By Marlize van Romburgh Friday, November 9th, 2012

Ventura County is going to start looking a lot more like South Santa Barbara County in coming years, with few job opportunities to match the high cost of housing.

That was the view from Bill Watkins, chief economist at the Center for Economic Research and Forecasting at California Lutheran University.

“Ventura County’s future has changed,” Watkins said, speaking at a Nov. 9 event held in Camarillo. He said that it is starting to resemble Santa Barbara – a sought-out, wealthy enclave but not a city known for private-sector job creation. “Santa Barbara is kind of a strange place,” Watkins said. “There’s no middle class.”

For the year ended July 1, 2011, Ventura County’s population grew at 0.6 percent, according to data presented by CERF, the slowest growth rate since such data started being collected in 1947. Watkins said the growth rate — basically zero — is the result of declining middle-class job opportunities in the county and in California as a whole. The birth rate is lower, and many Californians are moving to other states in search of a lower cost of living and better employment opportunities. Perhaps most significantly, international migration into California is also on the decline – largely as a result of federal policies and a gridlock in D.C. on immigration reform, Watkins said.

The decline in births is also troublesome, he said. “It reflects an aging, less vigorous population, the result of young families leaving the county,” he said in a written forecast released to the media before the event.

While the idea of “zero population growth” was fashionable, even among economists, in the late 1960s and ’70s, most experts agree that a stagnant population is at risk of slipping into a cycle of economic decline.

Ventura County saw just 0.4 percent job growth in the past year, according to CERF.

While some sectors – notably professional business services and leisure and hospitality — have seen increases, many of the new opportunities being created in Ventura County aren’t head-of-household jobs, Watkins said. And that, in time, creates a yawning gap where the middle class used to be.

Another indicator of a sputtering economy is stagnant home prices. Since 2008, Ventura County’s home price has bounced along what his team “hopes is the bottom,” Watkins said.

The county’s commercial real estate markets are showing a slightly stronger recovery, especially in the industrial sector, which has seen positive absorption.

Retail, which has been touted by many commercial real estate insiders as the strongest of the commercial real estate markets, is actually headed for a decline, Watkins predicted. That’s because, in his view, there’s simply too much brick-and-mortar shopping space in a world that increasingly buys everything online.

“There’s probably too much [retail space,” Watkins said. “If I was talking to a city government … I’d say, ‘If you’ve got one of these lousy shopping centers and someone wants to do something with it, I don’t care what … could be a cemetery … let them do something with it.”

California’s regulatory environment may be more burdensome than its high taxes, he said.

He pointed to the long-dormant Miramar Hotel project in Santa Barbara County as one example. The iconic property has gone through three owners since it shuttered its doors in 1999, and is currently owned by Los Angeles-based shopping mall developer Rick Caruso’s firm. Each Miramar owner has tried but failed to get through the entitlement and financing process — Caruso finally managed to secure all planning approvals, but when he asked the county for a special tax rebate, those talks also reportedly recently fell through.

“We have gone from, ‘If they can’t do it in California it can’t be done,’ to ‘We can’t even remodel an old hotel,” Watkins said. “California has lost its mojo.”

The state needs to focus on lowering its tax and regulatory burden, creating new jobs, and providing all young people with a chance at a quality education, he said.

“Two populations, one wealthy and one poor, living side-by-side with limited upward mobility for the poorer population is a prescription for problems,” he said in his written forecast. “It’s worse when the differences become racial. Opportunity along with quality education for everyone solves all of those problems.”

Although he said higher education will provide the path to upward mobility that Californians, especially the children of migrant workers and farm laborers need to succeed, Watkins was skeptical that recently passed Proposition 30 is the answer. Gov. Jerry Brown’s tax increase makes the top marginal tax rate in the Golden State the highest of any state in the nation and is intended to provide $6 billion to K-12 schools and public universities.

View from Sacramento

Longtime Sacramento Bee political columnist Dan Walters, who also spoke at the Nov. 9 event, said that because the Proposition 30 tax increase is only temporary and will mostly go toward letting schools pay down existing debt, rather than provide fresh funding for classrooms, the new measure may not have the effect its advocates had hoped for.

“Proposition 30 does not solve anything, but it buys [schools] a little breathing room,” he said. “The money woes are not over, the budget is not balanced, and the schools aren’t getting very much out of this.”

Walters said that with Democrats likely to have a “supermajority” two-thirds hold in both houses of the California Legislature, it will be easier than ever for liberals to pass new legislation.

But don’t necessarily expect it to happen all at one, he said. Rather, Sacramento politicians are more likely to push for incremental changes, such as lowering the voting threshold on increasing parcel taxes from two-thirds to a simple majority.

And, he said, even in a “one-party state” as California has become, there are factions and fissures within the party, he said. Business groups and lobbyists looking to oppose new Democratic measures would do well to focus on those divisions within the party, he said.

Still, Walters said, the Republican party in California is “on life support.” Just 28 percent of voters in the state in the Nov. 6 election were registered Republicans, and the decline is likely permanent.

One member of the audience asked Walters if there’s anything for Republicans in the state to do to turn the tide.

“If the Republican party is going to have any kind of rebirth, they have to recognize that there’s a new reality in the state,” Watlers said. The party may be able to recapture a portion of the large independent voter base in the state if it “lets go of hot button issues” such as abortion and immigration, he said.