The Economic Development Council of Colorado conducted a survey of 500 likely voters between September 12 and 15 which data is now available in the 2010 Survey on its website. The study was conducted by Vitale & Associates and is located HERE
The study asked questions which included:
"Do you feel things in Colorado/Your local area are going in the right direction, or do you feel things have gotten off on the wrong track?" 52% responded Wrong Track
"Which one issue do you think is most important for state govt leaders to address?" 42% indicated Jobs
"Would you say that Colorado is still in an economic recession?" 85% said yes
"Which do you think makes the most sense at this time. In order to balance the budget, should we... RAISE STATE TAXES AND FEES by 15% OR SHOULD WE CUT STATE GOVERNMENT SPENDING by 15%?" 63% supported a cut
"Do you think that the State budget has been cut too much or would it be best for Govt. to keep taxes, spending, and regs. to a Minimum." 52% indicated keep taxes, spending and regs to a minimum.
To see the entire report, go to the link and click on Power Point 1.
The Budget and
The Source of Funding.
I read about CIO putting together an agenda for our next governor. I have an issue I’d like to mention.
We are a small plumbing company with 65 employees. We are in a very good position because we do no new construction. We are a service and repair company. We make our living fixing things in the residential market.
Many of the repairs and replacements of water heaters, broken sewers, furnaces, air conditioners and other items require “permits.” So, to obtain a permit, we have to fill out the city forms and get a license in that city. In some cities, we have 4 or 5 licenses. A contractor’s license, plumbing license, HVAC license, refrigeration license, electrical license, etc. plus our state plumbing contractor license and state electrical contractor license.
Times this by the 26 plus municipalities we work in, leads to many licenses. Then we have to obtain a permit to replace a water heater. In many municipalities, we mail the paperwork with a check. Many require us to show up in person to pay $50 for the privilege of installing a water heater. The city of Aurora is the only one with this process online.
In 2009, we spent $64,500 on various municipal licenses and permit fees. Plus we have a clerk who works about 20 hours weekly to keep up with the paperwork.
I understand that municipalities want to insure that projects are completed correctly and operate safely. They also want to collect “use tax”
There has to be a better way.
AAA Service Plumbing, Heating & Electric Inc.
Governor Ritter unveiled a new report called The Dividend Degree that calls for across the board higher taxes to make up for budget shortfalls: income taxes, sales taxes (including services), property taxes, etc. The $1.5 billion dollars raised through these taxes would be dedicated to higher education to replace the $113 million in stimulus funds that will not be repeated next year. Report
John Straayer, a CSU political science professor, said this is not an extreme measure and would essentially roll the state back to where it was a decade ago. The report says we have enough wealth in the State of Coloado to bear this extra tax burden. It fails to acknowledge that we are in a recession. It also ignores the fact that support of higher education continued to increase by 10% each year for the last several years, including last year. No cuts, no layoffs, no reality checks.
For a measure like this to win the hearts of voters, Straayer said, the legislature will have to erase party lines, team up with the business and higher education sectors and start selling the measure now.
So what we have is an academic who has not felt any impact of the recession because of federal stimulus telling small businesses that they should sacrifice for his benefit.
As hurricane Katrina swept into New Orleans five years ago, government officials at all levels were reaching for copies of their emergency response plans to deal with the disaster. The plans called for special activities to manage communications, relief and transportation. Despite these plans, the response was too slow as the magnitude of the disaster overwhelmed all planning efforts resulting in damage to the New Orleans community that is still felt today.
The State of Colorado just released a disaster plan for higher education in Colorado. It details what may happen to the universities and colleges in the State if possible buget shortfalls force the State to cut support by 50%.
If the State has a disaster plan for higher education, it raises the question whether there is a similar plan for small businesses? If not, why not.
When terrorists bombed the World Trade Towers (the first time), a study completed by the University of Austin, Texas revealed that over 90% of the small businesses who ran their businesses out of these buildings failed within the next 5 years. Small businesses are more vulnerable to disasters than large businesses. They can't simply work out of another location or accomodate higher costs of operations.
Since the State of Colorado does not have a disaster plan for small businesses and we are in a financial disaster, we - CIO Colorado - will need to build one. We are developing initiatives now for immediate implementation to mitigate the ongoing harm to small businesses in our State.
Today, at the ISSA show in Orlando, former Prime Minister Tony Blair talked about the role of government and the need for government to acknowledge that jobs are created by the private sector.
He went on to state, "The measure of a nation is the quality of life of it's people. To see if a government is doing a good or bad job all you have to do is see if people want to move into your country or they want to move out."
Applying that bit of wisdom to Colorado, we have to ask whether we have a business environment within Colorado where businesses want to move in or to move out?
If businesses are considering moving to other states, then we have to ask ourselves what are those other states doing and can we do it too and do it better?
There is a direct relationship between the health of the small business community and the level of innovation. There is also a direct relationship between the health of the small business community and the number of new jobs created. Small businesses create between 60% and 80% of all new jobs in any given year. I have seen lots of explanations for this relationship, but have found most of them to be overly complex. The fact of the matter is that a small business is willing to embrace change because it stands to benefit more from a new market than in preservation of an existing market. Large businesses resist change since change shortens the product/service life cycle. Longer cycles allow large businesses to earn greater profits after major capital costs have been recovered. In theory, less change means lower prices for products and services. The consumer is able to afford a higher quality of life. All is good. In practice, change is always necessary. Products and services designed for 50, 25, 10, 5 and even 1 year ago may no longer meet the needs of consumers.
In addition, many needs remain in today’s markets which have not yet been addressed by the products and services of yesterday. Innovation is needed, but it won’t be found in large companies. During a recession, it is even less likely to occur as budgets are cut and employees become risk adverse to avoid being laid off. Thank goodness for small businesses who embrace change. However, change will not occur without capital. An opinion by Henry Dubroff and John Huggins in today’s Sunday Edition of the Denver Post discusses the lack of capital and financing for small businesses: “The Redlining of Our Small Businesses”. The article describes the decline of small business formation and job growth since 2003.as cheap money was diverted into the real estate market through public policy. In 2009, the capital shortfall was amplified as small business lending fell by 27%, venture capital funds tapped out and angel investors ran to the sidelines.
Without capital, there will be no new small businesses and many existing businesses will fail. Without small businesses, there will be no new jobs and the impact of the current recession will be extended. The article points out that all of the recovery and economic stimulation money has gone to large businesses. There seems to be no awareness or sensitivity by an ever growing government with employees that never missed a paycheck in the worst recession of all time. Any interest in hiring by small businesses is stifled by the uncertainty regarding large government programs that have been the center of political debate instead of the more appropriate topic of job creation. The State of Colorado is considering raising taxes on businesses - removing any reamining capital and any incentive to hire anyone. No new small businesses. No new jobs. No innovation. Be happy with the status quo, because that’s all we are likely to have for a long while without a change in public policy.
There are a lot of really tough problems out there. In recent years, there has been more discussion about why these problems continue to exist and whether these problems can be solved. In my readings and my own analysis, I have concluded that really tough problems can be solved with the right combination of money and innovation. You can’t solve a problem by continuing to do the same thing over and over again. In fact, it has become popular to define insanity as doing things the same and expecting different outcomes.
And, you can’t tackle the really big problems with small applications of money. Steven Goldberg does a razor sharp analysis of why charitable giving does not make really tough problems go away in his book “Billions of Drops in Millions of Buckets”.
As the title suggests, no matter how much money may be raised, its impact is diluted if it is spread out over too many projects. The Bill and Melinda Gates Foundation published their annual letter this week. [A full copy can be obtained at: http://www.gatesfoundation.org/annual-letter/2010/Pages/bill-gates-annual-letter.aspx] The letter states that: “Melinda and I see our foundation’s key role as investing in innovations that would not otherwise be funded. This draws not only on our backgrounds in technology but also on the foundation’s size and ability to take a long-term view and take large risks on new approaches. Warren Buffett put it well in 2006 when he told us, “Don’t just go for safe projects. You can bat a thousand in this game if you want to by doing nothing important. Or you’ll bat something less than that if you take on the really tough problems.” We are backing innovations in education, food, and health as well as some related areas like savings for the poor. “ The Foundation focuses on selected problems and solicits innovation to solve these problems with large amounts of money. A conscious decision has been made to work toward a better future rather than to distribute money to all of today’s needy. DaVinci Quest is attempting to take a similar approach with our innovation competitions. Through the incentive of access to an international stage and the possibility of winning a major cash prize, we can attract the best and brightest minds from all over the world to provide major innovate solutions for the world’s really tough problems.
The U.S. Environmental Protection Agency put together a guide for renovation of a commercial building to make it more energy efficient: Energy Star Building Upgrade Manual. The Manual is free and can be downloaded from their website at: http://www.energystar.gov/index.cfm?c=business.bus_upgrade_manual Like most government publications, this is not a paint by number kit that covers everything you need to know.
t is an overview or summary of key issues that will be of most value to a person looking at this subject for the first time. I was particularly pleased with Chapter 3 on Investment Analysis. This part of the manual looks at how spending the money on a renovation may pay for itself in energy savings. “All types of organizations, for-profit and not-for-profit alike, should analyze prospective investments based on their expected cash flows. If a business is contemplating an investment to support a higher level of sales, it should weigh the cost of the investment and any related operating expenses against the additional cash benefits to the business from the projected incremental sales. Only if the expected cash inflow is more valuable than the expected outflow should the investment move forward.”
The Manual presents and compares Payback Period, Net Present Value and Internal Rate of Return as concepts in making a decision to spend scarce cash. Although this Manual is for commercial buildings, this chapter also applies to residential buildings. The rest of the Manual covers benchmarking, financing, different types of renovation and different types of commercial buildings.