10:20 PM PST on Wednesday, February 3, 2010

By KIMBERLY PIERCEALL and JIM MILLER
The Press-Enterprise

There’s no shortage of numbers to describe the recession’s effect on the Inland region.

The unemployment rate hovers at 14 percent.

The number of home foreclosure filings last year reached 126,376.

Bankruptcies were up 50 percent to a total of 29,764 in 2009.

Now there’s another one.

The region lost more than 11,294 retailers, wholesalers, self-employed sellers and others required to pay sales tax in 2008, according to data from California’s Board of Equalization.

That meant the number of businesses in Riverside and San Bernardino counties shrank by nearly 12 percent between Jan. 1, 2008, and Jan. 1, 2009.

Compared to other counties, Riverside and San Bernardino had some of the steepest declines in sales-tax permits of any California county during the first year of the recession. None of California’s 58 counties saw a gain in sales tax permits. Statewide, there were a total of 106,545 fewer permits.

That mirrors the Inland region’s drop in taxable sales. The new state data shows that in 2008 Riverside County’s taxable sales were down 10.4 percent from 2007 levels and down 8.8 percent in San Bernardino County, compared to a statewide average of 5.2 percent.

The outlook for the surviving businesses that remain isn’t rosy since consumers who have cut back their spending aren’t likely to spend with the same pre-recession fervor.

However, the latest data on sales-tax permits, also known as seller’s permits, may offer hope.

As of Jan. 1, there were 1,066,161 sales-tax permits in the state. That compares to 1,041,944 sales-tax permits on Jan. 1, 2008, and 935,399 on Jan. 1, 2009. Unlike the 2008 and 2009 figures, the 2010 numbers cannot yet be broken out by county because they have not been finalized.

THE RIPPLE EFFECT

The decline in sales-tax revenue contributes to the major budget problems facing state and local governments.

State Sen. Gloria Negrete McLeod, D-Chino, said she thinks the region’s large number of foreclosures and job losses are the main reasons for the major drop in sales-tax permits.

State Sen. Bob Dutton, R-Rancho Cucamonga, blamed the decline on companies consolidating and closing branches. Many retailers’ business plans probably assumed that the region’s population would continue to grow because of the demand for housing, Dutton said. When that didn’t happen, some have shut down, he said.

LOAN MONEY TIGHT

Geof Gaines, co-owner of the Coffee Depot near downtown Riverside, closed his second location at Riverside Plaza in December.

For Gaines, the cost of milk went up as well as minimum wage and rent for his 1,455 square-foot space.

He closed his second coffee house rather than take on debt to keep the store open.

“It was pretty much a no-brainer,” he said.

Charles Bruce, the 65-year-old owner of Bearing Metal USA, has sold metal bearings and bushings used in pumps, machines, compressors and engines, as well as the raw material to make them in Riverside since 1996 and in Orange County before that.

But like many small businesses without the option of tapping into his home’s equity anymore for funds, Bruce needs a $250,000 loan to keep the business he has, and possibly grow, since competitors have gone out of business and left a void of service.

“Right now we’re in a cash flow crunch,” he said. “If it’s not for the goodwill of my vendors, I’m out of business.”

He has seven employees and plenty of orders, just little available cash to buy the supplies he needs.

“I don’t want to let people go anymore,” he said.

WHY A RISE?

In the depths of a recession as layoffs level the ranks of salaried and hourly employees who received a paycheck from someone else, the unemployed often venture out to make a living on their own, said Chapman University economist Esmael Adibi.

That might explain the increase in permits for 2009.

“A whole bunch of people become self-employed,” he said. “That’s always the trend.”

Adibi said the increase in seller’s permits could be an indication of that trend occurring.

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