Turning an economic corner
It’s a slight sense of hope, a cautious optimism heralding the resurgence of consumer confidence.
Clapper, vice president of Fagan Automotive, Janesville isn’t the only one who senses the change. Across the country, and in Rock County, business leaders see an increase in spending and hiring.
It’s not exactly the light at the end of the tunnel—unemployment remains above 9 percent and the public sector still faces significant economic challenges.
It’s more a sense that the light is there, and the community is steadily working its way forward.
“In Rock County, we’re seeing companies starting to expand, and we’ve minimized the amount of job loss,” said Mary Willmer-Sheedy, community president of M&I Bank and co-chairwoman of Rock County 5.0, an economic development group.
In 2010, Janesville lost McGrath Electric and Norwood Promotional Products.
But a Cambridge candy maker moved to Janesville, St. Mary’s Hospital will open this year, and Mercy Hospital and Trauma Center has expanded. In Beloit, Frito-Lay has continued to hire as well.
Monster.com currently lists about 600 jobs for the Janesville area. Eighteen months ago “there was almost nothing,” she said.
“We’re seeing a decrease in the unemployment rate—it’s small, but recovery doesn’t happen over night,” Willmer-Sheedy said.
It’s consumer spending that drives the recovery. But not the kind of lunatic, uncontrolled spending that characterized the pre-recession environment.
“Savings were minimal; people were just living outide of their means,” Willmer-Sheedy said. “Now people are much more thoughtful about how much they spend, they know they need to plan out major purchases.”
Clapper sees signs of increased consumer confidence in more than just his sales figures.
“A year ago, if people needed a new car, they delayed the purchase until their cars were worn out,” Clapper said. “They were waiting until they absolutely couldn’t wait any more.”
Now, people are making their trade-ins earlier, and many of them are trading in imported cars.
“That says a lot,” Clapper said.
New models have also contributed to sales, as well.
“I think people’s attitudes have improved, too,” Clapper said. “I don’t have anything to document that, you can just feel it.”
Local people were hurt by—and still worry about—the impact of the General Motors plant closing, they also see that it is possible to move on.
“They see that our community did not fail,” Clapper said. “There’s still a lot of room for improvement, but I think the worst is behind us.”
Public sector struggles
School districts, cities and counties might still have the worst in front of them
Tax revenues have dropped at all levels of government, Willmer-Sheedy said.
With lower home values and lower employment, the income the government gets from taxes drops dramatically.
The Janesville School District is considering layoffs, and incoming Republican Gov. Scott Walker has pledged significant cuts in state government.
Funding for pensions and health insurance costs have evolved from political issues to fiscal crises in many states.
Phil Boutwell, assistant to the Rock County administrator, said public sector recovery almost always lags behind.
For the county, revenues from interest earnings, which are used to offset the property tax levy, have dropped significantly, as have revenues from user fees.
The county is struggling with the state’s last budge that cut $4 million from the human services budget.
Rock County’s total budget is $177 million, and of that, $109 million goes to human services.
Here’s the kicker: The majority of those services are state-mandated, and the revenue limits mean that any shortfalls cannot be made up with local taxes.
For counties, it’s a no-win situation.
Short of discontinuing unfunded mandates, Boutwell would like to see the state give counties more flexibility in the way services are provided.
The state’s next biennial budget begins July 1. Until then, counties and other units of local government can only anticipate cuts—just how significant they will be is impossible to tell.