Good Times Roll in River Delta and Golden State

Filmmaking, high-tech industry return glimmer to California

AFTER five years of the state's worst recession since the 1930s, economists across California are predicting a long-term recovery - even without the still sluggish sectors of aerospace, construction, and real estate.

The rebound has been aided by strong growth in the US economy, reforms in worker compensation, and state and local efforts to streamline regulations and boost investment.

''California's strength in world-growth industries is pushing the economy ahead again,'' says Steve Levy, director of the Center for the Continuing Study of the California Economy.

In his November report, Mr. Levy chronicles how California has regained most of the 520,000 jobs lost between 1990 and 1993 by building on strengths in foreign trade, high technology, tourism, entertainment, and professional services.

The state has added between 250,000 and 300,000 jobs this year and short-term forecasters predict the state will gain another 250,000 to 300,000 more jobs in the next two years.

''That all of this is happening without the housing market and defense sector is truly remarkable,'' says Joel Kotkin, senior fellow at the Center for the New West in Denver.

Mr. Kotkin explains the recovery is structural, not cyclical. ''This is not the usual up and down in which the state merely gains back the same kinds of jobs that we lost,'' he says. New demand in high-tech services - such as computer components for expanding the Internet - biomedical technology, and moviemaking are filling the void.

The good news has just provided an early Christmas present to the state government - a $676 million in surplus tax revenue. The addition, calculated last week, has come from taxes on personal income, sales, and corporations that have generated more money than was predicted when the state budget was adopted in August.

''Clearly this reflects an underlying health and is a very welcome shock based on where we thought we would be only six months ago,'' says H.D. Palmer, director of the state Department of Finance. He notes that much of that surplus is spoken for in previous debts and entitlements. But, he says, it looks as if the good news may be a trend. ''There seems to be consensus that this will continue into 1996 and 1997.''

Tom Lieser, associate director of the Business Forecasting Unit at the University of California, Los Angeles, predicts the growth will continue because this recovery is not being led by typical factors such as retail spending and construction.

The Center for the Continuing Study of the California Economy tracks the gains this way:

* Exports produced by California rose 18.9 percent in the first six months of 1995.

* Technology exports are up 23 percent over 1994. Venture-capital funding in Silicon Valley hit a record $456 million in the second quarter of 1995 - more than $100 million higher than any previous quarter.

* California has added more than 40,000 movie-industry jobs since January 1994 - an increase of 50 percent.

* Amusement and hotel jobs have increased by 35,000 since January 1994.

* Engineering and computer-service jobs are up 60,000.

But economists warn that although California's economic base is well-positioned in many sectors, the state could be hurt by continued budget-cutting at the federal level and the failure of state and local government to support burgeoning industries.

''All recent [California] state budgets have been put together in hurried negotiations,'' Levy says. ''Despite a number of bipartisan recommendations for developing a comprehensive, long-term budget strategy, none exists yet.''

They also worry that public investment has declined substantially in key areas such as funding for education - where the state ranks 42nd nationally - and in building infrastructure.

''The growth industries of the 21st century demand world-class education, infrastructure, and quality of life,'' Levy says. ''To meet these demands, California must escape the gridlock, which is preventing adequate public investment for the future.''

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