Yesterday, Kern County, California declared a fiscal emergency arising as a result of the plummeting oil prices.
According to the Bakersfield Californian, this move allows country supervisors to spend reserves and make staffing changes to the Kern County Fire Department, which, the paper reports, will absorb about $17 million of the expected $61 million oil tax drop. Country departments were directed to reduce their general fund spending by 1% and departments were told to expect an additional 1.4% cut in general fund spending for each of the next five fiscal years.
Country Supervisor David Couch is quoted as saying: "We're going to start feeling the pain earlier than we have to. Doing nothing and hoping it all works out isn't really an option." At the same time, others are justifiably concerned about potential cuts in services and salaries, as a leading union noted: "Kern County's declaration of a fiscal emergency allows the county flexibility to tap into reserves, which may be needed, but we would caution the Board of Supervisors not [to] adopt drastic cuts that could cripple vital community services."
As has been discussed on this blog previously, those who view the hardships to be suffered by those in the oil and gas industry during this period of reduced prices as relatively minor in the context of the national economy often make two mistakes: (a) they frequently ignore real human suffering and (b) they minimize the ripple impact of job losses and dramatically reduced capital spending in the oil and gas industries.
Kern County is not and will not be the only county or municipality negatively impacted by these industry changes. The Kern County Supervisors apparently are aiming to be proactive and not reactive. It will be interesting to see if others follow suit, and what the impact on services to communities at large will be.
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