40 posts tagged “economic slowdown”

GOOD NEWS from Savannah’s City Council

Please join me in a round of applause or at least a moment of silence and thank the cadre of City of Savannah penny-pinchers who have just managed to find $4.5 million in savings to bring our 2009 budget into balance.

That’s right, despite Millions less in Sales and Property Taxes and other revenues, we will end the year without a deficit and with hardly any change in day to day operations.

Maybe you don’t think that is such a big deal. Maybe you find that kind of money in the sofa cushions of a Saturday night but in my experience that level of fiscal restraint and, frankly, fiscal calisthenics in a government NEVER happens.

Think of it this way:

If the Federal Government was run like the City of Savannah each of us would not currently owe $38,498.22 to cover deficit spending.

If the State of Georgia was running to the same standards used by the City of Savannah - School Teachers, College Professors and Mental Healthcare workers would not be taking almost two weeks of unpaid furloughs this year.

Okay enough praise cause we ain’t out the woods yet.

Going forward we still need to reduce spending an additional $15 million for 2010. That’s right just days after we found $4.5 million we have to start looking for more savings to cover what will be a definite further reduction in revenue next year.

Don’t get me wrong, there is a little wiggle room, but the city is already leaner than a vegan anorexic teen so we can’t wiggle much.

 Here is the good news on the 2010 Budget front – they think they’ve already found most of the cuts without too much damage to day to day operations. They aren’t saying what services may get the axe but they were very clear in their discussion with City Council that something’s gotta go.

Head Penny Pincher Chris Morrill warned council Thursday, “I don’t want you to think we’re going to bring you something that will be magically done there are tough decisions ahead.”

That sounded a lot more ominous in person than it looks on the page. Morrill says the bottom line is, after more than a year of squeezing and readjusting their service delivery model to save money and run more efficiently, they need to find $1-2 million more in savings to balance 2010.

 I won’t speculate on where they’ll go to get it but I will say to ignore everything you hear about possible service cuts or any other budget badness to come cause it is all speculation until the budget comes out and after that is still just a proposal until the electeds have their say.

It seems we gots ourselves a gen-u-wine reporter type in Savannah!

It seems everyone else is fine just pretending our resident naked emperor, Savannah River Landing, is fully swaddled.

It ain’t.

Despite their website which continues to boast –

“You're looking for that ultimate calm on your special spa day.  That's why we've made pampering a cinch.  Our location is a pleasure to visit and there's never a parking hassle.   Choose from the latest luxury treatments and allow our salon experts to relax and beautify all your troubles away. “

So, looking for that ultimate calm on my special spa day, I drove out there and was disappointed to find it has the same litterbox appearance it’s sported since the BIG Ribbon Cutting and not a salon expert in sight.

Then today I run across this on the GPB website:

“'Riverwalk To Nowhere' Almost Finished”

You have to love Mr. Montoya for having the guts to say that Savannah River Landing doesn't exist especially since everyone else in the media seems unwilling.

He even asked about the “receivership” rumor:

“A company spokesman wouldn't speculate on when "vertical construction" would begin, but did deny rumors that the project was in receivership. "We are re-working the financing," said Steven Johnson, a spokesman for Ambling Corp., the developer. "But we're still here and we still believe in the viability of this project."

“Reworking the financing” I have to remember that the next time I get overdrawn and have to ask my sainted mother for an advance on my allowance.

Meanwhile the city is about to finish our very expensive taxpayer funded riverwalk that, for the time being, will only lead to the biggest sand box you ever did see.

Addendum Thursday, September 10, 2009 7:24:36

I may have cracked the new Savannahnow website.

Despite this response to my Twittered Questions about my desire for a simple list of ALL stories posted to ALL sections on the site in one place:

"@SavannahNow Currently, we do not have the page you are asking about. The daily headlines e-mail is what we have to offer."

I found this archive page today. As of right now when you click on the date it seems you get a full rundown of ALL the stories in ALL sections for that day in one place.

I still need to figure out when it is updated and since it still has the little BETA at the front of the address it might simply go away one day but for now you should be able to use it to get the news with just a modicum of hassle.

 

Okay… so I’m trying to reconcile what I already know with this headline:

Savannah city budget cuts go deeper

Knowing what I know I was very curious just how much deeper they could go but there is nothing new in the article for those of us who have been paying attention to the city’s efforts to cut costs.

Then I realized that this is Savannah Morning News first mention of the city’s efforts in more than a month so they are playing catch up.

I guess I should be relieved that the tens of thousands of people who don’t read this blog will now know that the penny pinchers with the city have managed to squeeze out more than $10 million in savings without firing anybody or cutting services.

Let’s see you do that with your personal budget.

Meanwhile I am still trying to find my way around the allnewbrandspanking  savannahnow.com.

I have yet to find the simple chronological listing of ALL stories posted to ALL sections that would, you know, allow a person to see what’s happening without having to remember to check 13 different sections of the site every day.

It took me a couple years to find the list on the old site so this time I figured I would just ask. I used the twitter.

“Hey @savannahnow love the new look but where does a brother go to get one simple chronological list of ALL stories posted to ALL sections?”

The response was less than helpful.

“@SavannahNow @ESTUPIDOSAV Thanks for the question - we offer a daily headlines e-mail that gives you the list you are looking for: http://ow.ly/oF3O”

So ya’ll have a fancy allnewbrandspanking news website, but I have to subscribe to a separate spam email to get the news?

Right.

Dr. Strangeblog or How I, a simple-minded volunteer journalist, found $60 million in taxpayer money while Savannah’s media apparently got blinded by red-light cameras.

Let’s see…I waited for a while, 4 or 5 editions of the Savannah Morning News have come out and several hours of local television news have broadcast since I found all this hidden treasure at the Savannah City Council meeting.

I seem to remember a couple of reporters and at least one television camera were in the room when I found it but instead of reporting on the $60 million, all of your local media watchdawgs brought you useful information about some new ticket writing traffic cameras.

While I’m sure that story was important to people who often run red-lights, I’m thinking the other 90% of the population might just care more about the tens of millions of dollars the city has squirreled away in what the paper once mischaracterized as “magic cookie jars”.

According to Chris Morrill, Savannah’s head penny pincher, we are still facing a budget deficit but the deficit is down to about $800 thousand, not bad considering it was up over 2 million at one point this year. Morrill and his crew are currently applying a viselike pressurized clamp to our remaining pennies in an attempt to balance the budget by the end of the year.

Meanwhile Morrill admitted he has been holding out on us. He has put aside about $60 million in various funds and he refuses to use those funds to pay for stuff that irate council members or misinformed newspaper editors say we simply must have, like new multi-million dollar drainage projects to stop puddles from forming on very rainy days.

Before we warm up the tar and start bagging feathers Mr. Morrill has some pretty good reasons for hanging on tightly to the purse strings.

The city keeps a rainy day fund or, as the counters of the beans call it in their warm and fuzzy speak, Unreserved General Fund Fund. Currently our Unreserved General Fund Fund Balance is around $20 million which is right at 12% of what it takes to run the city for a year.  

This money is to help handle unforeseen expenses like hurricanes or earthquakes (it could happen) or alien invasion (less likely but certainly unforeseen) or plague or zombie apocalypse or…well you get the general gist.

We also have a Sales Tax Stabilization Fund set aside because the state is lousy at collecting and distributing sales tax money and as a result our income is downright unpredictable.

Seriously, it’s like the state accountant is playing tetris or PONG with the bar graphs on the balance sheet. It never follows any sort of actual trend and bears no resemblance whatsoever to actual sales taxes collected.

STSF is at $5.5 million it should be closer to $10 million but we’ve been using it to balance the books for the last couple of years and we will use it again this year to offset the lower sales tax collections and balance the budget.

Then there is the Risk Management Fund which does just what it says on the tin. It is money set aside for medical insurance, workman’s compensation and other liabilities, like lawsuits, the city might face. Currently Risk Management funds are right at $20 million.

In addition to that money we have about $9 million set aside to replace cars and computers as they wear out.

Then there is the money left over from various Special Purpose Local Option Sales Taxes which comes with lots of little strings attached and restrictions on when and who and how you can spend it. There is right at $5 million left over penny tax money that can’t be used to fund public safety or to fix anything or on salaries or to balance the budget or to do anything really useful right now. The city pretty much just has to hang on until a project that the money can legally fund comes along.

So there, that’s it, the roughly $60 million the city has set aside for emergencies and ongoing liabilities.

It is not hidden; there is no magic or cookie jars involved it is simply sound fiscal management.

I understand that sound fiscal management is somewhat of a dead language in these modern, creditfueled, times but why hasn't this new information, this good news, been reported by anyone in Savannah?

I for one will sleep a little better knowing our town has substantial reserves set aside for the worst of times.

Ya’ll know I don’t like rumors. I like facts, preferably cold and preferably hard.

But I also promised to report anything new about Savannah Morning News parent Morris Publishing’s long slow spiral down into the financial abyss.

Those two opposing desires have me at loose ends as to what to do with this piece of information.

“The rumor is Morris Publishing will either announce a restructuring of its debt or declare bankruptcy by the end of this month because the clock is ticking.”

Now whenever we hear a rumor we should always consider the source and whatever axes said source may have to grind with the subject of the rumor.

In this case the source is Metro Spirit Augusta.

The same publication that gave us this back in May:

“JP Morgan could force Morris to break up newspaper empire”

And this way back in February:

“What will Morris bankruptcy mean?”

So, in gauging this latest rumor, we must take into account the fact that Metro Spirit’s editor becomes tumescent every time Morris and Bankruptcy appear in the same headline.

Some would claim the same of me; however a close reading of my earlier posts shows only a desire for two things:

1.       1. Better local reporting on the media industry and the ongoing financial troubles therein.

2.       2. An end to the financial uncertainty at Morris which has resulted in a reduction in experienced staff and quality of reporting.

Other than this new rumor of an endofthemonth ultimatum, this week’s Metro Spirit article offers nothing we don’t already know.

Morris owes about 4x what the company is worth.

They hired a law firm famous for bankruptcy back in January.

Morris has cut employees, publications, benefits and salaries.

It has failed to make scheduled payments on the debt and been granted extensions and waivers 8 or 9 times.

Morris has stated in SEC filings that there is “significant uncertainty about its liquidity and ability to continue as a going concern.”

For the record: The latest deadline for Morris to write 2 $9 million checks is Friday.

Does the Savannah Morning News take joy in sowing discord?

They must. Why else would they spend so much time discussing disagreements over an issue instead of the issue itself?

The Savannah City Council’s last meeting was rife with emotion.

Some leaders were angry because of the false perception that money had been cut from one neighborhood in favor of a project in another neighborhood.

Some leaders were angry because of the false perception that drainage projects are being delayed while money is being spent on projects in another area.

The anger over these false perceptions was fomented by less than accurate SMN reporting and, in turn, became the basis for even more less than accurate SMN reporting.

Here are the facts:

There is nowhere near enough money in the City of Savannah capital improvement budget, and won’t be for the foreseeable future, to even begin a single new drainage project.

The City of Savannah is redoing the curb and gutter in the Edgemere/Sackville Neighborhood. This is a project the SMN goaded council about back in March.

Neighbors report the work and added police attention is reducing crime and making them feel safer. This is an effect the SMN praised this month.

In trying to balance the budget, City Staff have postponed some capital improvement projects. These include a new Fire Dept. training facility and improvements at the municipal building on Broughton Street. Neither of those delays will impact ongoing operations or services to citizens.

As part of the savings from delaying some larger capital projects City Manager Michael Brown was able to find enough money to redo one more street in the Edgemere/Sackville Neighborhood. This move was misrepresented this week by the SMN.

The SMN’s report on the meeting, at which all but two council members voted in favor of spending the money for Edgemere/Sackville, was focused on acrimony and anger. Lost in the paper’s ode to ugliness was the basic fact that some left over cash is going to help transform a neighborhood.

Larry Stuber is the council rep from that neighborhood and since the paper saw fit to leave out his rational and balanced statement I include it for you here.

“This is not in my opinion an unusually large change order $860,000. It is a unit priced extension, that’s like if you buy widgets for $10 a piece you have 100 in the original you are now going to have 200, you’re paying the same price for the same work. There’s nothing wrong with that. If it was $2 million there would be nothing wrong with that on the extension of a unit price contract.

This $860,000 change order has gotten mixed up with a very substantial long range drainage project. We’re talking, I’m going to go ahead and be specific, Habersham Village and Baldwin Park those projects are $20 to $50 million.

Now when the City Manager and his staff is managing a $400 million, five year, capital budget, trying to manage that budget and find funds to finish a nine city block area that was on the verge of becoming the Strathmore area.

 In another five years this area would have been destroyed. The neighbors considered it a battlefield, a warzone. Now I know that. I went out there and I heard it. I heard the gunshots I talked to these people. I can tell you if we had not done this project in five years this would have been another Strathmore and we would have been looking to tear it down and look about what we could do with it at a cost of probably $100 million. Now it’s on the rebound as the article said.

So, I would like to say to you, when you’re managing a $400 million budget and we are able to find $860,000 to save a neighborhood that’s money pretty well spent.”

Seriously, people haven’t been paying attention and have no clue what is actually happening with the economy. Of course the Savannah Morning News reinforces this lack of understanding by putting it front and center.

"People need to remember we've been in a recession since 2007. That is why unemployment is up 10 percent."

To be fair SMN isn’t the only source of misinformation about the economy, it seems no one in the media has one ounce of understanding about how the economy works or what the words that are coming out of their mouths actually mean.

First let us deal with the recently revised definition of “recession”. For as long as they have been keeping records the big brains that determined such things defined a recession as a period of at least two consecutive quarters of negative GDP growth. Then the process became politicized in the 90’s and somehow slow growth counts as negative growth which makes not one jot of sense to me.

I tend to go with the original definition of words since modern interpretations tend to lead one down the rabbit hole into an Orwellian newspeaking bureaucratic hell.

So…we kickin it oldschool up in this trailer.

Recession = 2 Consecutive Quarters of NEGATIVE GDP

By that measure the US entered recession in the third quarter of 2008 through the first quarter of 2009 and has remained in recession ever since.

Deal with it.

The only reason people are pointing to 2007 is because that marked the end of the housing bubble. The only reason they now date the last recession to 2001 is because that marked the end of the Internet bubble. In reality the economy never saw two consecutive periods of negative growth during that “recession”.

So…in 2007 the housing market tanks.

Then in the fall of 2008 the banks that were all wrapped up in investing in the housing market tank and, without even the courtesy of a wraparound, they take the rest of us down.

Then the Government assumes the role of ECONOMY GOD and decides who lives and who dies.

Goldman/Sachs you get to live.

Lehman Bros you die.

AIG lives

WaMu Dies

Of course if you have a conspiratorial bent you begin to notice that the companies that have profited most from this conspiracy are all connected to Goldman/Sachs and the Government’s financial Caesars giving the thumbs down to Goldman/Sachs’ competitors are all friends or former employees of Goldman/Sachs.

I digress.

 We were not in a recession until everyone realized that a big o’ chunk of the US economy had been built on a feverdream of overpriced and overleveraged real estate.  Trillions of dollars were invested in a hallucination. So, when someone finally took a minute and closely examined our paper moon economy, it simply disappeared.

Want to know why we'll see 10% unemployment? Because the Economy that generated most of those jobs was imaginary. The Economy is returning to where it would have been if the rich kids hadn’t started playing makebelieve with all the money.

More Layoffs at WSAV’s Sire, Media General…wait…that must be a misprint.

I thought everything is rosy now?  

“Media General Inc., the Virginia-based publisher of the Winston-Salem Journal, reported a profitable second quarter on Wednesday resulting from deep cost cuts.”

Marshall “Morty” Morton went from wallflower to prom queen in the Second Quarter and Media General stock is trading consistently above $4 a share for the first time in nine months

Just this week we saw headlines touting that the Bull had turned and Happy Days are Here Again! Apparently not Potsie;

“Three staff members have lost their jobs at WCMH-TV (Channel 4), including Amy Basista, co-anchor of NBC 4 Today and The NBC 4 Midday Update.

Channel 4 management would not comment on the layoffs.”

Perhaps this was isolated.

Perhaps the health of this station, in one of the company’s largest markets, doesn’t reflect on the company as a whole.

Perhaps this round of layoffs is just the beginning so they can look good for the 3^rd Quarter report.

After all this time I know it’s silly to be surprised when the local media lets me down yet again, but I am.

I finally got around to watching the financial briefing from the City Staff last week. I kept waiting for someone to mention it somewhere. There was this brief, impossible to follow, thing on WSAV but nothing else.

So finally, I watch, and I’m surprised to find reporters missed a number of headline-worthy bits of information.

SAVANNAH PROPERTY VALUES DROP

The property tax digest is finished. For those who don’t know the digest is essentially what everything in the city is worth, every property, the whole kitandcaboodle.

According to the digest the total value of existing homes and businesses in the City of Savannah is down by $42,183,000. This is thanks in part to a new state law requiring that foreclosures be included in reassessments.

That was offset by $65,835,000 in new buildings and development so the total digest grew about 0.47% over last year.

Nobody ever thought this would happen. In fact state law requires that City Council adjust the millage rate according to the digest. So, in years when the digest grew, that would mean a cut in the millage rate, this year however, if you applied that state law, it would increase the rate from 12.5 to 12.6.

The City has NO plans to raise the Millage Rate. Instead City Staff will recommend leaving the rate at 12.5 meaning they will bring in $819,000 less than they planned. Being the misers that they are, Staff had planned for a very conservative 1% growth in the digest this year.

According to Assistant City Manager and head Money Miser, Chris Morrill, we will have to get used to this, “The new normal is very, very slow growth.”

SAVANNAH SHRINKING

CITY REDUCES EXPENSES, COMPENSATES FOR LOWER REVENUE

Tax Revenue for the year is projected to be down between $9 million and $10 million below our rather modest estimates.

The city is making up some of that by dipping into the Sales Tax Stabilization Fund. The STSF is just what it says on the tin, since sales tax revenue can vary wildly from month to month and year to year the city set aside about $6 million to make up any unexpected shortfalls. Last year they used $1 million, this year they expect to use $3.3 million in STSFs. They also got some sort of one-time tax reimbursement thingy from the state of about $ 1 million and that will help with the shortfall too.

The rest of the difference is expected to come from a savings in salaries since they are letting more than 200 desks, mowers and metermaidmobiles remain empty. They expect to save right at $4.9 million in personnel costs due to unfilled job vacancies.

Bottom line: they are projected to be $1.2 million over budget but have promised to find additional savings and revenue to reduce that amount to $0 in six months.

SAVANNAH ALREADY $16 MILLION OVER BUDGET FOR 2010

The headline sounds misleading but it is true. The projections for 2010 put revenue down and expenses in some areas up meaning we are already behind the eight before the budgeting process even begins.

Property values are now frozen by the state likely meaning no increases in the digest next year. Staff is projecting a further reduction in property values and continued soft sales tax receipts meaning they think the city will collect $10 million dollars less in overall tax revenue.

They are expecting an added expense of $5 million just to do the needed repairs and maintenance on infrastructure and state law requires them to put aside an extra $1 million dollars for their pension fund.

This will mean a reduction in services. Go ahead. Get used to the idea right now and don’t start bitching about it cause it is going to happen. The government teat isn’t as ample as it once was and we simply cannot afford as much suckle as we once could.

Just what services will take the hit they don’t know but the Police and Fire Departments WON’T be cut. Those departments likely won’t see an increase in their budgets for 2010 but the promise from on high is that essential services won’t be reduced.

Staff is working on finding “non-essential” services to reduce or cut to save money and chances are you won’t see any expansion of existing services for some time to come. Mayor Otis Johnson says that means some things the city was doing for us we may now have to do for ourselves. 

“Now is the time for citizens to stand up and assume their rightful role in their government,” he said. “We’ve had the luxury of sitting back and letting the politicians and bureaucrats run government and they talk about what we do as if the government were not theirs.”

And I would add, QUIT YOUR BITCHIN!

I really shouldn’t stick a pin in Media General’s pretty pink balloon but…

Wall Street was abuzz on Wednesday after WSAV’s Commander n’ Chief reported a profit for the second quarter.

According to their press release:

“Media General, Inc. today reported net income for the second quarter of 2009 of $20.6 million, or 90 cents per share, compared with a net loss of $532.2 million in the 2008 period…”

Such good news doubled the price of MG stock between 10am and 11am. It is unfortunate that the fundamentals behind the headline still point to the same old problems.

Firstly, doubling a $2 dollar stock is fantastic if you bought the stock at $2, not so great for those who invested in MG back in the heady days of $60 and above.

Second, all the things that caused MG to tank from its highs are still in place. The “everything but what we’re good at” strategy hasn’t changed. Marshall “Morty” Morton is still touting their real estate and gaming sites as the way forward despite another million dollar quarterly loss in that division. Also, the company still hasn’t figured out how to turn its successful news brands into online money-makers.

“We're pushing into new digital and mobile platforms and creating new ways to serve consumers and advertisers. We're driving audience growth through new products, as well as our Web-First continuous news initiative. Our mobile delivery includes new advertising and marketing services such as text messaging, mobile coupons and classified vertical applications. We are aggressively executing on our partnerships with Yahoo and [Zilla] and we're accelerating the growth of the new revenue streams tapped by DealTaker.com and Blockdot.”

Plus behind the headlines today’s economic news from the company pretty much sucked.

“Operating profit from Media General’s 18 broadcast stations was $11.3 million, down from $14.9 million the year prior. Total revenues declined 21.4%, or $17.7 million, with ad sales declining $22.4 million”

They still have an a$$load of debt, they owe more than half of what they have in total assets.

(Unaudited, in thousands)

“Long-term debt                         $711,458”

“Total assets                               $1,262,921”

And according to the Seeking Alpha transcript of today’s earnings call they don’t plan to pay down much of that in the last half of the year.

“…we paid down from the end of 2008 to the end of the first half of the year basically with the proceeds, of course, from the sale of our Jacksonville station. There will be a slight reduction from the $711 million where we are right now to the end of the year.”

Basically they wouldn’t have seen much change at all if not for the sale of that station in Jacksonville and cutting all the meat off the bone at their newspapers.

“The company, which operates more than 20 daily newspapers and 18 television stations, trimmed operating costs by 23 percent.

The deepest cuts came in publishing. The division posted $12 million in profit, up from $6.8 million a year earlier despite a 26 drop in advertising revenue.”

So what are they going to do when they can’t cut anymore?

There is nothing in what I’ve read today to suggest anything got any better at any of their stations or papers. They are simply surviving and eating their own to do that.