The NYT has a story today about just how dire the situation is for the U.S. states. There are many unusual measures being enacted in order to scrape up revenue: releasing prisoners early… closing state parks… Maine is going to tax candy. Kentucky is going to tax cell phone ringtones.
“Legislators have never dealt with a recession as precipitous and rapid as this one,” said Susan K. Urahn, managing director of the Pew Center on the States. “They’re faced with some of the toughest decisions legislators ever have to make, for both political and economic reasons, so it’s not surprising that the environment has become very tense.”
The hardest part is that it’s going to take a while. If you believe the analysts who say we have indeed hit the bottom of the market drop, we’ll still have a long while to wait before unemployment turns around and the housing market picks up. And both of those things have to happen before consumers are back to work, and will start spending again — in turn creating the boosts to sales, property and income tax that the states will require in order to see revenues return. So there’s still a very long way to go.
In a March 14, 2009 New York Times article called “Is it Time to Retrain Business Schools?“, author Kelley Holland has a new take on the “where did this all go so wrong?” autopsy that everyone is performing on the current economy.
Read more…
From NCSL.org:
A number of states have proposed, designed and enacted state-level stimulus plans in response to the current economic recession. Public spending on infrastructure projects is perhaps the most common component of state stimulus plans. Other elements include small business development, increased capital in local financial markets, job creation incentives, and investments in green energy and health technology.
The [chart at link above] shows stimulus plan details for 16 states. Investments from these selected states add up to over $10 billion.
This bit from Indiana is especially interesting: “The proposal also clarifies that the legislature, not the governor, is to distribute future federal stimulus funds.” In other words, the Indiana General Assembly has ruled that any money coming to the state from the Congressional stimulus package will get appropriated by the legislature.
And yet, the Indiana General Assembly must adjourn no later than April 30, 2009. I expect the governor will have to call a special session in order for the Assembly to meet to appropriate these funds.
So, in a bit of wonkish irony: the legislature made a rule calling dibs on doling out federal stimulus money… but existing rules will likely mandate that the governor gets to decide the mechanism by which the lege will do the doling.
On Friday, US News & World Report ran a piece that has the internet abuzz.
In “15 Companies That Might Not Survive 2009,” Rick Newman opens with the recent demise of big-box retailers Circuit City and Linens-N-Things. From there, I expected to see the list populated mostly with similar retail operations — companies that sell consumer goods at a time when consumers just aren’t consuming. (It’s not a trick of the crystall ball to speculate that long-troubled BlockBuster likely won’t last the year. They weren’t doing well before the bust, and haven’t significantly changed their product offerings or business model in any meaningful way since. Chrysler was another no-brainer for the list.)
But I wasn’t expecting #15:
BearingPoint. (BGPT; about 16,000 employees; stock down 21%). This Virginia-based consulting firm, spun out of KPMG in 2001, is struggling to solve its own operating problems. The firm has consistently lost money, revenue has been falling, and management stopped issuing earnings guidance in 2008. Stable government contracts generate about 30 percent of the firm’s business, but the firm may sell other divisions to help pay off debt. With a key interest payment due in April, management needs to hustle - or devise its own exit strategy.
What especially surprised me is the idea that if BearingPoint survives, it will be based on their substantial pile of “stable government contracts.” Read more…
I was preparing to travel to Bonita Springs, Florida for a legislative leadership conference. It was wintry and cold in Dallas, so it was difficult to pack light, warm-weather clothes — even though I knew the temps in southwest Florida were in the 70°s.
I had just been interviewed by the New York Times (who made me sound a little ditzy).
I was planning a vacation with my brother and sister-in-law, who figured on having a last hurrah before they started a family.
The US states had just started to get an inkling of the budget trouble that was coming down the pike (PDF).
We were still in the midst of primaries for the US presidential election. Neither party had a nominee yet.
Doesn’t it feel like one hundred years ago?
I recently worked for an Irish company, so I am more interested in American perspectives on Irish business and culture than others might be. This NYT article “The Irish Economy’s Rise Was Steep, and the Fall Was Fast” (Jan 3, 2009) offers a snapshot of the current condition of the Celtic Tiger.
“This place missed out entirely on the moment,” says Stephen Kinsella, an economist at the University of Limerick. “There has been no accumulation of wealth here.”
Walking through the garbage-strewn, empty roads on a cold, misty afternoon, Mr. Kinsella points to the shuttered houses and the mothers still dressed in pajamas taking their children home from school. Social workers in Moyross refer to the “pajama index”: the more men and women one sees who do not take the time and care to dress for the day, the worse the economic situation tends to be.
The “pajama index” is well-articulated — although not just as an Irish phenomenon, because I’m sure that it’s a symptom in other Western cultures as well. Just as England is more than London, Ireland is more than Dublin.
California’s budget problem has been common knowledge for some time. But at a press conference on Friday, Governor Schwarzenegger stated that the situation is basically on the verge of disaster — and that CA legislators should plan to stay in Sacramento for Christmas, in order to work, rather than going home to their families.
Sure, a Republican governor comments that his Dem-majority legislators should stay in the state capitol and do their jobs, because they refuse to pass his pet plan; actually, this sort of thing happens a lot. But, at this point, it’s beyond partisan gamesmanship; the financial stakes are incredibly high in California.
I suspect that we’ll see the Governator go to DC in January after the inauguration, and ask President Obama to help him convince Timothy Geithner to release some of the $700B Paulson-led bailout money, in order to aid California. The state is the eighth-largest economy in the world, and they are flat broke… something has to give.
People have recession fatigue. Now that Americans have swallowed (however reluctantly) giving almost a trillion taxpayer dollars to the U.S. government to distribute however it sees fit in the name of financial rescue, getting them adjusted to the idea of giving some of it back to beleaguered state governments is an easy sell. Getting Congress on board to give help to the most populous state in the Union is a no-brainer too.
Just have to wait and see!
State IT watchers will be interested in this: the President of the Hawai’i State Senate has tapped a senator to serve as the chamber’s Majority Technology Leader, a newly created role.
My understanding is that this would not be a policy position, but instead the Majority Technology Leader would likely serve as the internal subject-matter expert for the Hawai’i Senate’s legislative technology processes.
One of the challenges faced by all IT departments is communication with the end user (always exacerbated when the end user is also the executive decision-maker!). In this situation, where the end users are the state senators, they have been forward-thinking enough to appoint one of their own, as a technology thought leader and liaison. I suspect this will create an increasingly open and productive dialogue, which is always helpful in a complicated business environment like a state legislature.
If this ends up a trend that other state chambers elect to follow, it could contribute significantly to the overall effectiveness of state government technology. And in the meantime, it certainly will benefit the legislative IT team in the Hawai’i Senate.
Today, Seth Godin posted an idea about marketing that, at its core, is blindingly obvious (”it’s harder to change people’s minds than it is to sell them something they already want”)… and yet Godin’s packaging of the idea is quite clever. (Just the sort of thing you’d expect to see, really, from a chap who sells lots and lots of books based on his ability to tidily package marketing concepts into digestible ideas and images.)
The crux of the post is that gravity is something that people can see working immediately. They might not know how or why, just that it does… making it vastly easier to believe in (or to buy, if you will). Whereas evolution — the science of which most people do grasp and understand — takes milleniums to reveal itself. Therefore it’s a harder sell, and even susceptible to refutation. People have a hard time buying into that which they can’t see, even if they know intellectually that it’s correct or reasonable.
It’s a fine idea and I’m sure will make a fine book one day. But my argument is with Godin’s takeaway: “When in doubt, market gravity.”
Read more…
After all is said and done, downmarket American humorist Dave Barry nails the real true takeaway from the election:
In analyzing the results of Tuesday’s historic election, the question we must ask ourselves, first and foremost, is: what the heck were the results of Tuesday’s historic election?
I personally don’t know. The Miami Herald made me send in this analysis before the election was actually over, so that it could be printed in a timely manner…
…We are bitterly divided, because whoever wins, roughly half of us will despise the other half, and vice versa.
You know what I miss? I miss 1960. Not the part about my face turning overnight into the world’s most productive zit farm. What I miss is the way the grown-ups acted about the Kennedy-Nixon race. Like the McCain-Obama race, that was a big historic deal that aroused strong feelings in the voters. This included my parents and their friends, who were fairly evenly divided, and very passionate. They’d have these major honking arguments at their cocktail parties. But unlike today, when people wear out their upper lips sneering at those who disagree with them, the 1960s grown-ups of my memory, whoever they voted for, continued to respect each other and remain good friends.
What was their secret? Gin. On any given Saturday night they consumed enough martinis to fuel an assault helicopter. But also they were capable of understanding a concept that we seem to have lost, which is that people who disagree with you politically are not necessarily evil or stupid. My parents and their friends took it for granted that most people were fundamentally decent and wanted the best for the country. So they argued by sincerely (if loudly) trying to persuade each other. They did not argue by calling each other names, which is pointless and childish, and which constitutes I would estimate 97 percent of what passes for political debate today.
What I’m saying is: we, as a nation, need to drink more martinis.
No, you know what I’m saying. I’m saying, now that this election is over, whatever the hell happened, can we please grow up and stop being so nasty to each other? Please?
I try to make this point aloud when possible, but the opportunity doesn’t arise all that often. It’s disheartening that we’ve allowed partisanship to get in the way of friendly (even if spirited. Ahem) dialogue. We have to stop demonizing The Other Side, and we have to stop settling for the lowest common denominator in our conversations about politics, government and current events.
Also, more martinis. 
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This is a professional-ish blog where I ponder mostly work-related topics. Any opinions expressed here are mine alone, meaning you have only me to blame for them.
