Welcome to the June Tourism issue of NorthBay biz magazine. Ready for some good news? Despite a struggling economy, the outlook for Wine Country tourism this year is positive. While no one is expecting to set any spending records, 2009 should see area hotels and restaurants filling up and parking lots bulging. Second only to agriculture, tourism is the economic driver of our local economy. So as the crowds swell this summer, remember to keep smiling despite the added congestion—the billions of tourism dollars spent in the North Bay this year will translate into millions of tax dollars that help fund local services. So, please enjoy all the stories, special features and columns this month in the North Bay’s only locally owned business publication—NorthBay biz.
As I sit here on deadline staring at an almost blank screen, I’m struck by the state of our State. Sometimes, as I begin a column, I struggle to come up with a timely subject. This time however, the topics upon which I could rail seem almost limitless. So, unable to winnow down the list, I guess this month’s column is going to be an eclectic mix of observations—or, I should say, criticisms—of what’s passing these days as governance.
How much is a billion? What does that number mean? Most people can get their minds around, understand and quantify how much a million is. But can the vast majority of us truly fathom a billion of anything? Here’s some perspective that hopefully can help. A billion seconds ago it was 1960. A billion minutes ago Jesus was alive. A billion hours ago our ancestors were living in the Stone Age. A billion days ago no one walked the earth on two feet. Yet, as an experiment, our Federal government routinely hatches hundreds of billions of dollars of bailout schemes, unsure of their efficacy, to be paid for by us and our children. Collectively, we’re now talking about multi-trillion dollar deficits. That’s one thousand billion. Are you kidding me? Try getting your mind around that number. Our country, albeit the wealthiest in the world, doesn’t have and can’t sustain this level of profligate spending. The country’s mortgaged to the hilt and the government has the temerity to tell business that they don’t know how to run their companies—all while borrowing and printing money to try to nationalize whole industries.
Closer to home, over the past year, California’s economic outlook fell to 43rd nationally, according to the American Legislative Exchange Council (ALEC). Reasons include having one of the highest tax burdens of any state, a broken tort liability system and stifling regulations. In just the past 10 years, California has lost a net 1.5 million residents to far more business-friendly states like Nevada, Arizona and Texas. There’s no real secret why these states are attracting Californians: They keep spending and the regulatory burdens low and therefore can afford to keep taxes low, too. States that are losing people have several things in common—high tax rates coupled with unsustainable spending and onerous regulations. According to the report, “State governments that believe they can bring about economic recovery by growing government and increasing taxes are sadly mistaken.”
Last year, California’s employers paid 20 percent more than the national average in taxes.
Since 2001, the annual wage of new jobs that have been created in California is $40,000, while the jobs we’ve lost averaged $66,000.
Shipping company APL is moving its headquarters from Oakland to Arizona. Yes, you read that right: A company that operates 130 ships worldwide is moving from the Bay Area to a land-locked state because it can no longer afford to do business here.
Why is it so costly to do business here in California? One reason is the cost of government rises each year—without any changes in services—because of salary and benefit increases for state employees. Largely negotiated behind closed doors, details rarely receive much publicity. These annual increases average three to five percent, but on top of these base raises there are increases called COLAS, or “cost of living adjustments.” In our current economy, many private sector employees are happy to just keep their jobs, while in the public sector, raises and COLAS are guaranteed. As just one example, some public employee unions were scheduled for a 21 percent COLA increase over three years in addition to their regular raises in Vallejo. (You remember Vallejo; they filed for bankruptcy protection recently.) Add to that full medical benefits for life, extensive overtime pay and an overly generous retirement system that can sometimes pay 90 percent of active wages, and you have a state that’s destined to be sunk by its own fiscal folly. When these deals are done by the same elected officials who received big contributions from the unions they’re negotiating with, you have a corrupt system. And at the end of the day, the taxpayer gets stuck with the bill.
As politicians demand more tax increases to sate their insatiable demand for more cash, the rational among us timidly suggest, how about trying some spending cuts instead? You’re going to like this one. Here’s how Sacramento defines a “spending cut.” If a given program has a $10 million appropriation this year, it would automatically go to $12 million in the next fiscal year. Now, if we were to believe our politicians, reducing the appropriation for next year to $11 million would represent a $1 million “spending cut.” Of course, you and I wouldn’t consider that a “cut” at all, but rather a $1 million increase.
I have much more, but as usual, I’m out of space. I’ll leave you with this quote: “You cannot help the poor by destroying the rich. You cannot strengthen the weak by weakening the strong. You cannot lift the wage earner by pulling the wage payer down. You cannot further the brotherhood of man by inciting class hatred. You cannot build character and courage by taking away men’s initiative and independence. You cannot help men permanently by doing for them, what they could and should do for themselves.” —Abraham Lincoln.
That’s it for now. Enjoy this month’s magazine.
