Top Stories: July 2, 2009

Reed Taps Salsido; I.O.U.'s Explained; Startups and Nonprofits Hurting

By Staff (Jul 02, 2009 )

Mayor Names Law Enforcement Official as Senior Policy Adviser
With the SJPD facing growing criticism from community activists, Mayor Chuck Reed named Santa Clara County Sheriff’s Lieutenant Jose Salcido as a senior policy adviser in matters relating to public safety and neighborhood groups. Salcido has served in the Sheriff’s Department since 1977, and has been a lieutenant since 2002. He had also been suggested as a possible candidate to replace current Sheriff Laurie Smith. Read More at San Jose Inside.


All You Need to Know about IOUs
With State Comptroller John Chiang about to start issuing IOUs today, Bay Area residents need to know what to do with the slips, more formally known as “registered warrants.”

Q. Who will receive IOUs?
A. People owed tax refunds, local governments, vendors doing business with the state, and owners of unclaimed property.

Q. When can they be redeemed?
A. October 1, 2009.

Q. Will anyone be getting paid the normal way?
A. Yes, but the state constitution sets priorities for this, with education and debt services being the first to get paid, followed by state workers, public employment retirees, state teacher retirees, in-home supportive services, and Medi-Cal providers.

Q. How much interest will I received for my IOU?
A. This will only be decided today at a meeting of the State’s Pooled Money Investment Board. Bear in mind though that they are planning to keep the interest rate as low as possible. According to a recent bill, interest will only be paid up to the redemption date. On the other hand, it will also be possible to redeem IOUs before they mature. Read More at the Sacramento Bee.

How Much Did the Deficit Grow on Tuesday?
California’s $24.3 billion deficit grew by at least $2 billion Tuesday night after Senate legislators failed to cut $3 billion from education and other programs. The hike is due to a complex funding formula that automatically increases school funding every fiscal year. Observers are now worried that this may increase as much as $7 billion because the lawmakers failed to enact a series of measures in response to Prop 98 education funds, which also increase automatically.

Even if they had succeeded in reaching agreement, Governor Schwarzenegger has rejected the idea of stopgap measures and stated that he would only sign a complete budget.

The failure to reach agreement means that the state will begin issuing IOUs today in place of payments. The IOUs can only be redeemed on October 1. IOUs have not been issued in California since 1992. Read More at KCBS.

Bad News for Silicon Valley Startups
The recession is having a serious impact on startups in Silicon Valley. A new Dow Jnes VentureSource study found that venture capitalists raised only $2.57 billion this quarter in the sale or merger of 67 businesses. This is 60 percent less than the $6.48 billion raised in 89 such deals last quarter. The amount raised by startups has decline by about one-third, from $23.4 million last year to $16.3 million this year, while the median prices paid for businesses also dropped, from $41 million to about $22 million this year. Nevertheless, despite the bargain-basement prices, acquirers are still taking their time to decide where to put their money.

Other bad news for Silicon Valley startups comes from Texas, where Austin is quickly emerging as a high tech competitor. The highest IPO offering this quarter was for the Texas-based SolarWinds, which raised $113 this quarter. Read More at the Business Journal.

Local Nonprofits Suffer from the Budget Crunch
With the State of California resorting to IOUs to pay for services, local non-profits whose fiscal year began yesterday are being forced to cut back to make ends meet. According to Patricia Gardner of the Silicon Valley Council of Nonprofits, over half of the 200 nonprofits she represents are facing cash flow problems. In just under half the situation is so severe that they are being forced to lay off staff.

San Jose nonprofits are being especially hard hit. The Boccardo Family Shelter is being forced to cut the number of emergency beds it offers from 250 to 100, while the Alum Rock Counseling Center is closing one of its truancy reduction programs and Evening Reporting Center, which has offered rehabilitation services for youth released from juvenile hall. Read More at KNBC.

Santa Clara County to Pay $2.3 Million in Wrongful Death Lawsuit
Santa Clara County has agreed to pay $2.3 million to the family of cyclist Matt Peterson. Peterson, 29, was struck by a police cruiser and killed on March 9, 2008. The driver of the vehicle, Sheriff’s deputy James Council, fell asleep at the wheel. Two additional lawsuits resulting from the incident are still pending: one by the family of Kristy Gough, who was also killed, and the other by the family of a third cyclist, who was severely injured.

Council was sentenced to four months in jail and 800 hours of community service. He was also demoted to sheriff’s technician, and is barred from driving a patrol car or carrying a gun. Read More at the SFGate.

Hunger Strike to Begin Today on behalf of Iranian Protesters
Iranian-Americans in the Bay Area will launch a hunger strike outside City Hall at 4:00 pm today in solidarity with the pro-democracy protesters in Iran. The strike is expected to last until July 4. The strikers are demanding that the United Nation take action in response to the human rights situation in Iran following that country’s contested presidential election. Read More at the Examiner.

San Jose Police Searching for Abductors of Street Vendors
The SJPD is search for suspects involved in the kidnapping of two street vendors on Monday evening. The vendors were originally held for ransom but later released unharmed. The suspects are Hispanic men of medium build about 5’10” tall. Read More at CBS 5.

Soccer Coach Pleads Not Guilty to Molestation Charges
Pedro Carbajal, 34 who ran a popular soccer club for boys in Rengstorff Park, pleaded not guilty yesterday to three counts of lewd and lascivious acts with a child and one count of aggravated sexual abuse of a child. The alleged victims were three female relatives, aged 7 to nine. Carbajal’s lawyer said that he “looks forward to being vindicated at his trial.” Read More at the Mercury News.