I am writing this to represent my own personal views, not necessarily those of the ECA or any particular member firm. The idea behind this “Soapbox” is to present ideas and topics that are loosely based on the current news, but with the intent to make people challenge the typical dialogue and provoke thinking about these events.
Last night, President Biden spoke to a joint session of the Senate and Congress about his first 100 days in office. Clearly, “climate change” was, and is, and will be, a huge focus for this administration. “Climate Change” issues also are a major part of the huge, so-called “infrastructure bill” being proposed by the Biden administration. Biden proposes $2.3 Trillion, and the GOP has countered with a proposed $568 Billion package that has twice the amount for roads and bridges as the Biden plan despite the much lower overall price tag. There will be a spirited “battle” in Washington as the two parties try to thwart each other’s plan to spend OUR TAX DOLLARS.
While all this is playing out, I sit back and contemplate what Climate Change and Infrastructure funding will do to influence our lives here in the North Bay Area. While it is clear that lots and lots of dollars are flowing into our local economies, it is also true that lots and lots of tax dollars will flow out of the economy to pay for the “fast and loose” spending traits we have seen from both the GOP and the DEMS in the last few years. Factoring in the “infrastructure bill” in some form “north of $1 trillion, the Feds will have pumped nearly $10 trillion into the economy and somebody, somewhere, needs to pay that back at some point in time.
It seems like opportunities will abound around Northern California for the next few years. On Wednesday, I had the pleasure of hearing State Senator Mike McGuire talk about the economic vitality of the State of California. Because people are making money and writing tax checks in record amounts to the State, California has been able to repay the $9 Billion it had borrowed from former Governor Brown’s “rainy day fund” already. That’s a good thing!
California has also been able to fund a $536 million wildfire defense bill that will see specific shovel ready projects go before the California Coastal Conservancy Panel for approval on May 27, 2021. Those dollars will filter down to our Counties in the form of replacing wood power poles that are in high fire danger areas, cleaning out underbrush and wildfire fuel stockpiles that abound in public areas and forests, and perhaps burying some power lines in certain fire corridors so that downed power lines do not hamper evacuations and first responders coming in to fight the future wildfires.
Senator McGuire also spoke about the California drought and the $2 Billion that has been earmarked for dealing with our water reservoirs, transmission systems and other storage for water that is so desperately needed. Grants and subsidies will soon be coming to ranchers and farmers and wineries to line their storage ponds, create new storage ponds, and reduce inefficiencies and leakages across the spectrum from collection to distribution of those water resources.
Whether the Dems or the GOP wins the debate on infrastructure spending, dollars are coming to fix our roads, bridges, ports, broadband cable, airports, and rail systems. These various dollars will create opportunities for our ECA firms starting in the 3rd quarter of 2021 and continuing well past 2025. Senator McGuire told us that the State of California is looking at record economic development and a very “hot economy” starting in the 3rd quarter of 2021.
I have been watching and writing to our Supervisors regarding the budget process for funding Sonoma County Transportation and Public Works projects. The proposed funding for the SoCo Transportation and Public Works for capital improvement projects in the unincorporated roads of Sonoma County will be a record this year and next. As Senator McGuire likes to say, “Hot Dang”!
With all this money flowing in, we will certainly see our membership get their fair share of the projects. All this goodness doesn’t come without some “badness”. It seems obvious to me, that some major inflationary pressure is certain to come which means higher prices on EVERYTHING. When Biden tells us there will be no new taxes for those of us making $400k or less, he is not saying you won’t be paying much higher prices for everything. Inflation equals higher taxation. That is conveniently left out of the sales pitch for all this spending. And I guarantee you, the “rich guys and the rich corporations” are not going to subsidize those higher prices for you and me. Just a guess folks–
As we talk about adjusting your business plan to accommodate more income opportunities and more costly goods and services, keep in mind, your needy far away “Uncle Sam” will be tapping those projects for repayment of all this “free money” that he has been printing. Whether it be via an increase in capital gains tax rates, or a reduction in deductible items for your tax returns, bad Uncle Sam is going to get “his” money. Guaranteed!
The other thing I worry about is about 15 years from now-will we be told to convert all of our dozers, trucks, cars and conveyor motors to be powered from solar, wind or some as yet undetermined sustainable energy source? Judging from the speech Wednesday night, that day is coming——–. That is subject for another Soapbox though.
For now, go get this work that is presenting itself now and for the foreseeable future. Tweak your spreadsheet forecasting for your business and personal financial outlook by assuming goods and services will be going up 3-5% at least each year. And stash some of those dollars away for that greedy relative who will be visiting you next year!
Let the good times roll!
That’s all folks!