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Raising Taxes & Connecting Government with Business
December 9, 2010 - Ernest Hohmeyer
Partners or on the Endangered Species List?
A leading indicator on the U.S. economy has been consumer confidence. If it is up that means people are feeling pretty good about themselves and are more willing to live dangerously and take chances, otherwise defined as buying consumer items, new homes, cars and going on vacation. When it is not, folks are scurrying for the nearest bunker or putting their wallet in a part of their jacket that has a broken zipper and they can’t get it out. They do not go out to eat as much, they put off that home repair and they do not travel as often.
If consumer confidence is down, it is usually not a good thing for our Adirondack economy that relies on consumer superfluous spending and home buying. To combat the recession or for this discussion, poor consumer confidence, many Adirondack businesses either held the line of price increases or in some cases reduced them. In other words, we have been selling many of our services or products at 2008 prices. As taxes, fees, utilities, labor, insurance has gone up, it has eroded the already slim margins that we operate under based on the seasonality of our economy and other factors.
Look at the proliferation of on-line bargain avenues such as Priceline, Orbitz, Hotwire, Expedia as well as those that exist for almost anything you want to buy. The savvy customer can compare your room price, television sale, right down to the average chicken wing price on their home computer or even more awkwardly, right there while they are there in your store through their mobile phone. With all this on-line and off-line competition our small businesses simply cannot raise prices to offset taxes. Further, take that into consideration with new fees, mandates (yes, we face them too) such as the new requirements for health insurance, once again rising oil, gas and utility costs, “business” confidence erodes.
As people waiver whether to spend or save and when they do spend, they do so with a careful eye, it has been hard to guess on how we should plan our business. Should we buy that extra inventory? Should we keep staff on through the winter? Should we invest in upgrades? The result may be continued belt tightening and potentially laying people off. What does that mean? Just one job loss means that person will not buy as much from our local stores this Christmas, he or she may not be able to afford to frequent our area restaurants as much. This in turn is one less customer for our local store where the loss of selling only 6 appliances, furniture or paintings may be the difference between a successful month or bah-humbug. This in turn affects these businesses confidence and the circle gets wider until well, we are part of a national trend. When you think of key economic indicators such as housing and unemployment, a lot of it rests with the rise and fall of buying goods and services – and it starts right here at home.
Businesses Teaming with Local Government?
Not being able in many cases to raise prices to offset these increasing costs, entrepreneurs have been forced to be creative and think out of the box and this is where I think we can be helpful to local government. Let’s take Franklin County for example. Can we take the major items including discretionary spending and form a bi-partisan local government and business team? We are so rich in business resources in this region with a wealth of business knowledge. These include non-profit and for profit expertise.
Think of the resources at Sunmount, AMC, PSC, NCCC, Trudeau, AMA, accountants, lawyers and countless entrepreneurs. These businesses and organizations have also had to deal with mandates, unions and how to cut overall spending. Is it possible to bring specific business resources together to work on a specific area of the county budget that matches their expertise? Create clear objectives and a timeline so that these businesses understand the level of commitment so that this process is short and intensive and does not drag on.
Can this process begin in the spring when worse case scenario’s can be examined? In terms of mandates, in addition to other counties, state legislators, can we also work with all the Chambers and the New York Business Council to carry this message forward with ideas that have been mentioned before such as the Homestead Act? The County is a business and perhaps it can benefit from ideas from the business sector that have had to take a stand on raising prices and have had to think out of the box. Just as in our own business when we are in it everyday, we sometimes can benefit from a fresh set of eyes.
Government is a Business: Creating a Business Plan?
While a short-term look is being conducted on the 2012 budget, is it possible to create a long-term business plan for the County that begins to explore the future with a vision and perhaps out of the box thinking?
Perhaps another mix of the private sector and local government officials can be assisted by Rural Government Services, the Department of State, the Association of Counties and Betty Little’s office, among others on looking at streamlining or consolidation of services. Perhaps blue sky ideas can be examined such as the northern end of the county contracting with St. Lawrence County and the southern end with Essex County for certain services for example.
Working with Business to Expand the Tax Base?
You can only save so much and while this proposed short and long term look at the County is underway, we need to aggressively expand the tax base and bring jobs into the region. Again, the County is the home of many business development resources and many that you may not think of. For example, AMC, PSC, Trudeau Institute and others are constantly recruiting employees, might there be some lessons learned or partnering the County can do with them?
How about the Franklin County IDA hosting a series of round-tables with the business community on ways they can help the County recruit?
A Private/Public Team for the Airport?
The same can be said for the Adirondack Regional Airport that Town officials have expressed the desire to take it away from the sole responsibility of their taxpayers. Perhaps a similar business/municipal team can work together on short and long term solutions.
We are All Residents
These might not be the answers or even good ideas but the point is that government needs to stop raising taxes and real solutions may not be found in the way they are going about it now.
As businesses, we have had many of the same problems, but the difference is raising prices is often not an option – period. So we have had to be creative. When leading economic experts comment that a key path out of this recession will be based on the success of small businesses to be innovative – perhaps this type of thinking can help local government.
As the Adirondack Regional Assessment Report indicates we are already losing our population and schools. But we are partners, whether we are public officials or businesses, we all share the same bond, all of us call this place home. It is just getting harder for us to heat them.
It is a new age filled with old problems but there is an opportunity for innovative solutions and perhaps some of this thinking can come from the private sector.
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