Planes Fly Low in San Diego

Due to the geography, planes landing to the north get very low on final approach. This video is from the gas station just off the approach end of the runway.

A Welcomed Change in Climate

While I love life in the midwest, I can see the attraction of the coast. The waves along the San Diego shoreline against the sunset were simply spectacular. The mid-70 temps were a great change as well.
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Springfield Tax Revenues Down Again

This from today's SBJ:

Springfield's sales tax revenues dropped in January, though the decline was less than in previous months.

The city received just less than $3.4 million from its 1 percent general revenue sales tax this month, a 3.5 percent drop from the $3.5 million the tax generated in January 2009. January revenues reflect November sales in the city.

For the first seven months of fiscal 2010, the city's general sales tax revenues are $20.8 million, down 8.8 percent from the first seven months of fiscal 2009.

The January drop comes on the heels of City Manager Greg Burris' announcement last week that the city must cut $1.27 million from its current year general revenue budget due to lackluster sales tax performance through the first six months of the fiscal year, which runs July 1-June 30.

Those proposed cuts, which include withholding a $225,000 transfer to the Health Department and cuts to capital and maintenance funds for the Public Works and Public Information departments, will get first reading at Springfield City Council's meeting tonight.



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Wireless at 30,000 feet

As technology continues to evolve, here's another first for me that few others have done: blogging from 30,000 feet over New Mexico. Thanks to gogo wireless, my blackberry is running like a charm with email and internet. Gosh I love technology.

True Commerce - EDI: Follow Up

Since my post on issues surrounding our new EDI package from True Commerce, I've got to say that they've responded to the challenge.  After a letter to corporate management at True Commerce and Sage, I've been personally contacted by both the President and Vice-President at TC along with being given unsurpassed access to technicians to finally fix the issues.  While I would have preferred the solutions to have come without such extreme measures, I'll give them the credit of taking care of the problems and showing their willingness to address customer services issues. 

So far, their 'fixes' are working and things are much, much better.  And I've gone as far as extending an invitation to their technical assistance folks to visit Neosho to get some hands-on experience with their software in a real manufacturing environment. 

Overall, it's been an learning experience for everyone, but I'm glad to see that some US businesses still understand the value of customer service and I'm glad to see TC step up to the plate.

Chinese Exports Turn Upward in December

Exports from China grew 18% in December.  That follows 13 months of repeated declines.  It also comes a year after the Chinese gov't implemented a massive investment-led economic stimulus program.  Import activities were also up 56% led by a record-setting month for crude oil and 2nd all-time-high for iron ore. 

For the year, China's exports were down 16% while imports slid 11.2%.  2009 was the first year China had seen a decline in exports since 1983.  That decline in '83 was a mere 0.4%

China has been very clear on the need to drive up domestic consumption.  After all, having jobs and making products that have no where to go helps very little.  That's one stimulus the US market is missing.  Giving tax credits to those that hire people is fine, but if you don't have a market to need those jobs, those credits will offer marginal help.

Airport Security Is a Broken System

Last month's terror threat on NW Airlines by the now infamous underwear bomber shows a lingering and fatal flaw in airline security. Despite all of the flags (cash ticket, one way travel, no luggage), the system didn't work. And even if the would-be terrorist had done it right to avoid extra scrutiny (which he didn't get), the chances of catching an explosive in someone's underwear with today's security methods would have been more luck than anything else. Bottom line, those passengers got lucky - lucky that bomb didn't kill every one of them.

But it doesn't take a Nigerian terrorist with explosives to show the system is broken. This morning, the TSA agent clearing me through security made a fundamental error in not checking the right boarding pass of my traveling partner. Without showing a proper boarding pass, the TSA agent simply made a few check marks and scribbles on the piece of paper and sent us on, violating the simplest and most direct check there is - 'Does this person have a valid ticket to get past security?' What he saw and signed off on was not what is required. But we got through anyway. (We did make a point to notify the supervisor on duty once we got out shoes and belts back on. )

But change does appear to be coming. The new administration is looking to make TSA a union organization, further creating more gov't bureaucracy and only making it harder to hold those accountable who don't do the job they are paid to do.  That's will surely make things so much better.

Personally, I'd rather see the TSA raise their standards.  It takes years to be a pilot on a 777 flying from Chicago to Shanghai, but it takes only weeks to be responsible for keeping those planes free of explosives and other harmful items.  Don't take this the wrong way.  There are a number of talented and well qualified individuals doing their job for the TSA, but I've seen just as many that make me cringe.  This personal example is just one of several I could share.

So I'd offer this comment - until things get better:  make security your concern. Don't rely on others to keep you safe. Be vigilant. Pay attention. Report anything suspicious. Help them do their job. It's painfully obvious that the system today isn't doing the job it is designed to do. And I wouldn't count on our government to make it better anytime soon.

Key Legislation To Look for in 95th General Assembly (2nd Session)

As the people we elect to do our business go back to work in Jefferson City, there are a few key legislative items that municipalities should follow.

HB 1409 – Prohibits municipalities from holding the landlord and tenant jointly liable for delinquent utility bills.  Right now, a municipality CAN hold both parties liable.

HB 1299, HB 1444, HB 1445 – Makes changes to the Sunshine Law including the addition of penalties of $1000 per person for any “knowing” violation of the law no matter how minor or technical.  Current law provides for a penalty up to $1000 based on the seriousness of the violation, size of the jurisdiction, and previous violations.

Other bills of interest include:

HB1205 – Prohibits all drivers of a motor vehicle from text messaging while driving.  Currently, texting is prohibited for drivers under 21 years of age.

HB 1214 – Exempts from property taxes anyone of the age of 75 with an income of less that $30,000.

BH 1216 – Freezes  the property taxes for every homeowner over 65.

HB 1222 – Exempts from sales tax any membership fees for health and fitness clubs.

HB 1229 – Fines collected for a red light camera violation shall go to the local school district.

HB 1350 – Limits the growth in assessments on owner-occupied residential property to 2% or CPI growth, whichever is less.

HB1387 – Exempts firearm and ammunition from state sales tax for a three day period in October.  Cities may opt out.

HB 1414 – Requires forfeiture of all benefits from state or political subdivisions for any elected or appointed official found guilty of a felony.

HB 1442 – Caps the general fund sales tax at 2% and the capital improvement sale tax at 1%.

HB 1444 – Requires a four day notice where any tax increase, zoning matter, TIF, TDD or CID issue is discussed along with mandating comment periods.

HB 1458 – Exempts fuel used in the operation of school buses form the state motor fuel tax.

HJR 52 – Prohibits use of eminent domain to redevelop blighted areas.

SB 589 – Prohibits a convicted felon from holding any public office.

SB 623 – Prohibits the payment of interest by local governments on sales tax refunds

SB 638 – Prohibits all red light enforcement cameras.

SB 671 – Limits residential assessments to any increase of 1% per year.

SB 680 – Reduces the liability on hazardous substance spills from 100% to 25% of cleanup costs.

My Formal Apologies to “Bob”

Every so often, I’ll make a comment that gets taken the wrong way.  It’s usually because the person doesn’t know me well, I do a bad job of communicating, or they just don’t “appreciate” my sense of humor. 

In any case, I found out this week that a comment I’d made to “Bob” a few weeks ago in passing had really been bothering him.  And while I’ve apologized to him in person, I wanted to put the apology here so he knew the apology was sincere. 

“Bob” – I again apologize and I am sorry.

Cessna Brings Back 180 Workers

While the econmony continues to suffer, one surprise I caught in the news last night was Cessn'a plant to bring back 180 employees over the next three weeks to restart production of its Citation Sovereign business jet.

While Cessna cautioned the recalls were not due to any significant new activity in orders, it's good that these 180 folks will be back to doing work and receiving a paycheck.

The full article can be found here.

World’s Tallest Tower Opens In Dubai

From Bloomberg - 

Dubai's Sheikh Mohammed bin Rashid Al Maktoum opened the world's tallest tower today and renamed it after the ruler of neighboring Abu Dhabi, which bailed out Dubai during the country's debt crisis last year.

The 200-story Burj Khalifa cost $1.5 billion to build. The tower takes it name from Sheikh Khalifa Bin Zayed Al Nahyan, who is also president of the United Arab Emirates. While mainly residential, the building will have 37 floors of office and retail space.

During the five years of the tower's construction the sheikhdom's debt-fueled property market went from the world's best performing to the worst, forcing officials to renegotiate loans and seek bailouts from Abu Dhabi. The Burj's occupancy rate may reach 75 percent this year, with office leasing proving the biggest challenge for investors, said Roy Cherry, an analyst at investment bank Shuaa Capital PSC.

"Those who bought with the intention of leasing will face a difficult time because few companies today can justify paying premiums for luxury," Cherry said.

Burj Khalifa has a height of 828 meters (2,717 feet), Alabbar said in a telephone interview today. Apartment prices in the tower, formerly known as Burj Dubai, have fallen to less than half of the 10,000 dirhams ($2,700) a square foot that they reached at the 2008 peak.

Project Overruns Contribute to Cash Flow Problems

So far, we’ve taken a look at one major source of revenue to the city – sales tax, and how a downturn in economic activity can spell trouble if reserves are not adequate and/or the downturn lasts longer than reserves can cover.  But by looking at the numbers related to sales tax, it’s fairly obvious that this area alone was NOT the sole cause of our current issues.  So what else is there?

Over the past few years, Neosho has seen some aggressive spending for a number of capital projects.  Those projects include renovations to the Civic and the Sr. Center along with a transportation package consisting of the South St. Overpass project, Howard Bush Drive extension, La-Z-Boy Drive (down by Morse Park) and Hwy 59 resurfacing.

Both the renovations and the street projects were given the go-ahead by voters and both use a sales tax to repay, over time, the principal and interest payments associated with the borrowing that provided capital for the projects.  But a closer look will show that those projects wound up costing the city more than was planned, and thus became another contributing factor to the cash flow crunch the city is now experiencing.

Transportation

While the accounting gets a little complicated due to past work performed by city employees prior to the actual approval of the transportation plan, that project as a whole is still over budget.    Depending on how far back you go and how you treat the city’s internal work and allocations to the project, cash outlays in excess of bond revenues already exceed $1 million.  Depending on how you allocated rebates from MoDOT and the railroads once La-Z-Boy Drive is complete, that number may drop by a few hundred thousand.  But that doesn’t include the projected $1 million Hwy 59 resurfacing project originally discussed as part of the transportation proposal.  Nothing has been spent on that project as of the end of 2009 (and probably won’t be anytime soon based on the circumstances we face.)

Civic/Sr. Center

An easier project to analyze is the Civic/Sr. Center remodel and the costs associated with it.  On paper, my math shows those two renovations, together, exceeded revenues by over $1.3 million.  That’s $1.3 million that had to come from somewhere…and that somewhere is straight out of the city coffers.  What Neosho wound up with is a great place to hold events (in the Civic) and a great place for our Seniors to meeting, have fun, and socialize.  I’m not criticizing either project.  But when budgets don’t hold and extra monies are spent  above original estimates, even the best intended projects can cause trouble.

Summary

So we’re now getting closer to having a better understanding of how we got to where we are.  Remember, I’ve not laid blame or criticized any specific people for their actions, but rather made an attempt to help explain to the public the how’s and why’s of our current predicament.  As all of the areas start to add up, it’s not difficult to see how a cash crunch was almost inevitable. 

It’s important that we all be well informed.  You should know that more difficult decisions are coming in the new few weeks and months if we are to to pull out of this spiral.  And while having an understanding won’t make the pain any less, I think it does offer some reassurance that the problem is manageable and a solution can be worked out. 

I am confident that Neosho will recover.  And I’m here to do my part, 24/7, to help ensure that happens.  Hang in there, folks.  We will get through this and Neosho will be better and stronger because of it.

Mssu Girls Home Against Emporia Hornets

MSSU Lady Lions are home tonight against the No. 7 Emporia State

The Lady Lions will try to snap a three-game losing streak.

Missouri Southern is 8-4 (2-3 MIAA). Emporia State is 12-1 (5-1 MIAA).

**Update - Emporia Ladies defeat MSSU 55-52**

Pelosi Plays Down Obama's Campaign Promise for C-Span to Cover Legislation Debate

Pelosi's speech yesterday took a jab at President Obama who, while on the campaign trail running for President, promised he would have debate and discussions related to this topic put on C-SPAN for all to see. Obviously, that hasn't happened. And I guess Pelosi doesn't really believe that was the actual promise from our President.

Open process?  Give me a break.

You decide.

Joplin OK’s Sewer Run to Help with Industrial Development

Last night, the Joplin city council approved a $839k sewer project to supply sewer lines to a new 2000 acre industrial development in SW Joplin.  The vote was the council’s way to show their support to help bring more industrial jobs to the Joplin economy. 

After grants and other costs paid for by the EPA, the city of Joplin will be responsible for approximately $350k of the project cost.

The full Globe article is here.

Missouri Facing More Cuts as Revenues Fall Short

Below is an article from today’s Joplin Globe commenting on more cuts Missouri may need to make to balance the budget.  Neosho is not the only one feeling the pinch of revenue shortfalls.

The full article is here.

JEFFERSON CITY, Mo. (AP) — Missouri officials might have to cut an additional $200 million from the state budget within the next month if tax revenues continue to fall short of expectations.

Revised figures released Monday predict revenues for the 2010 fiscal year, which ends July 1, will be 6.4 percent less than those collected the previous year.

Gov. Jay Nixon already has vetoed or cut more than $600 million from the $23.7 billion approved by lawmakers for state operations and capital improvements. But with revenues continuing to shrink, Missouri faces an additional shortfall of nearly $200 million, said Linda Luebbering, the budget director for Nixon’s administration.

“Our goal is to announce some additional expenditure restrictions by hopefully the end of January,” Luebbering said.

About 2,300 full- and part-time state jobs have already been eliminated. Additional layoffs are possible, and all areas of state government are being examined for potential cuts, Luebbering said.

Nixon, who is a Democrat, and the Republican chairmen of the House and Senate budget committees all accepted the revised revenue estimates. Missouri officials consider revising their revenue estimates each year around December or January, when they also release the first revenue projections for the upcoming budget year.

C-SPAN to Obama – Follow Thru with your Promise

C-SPAN, in an unusual move, today sent a letter to President Obama asking him to allow the network to cover all hearing and meetings related to the reconciliation of the health care bill.

During the campaign, then-Senator Obama criticized the workings of Washington politics and pledged to make our government more open and transparent.  Rep. Pelosi and Sen. Reid were behind him.  Since then, a number of behind-closed-door meetings have occurred with Rep. Pelosi and Sen. Reid regarding health care.  More are occurring as we speak.

C-SPAN’s point – you said you’d make this change, now make it.

Brian Lamb, CEO of C-SPAN said this in the letter:

"President Obama, Senate and House leaders, many of your rank-and-file members, and the nation's editorial pages have all talked about the value of transparent discussions on reforming the nation's health care system....  Now that the process moves to the critical stage of reconciliation between the chambers, we respectfully request that you allow the public full access, through television, to legislation that will affect the lives of every single American."

Personally, I like CSPAN’s approach.  The time has come to hold politicians to their promises.  The days of saying what it takes to get elected, only to then do what it takes to get re-elected need to end.  Both parties are at fault and we are all paying for it.

True Commerce EDI - Not The Best

This post won't interest most of you, but based on how quick Google is picking up posts to this blog, I thought I'd post a comment regarding a new EDI package my business recently switched to.

Most of my customers require EDI to exchange information. For those that aren't familiar, EDI is basically an electronic exchange of information for orders, invoices, etc. For us, the data crosses back and forth via the internet.

Because EDI is it's own unique animal, I decided to 'outsource' our EDI processing. As things have grown and EDI has changed, I was tired of trying to keep up on the technology and wanted to quit being the inhouse IT guy to fix EDI whenever it broke. And since EDI has to somehow interface with our accounting system (MAS90), we went to the company who makes that software (SAGE) for guidance. Long story short - we wound up using a company called True Commerce. They were touted as 'the' sole solution provider specifically recommended by our software maker.

Let just say that I must be the first company in the world that had to use True Commerce and MAS90 together for customers like Wal-Mart and Office Depot. Nothing worked well to start, support was hard to coordinate, and even two months into it, we still have to manually keys simple things like discounts and allowances.

As much as I hated our old software and it's quirks, it was 10 times better than what we have now. So to those that land here after surfing for an EDI packing for MAS90, think twice before you jump in with True Commerce. Or at a minimum, email me. I'll give you some thoughts that might save you a few headaches.

Sales Tax – How Much is 10% Down

Now that's we've looked at the tax structure of Neosho, we can start to understand what it means when revenues are up or down during a certain period.  As a refresher, Neosho operates primarily off of a sales-tax revenue base.  The city’s tax rate is 2.5% on retail sales and is a portion of the 7.6% sales tax rate you and I pay on most things we buy in Neosho.

Retail Base

By doing some simple math from the budget, the 2.5% sales tax backs into a taxable retail base of roughly $200 million annually.  That means that between Wal-Mart, Lowe's, and every other business that sells products, food, etc. in Neosho, they collectively sell around $200 million worth of ‘stuff’ every year.

So with those numbers, we can now say that Neosho will collect around $5 million in sales tax this fiscal year ($200 million x 2.5%).  That sales tax goes to pay for everything from light bulbs to bridges, from payroll to pavement, and everything in between.  As listed in the previous blog posting, there are a number of different taxes that add up to the 2.5% total.  Each tax should be accounted for in the books of the city and, typically, cannot be mixed with other taxes or used for purposes other than their statutory description.  (That means that taxes collected for fire protection should not be used for parks and recreation, etc.)

What a Percentage Decline Means in $$

So during times of economic slowdown like we are living through right now, the paycheck the city receives from tax payers (in the form of sales tax revenue) is lower.  If our revenue expectations are down 10%, that number approximates a $500,000 reduction in city sales tax revenues annually. 

And since things like debt payments (which Neosho pays around $1.5 million annually) can’t be cut in the short run, it’s not as simple as just cutting expenses across the board.  Some expenses cannot be cut (banks won’t accept lower payments on debt just because taxes are down) and others areas wind up taking a larger cut to balance a reduction in revenues.

If a city had a blend of sales and property tax, the impact of slower retail sales may be lessened since property taxes don’t typically see the same volatile swings.  That’s a reason I would recommend the city, as some point, look into a blended tax base.  That option falls outside the scope of this discussion.

It’s also important for cities to keep a 2-3 financial reserve in place to help offset the effects of a temporary slowdown in retail sales.  Neosho did not have this level of reserve in place.  That will need to be addressed in the future.

Summary

So now that we’ve looked at revenue sources and some rough numbers on annual revenues, I hope you have a clearer understanding of why any city with a sales-tax-based revenue stream suffers more during a time of economic slowdown.  And without sufficient reserves in place to handle these slow downs, that leads to pay cuts, layoffs, and a number of other issues that we are all living with today.

Next time, we’ll take a look at some sizable capital projects that have occurred over the past few years.  Those include renovations of the Civic/Senior Center, Howard Bush Drive Extension, South Street Overpass, and La-Z-Boy drive.  Specifically, we’ll look at how these projects contributed to the cash-flow problems we’re seeing today.

Until next time…stay warm!

Where the Money Comes From – Sales Tax

Before we can have a full understanding of why the city is facing a financial crisis, we must first have an understanding of taxes – specifically, where tax revenues of the city come from.  For now, I’m only going to focus on sales taxes.  While there are other revenue sources (grants, donations, STP funds, etc.), they are not a primary source of funding city operations.  I will also exclude ‘fees’, such as those from building permits or courts.  Again, these are not primary and don’t typically have a significant impact.

Cities in Missouri typically use two forms of taxes for revenue:  sales taxes and property taxes.  That’s not to say that all cities have a property tax, but a majority do.  As of Jan 1, 2010, Neosho does NOT have a property tax.  That leaves a sales tax as the sole means of tax revenue for the city of Neosho.

Each sales tax available to any city is governed by statue.  Those statues are specific in what the tax may be used for and what the tax rate may be.  Below is a table summary. 

Tax Description	Allowable Rates	Neosho’s Rate
General Sales Tax	1/2%, 7/8%, 1%	1%
Capital Improvements	1/8%, 1/4%, 3/8%, 1/2%	3/8%
Economic Development	Up to 1/2%	1/8%
Transportation	Up to 1/2%	3/8%
Parks/Storm Water	Up to 1/2%	3/8%
Fire Protection	1/4%	1/4%

By statue, the state ‘allows’ cities to collect up to 3.25% in total sales taxes – subject to voter approval.  Currently, Neosho collects 2.5%.  When added to the combined state/county tax rate of 5.1%, you see the more familiar number of 7.6% – familiar because this is the number you’ll see on most receipts for purchases inside the city of Neosho.  (You may see 4.6% on certain food items.  This is because the state reduces their portion of the tax by 3% on such items.  That reduction has NO impact on city taxes.)

Taxes for neighboring cities

While we’re looking at taxes, I’ve included a few rates from other cities around the area.  Some are higher, some are lower, but they are all very close to Neosho’s rate.

City	Total Sales Tax Rate
Neosho	7.6%
Joplin (Newton/Jasper County)	7.725%/7.835%
Carthage	7.388%
Webb City	7.7%
Seneca	7.1%
Anderson	7.725%

Next time, I’ll be explaining how these revenues add up for the city of Neosho and how an economic slowdown impacts sales taxes.  It won’t be the final answer, but it will add to our knowledge of city finances as we work to get a full understanding of why we are where we are.