
  • lowering the costs for startup, and
  • providing some other efficiencies like those RSG outlined in last month’s article for EIFDs. 

It’s important to note -  qualifying alone does not mean this tool is right for you.  It’s important to look at the financial feasibility carefully before jumping ahead.

Written by Jim Simon, a Principal at RSG

Dissecting Brown’s Budget

Image courtesy of

Image courtesy of

Governor Brown and the California legislature approved a $122.5 billion budget to fund state operations for 2016-17. The budget allocates $400 million for affordable housing construction, increases preschool/child care funding by $500 million, increases reserves by $2 billion, invests $200 million in college readiness programs, and redirects $2 billion in Proposition 63 mental health funds to provide housing for mentally ill homeless people.

Putting an extra $2 billion into the rainy day fund suggests that state lawmakers are weary about a looming recession. There was a notable focus on alleviating poverty and income inequality in this year’s budget process. Brown and lawmakers failed to agree on a spending plan from the state’s greenhouse gas reduction fund, also known as the cap-and-trade fund, and failed to reach a deal on funding to fix crumbling roads and highways, which they have labeled as a top priority for several years.

To learn more about how the state budget impacts your local community and how you can make the most of it, contact RSG.

Written by Jeff Khau, a Senior Analyst at RSG


San Carlos Breaks Ground on a Landmark Hotel


The City of San Carlos recently broke ground on a new four-story, upscale, extended-stay Landmark Hotel. The hotel will include 204 guest rooms with individual kitchens, outdoor patio areas with a pool and sport court, fitness and laundry center, and a meeting room.



The hotel will be located near the City’s gateway entrance off the 101 freeway. It will provide much needed transient occupancy tax revenue to diversify the city’s tax base and increase revenues to fund services for the community. All buildings previously on the site have been demolished, and the entire project is expected to be completed in August 2017

RSG was involved in every step along the way from site assembly and acquisition, drafting purchase and sale agreements, relocating existing businesses, developer negotiations and agreements, and obtaining approval from local agencies. Call us to find out how we can facilitate your next project.

Written by Suzy Kim, a Senior Associate at RSG

A Fresh Look at Economic Development

The Brookings Institution recently released a report with guidelines to prioritize growth, prosperity, and inclusion in economic development efforts. 

The goal of economic development, should be to “put a regional economy on a trajectory of higher growth that increases the productivity of firms and workers and raises standards of living for all, thus achieving growth that is robust, shared, and enduring,” according to the report. Economic development should prioritize building strong business ecosystems for core industries, improving the productivity of firms and people, and facilitating trade. These are the market foundations from which growth, prosperity, and inclusion emerge. The report recommends five action principles:

1.    Set the right goals, 
2.    Grow from within, 
3.    Boost trade, 
4.    Invest in people and skills, and
5.    Connect place.

The report has already received coverage from outlets with broad distribution, like CityLab, which said that the report calls for a paradigm shift in economic development thinking, away from competitiveness and growth for growth’s sake, and toward a more inclusive prosperity. Such coverage is important for the ideas and approaches to spread and be adopted more widely.

At RSG, we have long focused on making growth equitable for all community members: residents and businesses. Our economic development analyses incorporate Brookings’s action principles. Contact us to discuss how your city can achieve inclusive growth and prosperity.

Written by Dima Galkin, an Associate at RSG

The Economics of Valentine’s Day

In 2016 Valentine’s Day was estimated to add $19.7 billion to the economy. According to Kimberly Amadeo, US economy expert, people were going to spend much more than last year’s record of $18.9 billion. 

Consumer spending contributes to 70 percent of economic growth, as measured by Gross Domestic Product (GDP). The spike in purchasing helps the economy in a year where business spending has been on the downswing. Because the strong dollar has hurt exporters, higher consumer spending helps to keep the economy on track.

Statistics show that men spend nearly twice as much as women on Valentine’s Day: $196.39 per man vs. $99.87 per woman, partly because men are usually higher earners. Younger people are more likely to celebrate than older people. The top five Valentine’s Day purchases are candy, greeting cards, an evening out, flowers and jewelry.

Maybe we need more holidays to keep the economy healthy.

Written by Brett Poirier, a Research Assistant at RSG

How Health Can Contribute to Economic Wealth

For many people, a new year means new commitments and resolutions, such as getting in shape and being healthy. While eating better and losing weight may be great for your waistline, having a healthy lifestyle can also benefit your community!

Exercise makes your body release a protein called BDNF (Brain-Derived Neurotrophic Factor) that makes you feel at ease and happy. Endorphins, chemicals that fight stress, are released in your brain during exercise, minimizing discomfort, blocking the feeling of pain, and creating a feeling of euphoria.

A focus on individual health also provides benefits for the local community and workforce. Working out clears cortisol, the stress hormone, out of the body. Walking improves both convergent and divergent thinking, enhancing creativity. Exercise can help us to focus more through building stamina and productivity. Workplace health programs that combine individual and organizational strategies can produce benefits for individual employees, their families, and the organization as a whole by reducing sick days and enabling employees to be more productive.

Though not a typical part of economic development strategies, improving individuals’ health can provide local economic benefits. With a strategic approach and comprehensive vision, RSG helps clients develop solutions for their economic and fiscal health.

Written by Evanne Holloway, a Research Assistant at RSG

Telecommuting with Improved Technology

Most working people have wished that they could clone themselves or be in two places at once. Now the idea is getting closer to reality. 

For instance, the Beam Store in Palo Alto is “manned” only by robots that move around and interact with customers at eye level. Actually, people in remote locations can see and communicate with customers in the store through the device, called the Beam. It is on wheels with an iPad-like screen showing the face of the person who is talking to the customer.

Made by Suitable Technologies, the Beam offers mobility and independence, high-level sound quality and ease of use. The user is in complete control and has a sense of being at the location where the communication is taking place.

This new technology may make it easier to telecommute, attend virtual meetings and follow up in what appears to be a more effective way than a telephone call. It can change workforce possibilities by giving people all over the world a chance to interact effectively without going anywhere, thus saving money while increasing productivity. How might such technology change your local community?

Written by Brett Poirier, a Research Assistant at RSG