The Economy, South Ogden, Keynes vs. Friedman

South Ogden's economy has been on mind a lot lately. Recently we talked about the deficit spending South Ogden is headed for. Though most people are saying we are headed for better times and it may appear that is true. There is still much debate on the two schools of thoughts in economics. For those who took Econ 202 you will remember the ideas of John Maynard Keynes vs. Milton Friedman. In the previous years we have been attempting to follow the free-market ideas of Friedman. We are now following a Keynesian model of thinking. I have been in support of a mixture of these ideas for sometime but looming in the back of my mind has been the future consequences of our actions today. What will these be?  If what we are doing doesn't work, what will be the result?  The following article was in Bloomberg yesterday and got me thinking:

"Federal Reserve Chairman Ben S. Bernanke is siding with John Maynard Keynes against Milton Friedman by flooding the financial system with money.

If history is any guide, says Allan Meltzer, the effort will end in tears. Inflation "will get higher than it was in the 1970s," says Meltzer, the Fed historian and professor of political economy at Carnegie Mellon University in Pittsburgh. At the end of that decade, consumer prices rose at a year-over- year rate of 13.3 percent.

Bernanke's gamble that the highest jobless rate in 25 years and the most idle factory capacity on record will hold down inflation is straight out of the late British economist Keynes. Should late Nobel-prize-winner Friedman's dictum that "inflation is always and everywhere a monetary phenomenon" prove right, the $1 trillion or more in liquidity Bernanke has pumped into the financial system by expanding the Fed's balance sheet may leave him to cope with surging consumer prices.

So far, investors and economic data both back up the Bernanke-Keynes view. The market in Treasury Inflation-Protected Securities as of April 6 indicated long-term inflation expectations of 2.5 percent, below the 2.8 percent average inflation rate of the past 10 years.

Again, it appears we are headed for success, but I am scared we could go too far and end up worse than before. How will this all turn out? I am personally preparing for the worst and hoping for the best. I am excited that South Ogden city has a lot of reserves left, nearly 18 percent. But the worst may yet have come. Spending our rainy day funds should not be done now. Instead we should trim our budget to balance.

Looking back to nearly five months ago, Councilman Bradley talked about how we are doing well and how we are on budget. Now we are headed for deficit spending. I am scared to death to see inflation of 13+ percent. I am hoping for the best; but now is not the time to spend our rainy day funds.

South Ogden City Council - Working Session

It has been nearly 20 days since I last posted to the blog. We have had a number of crazy things happen with our family, but I am glad to be back and post a little. Tuesday night was the South Ogden City Council Working Session. Olive Garden was offered to all in attendance. Since I was the only one there besides the council, I enjoyed some Alfredo Pasta in the back.

As for the meeting, the discussion of topic was the 2009-2010 fiscal budget. A number of interesting things came out of the preparation of the budget. First of all South Ogden has finally caught up with the recession. Sale Tax Revenue is down 2.8 percent, since a major portion of our budget is Sales Tax, that makes things very hard. Scott Darrington, city manager, commented we are now in uncharted territory. Therefore a number of cuts will need to be made. Here are some of the potential cuts for South Ogden:

• Already South Ogden has cut their budget by 5 percent, but now we are looking at an additional 7 percent cut. Total will be a 12 percent cut to the cities budget starting in July. The goal is not cut personal or services.
• A soft hiring freeze is now in affect, positions that open up will be evaluated and decided if they are needed.
• The average salary increase will probably only be 1 percent this year. But a lengthy discussion took place on whether this should even be paid at all. Instead the idea presented by some would be to forgo any pay increases and instead cut some of the cost to health benefits for city employees. We will see how this goes.
  

Overall we are looking at $444,000 deficit headed into the next fiscal year. When I first heard this I was shocked. Mr. Darrington was then quick to point out our city has a rainy day fund of 18 percent of our budget. In fact we have had too much money in the fund in the past and have been cited by the state auditors. This fund has us nearly $1.6 million to help us in tough times. South Ogden should be just fine for awhile. The one thought I have is if the state legislature didn't dare use their rainy day fund because of a potential fall in the economy. Why are we so quick to use ours?

Finally the Rec Center. Apparently costs are coming in lower than expected. South Ogden Jr. High will now be about $5 Million under budget for a monster amount of $17 Million. Therefore our bond will now only need to be $2.1 Million. The only other good news was the idea of doing a 15 year bond instead of a 20 year bond. The cost would be the same, but we will now pay off the bond faster saving us all $190,000 a year. The cost to the average family will be $36 a year in property taxes. Still way too high of an increase in my mind.

Election year is upon us...who will run?

Lawmakers make tough calls – Now it is our turn – Standard Editorial

Today's Standard Examiner editorial praised the legislature for most of the tough calls it had to make regarding the budget. As I have mentioned numerous times we were facing a 15 percent budget cuts and have now rested at 9 percent. Our beloved Weber State has been spared part of the damage that was foretold in the early days of this legislative session. Yesterday we spent quality time with Sen. Hillyard from Logan, regarding these cuts and how it has affected the state.

I agree with the editorial staff about these tough calls, though I don't agree with all of them, they did a good job none the less. Here are some of the editorials points regarding the tough calls this session have produced:

Lawmakers were able to stave off cuts that would have reduced prison beds as well as a parole violation center.

Education has taken about a 5 percent hit. That's a better result than many were hoping for.

School districts will have a tough responsibility in deciding what to do and what to trim with the smaller funds.

Borrowing $2.2 billion via bonds for road construction and building projects - is another good idea. Utah has boasted a good financial record, and these work projects will keep many people employed in these tough economic times. Lawmakers won't touch the $414 million that is in the state's rainy day fund.

I would like to highlight a simple phrase found near the end of the editorial:

Legislators are concerned that this recession will get worse and Utah will need the cash when the fiscal year ends July 1, 2010, or sooner.

Lawmakers have made tough calls this year. However the reason we didn't see 15 percent cuts is because of one time stimulus money and backfills. As Sen. Killpack made clear in our bloggerpress yesterday, "this is one-time money." Once this money is gone, it is gone! If our economy hasn't rebounded by 2010-2011 we will be faced with the same cuts. 2009 needs to be a year of efficiency in our government. I was impressed during the Higher Education Sub-Committee meetings with Snow College President Scott Wyatt (who is a blogger). He mentioned a process his school had gone through to trim their budget. They had late night meetings, sometimes until midnight, talking with all parties involved in how to trim their budgets and be more efficient. We are currently doing this same thing in my company. Not to find reasons to lay off workers, but to make sure we are doing things efficiently and cost effectively.

Now is not the time to spend as you have in the past. Now is the time review your processes and how you are doing business. Your company can still expand, but only after you have reviewed your efficiency and are sure you have the capital to do so. No one should come to 2010 and be surprised if we have to trim the budget again. Instead you should come prepared to do so with a plan. Protests of shock and awe announcing you were caught unprepared, will not hold water in 2010. If your company can save money, start savings for a 9 percent cut now.

The legislature has made tough calls, now it is our turn.

Read the editorial here

Bloggerpress #2

Today was our second bloggerpress put together by Ric Cantrell and the UtahSenatesite.com.  It was an opportunity to rub shoulders with bloggers such as David Miller - Pursuit of Liberty, Holly on the Hill and Misty Fowler - Saintless.  It was an interesting experience, being their live, and not online.  As bloggers we tend to find ourselves behind our computers and cellphones.  To be in front of the legislators and ask questions was a great experience.  Though I just observed this round, I feel there is a real future for political bloggers and communication with the legislature.  

A number of issues were discussed ranging from transportation, alchole, vehicle registration, and lobbying.  Senate President Waddups, Sen Killpack, Sen. Hillyard, Sen. Valentine and more attended the event. It appeared they we're not quite sure what to think of us.  Perhaps they haven't really read our blogs or haven't made up their minds as to our usefulness. It was always good to have Glen Warchol barking behind us and attempting to get a rise out of the legislators.

As I was leaving Ric and I spoke about the future of the bloggerpress and were we go from here. We agreed our current format works well and the Utah's Political bloggers are very keen and intelligent in their blogging.    I was very excited with what we are working on with the future of blogging.  

As bloggers, some of us are caught in the middle of being a blogger/reporter or just writing down our thoughts about issues as a past time. Either way, I feel bloggers are and will be the new wave of reporters and with the efforts of the Utah State Senate this reality will come sooner than later.  Bloggers are beginning to make a real difference in Utah.  During this past session hundreds of people came to the From Where I Sit blog wanting to know about SB 199 and 208.  My fellow bloggers had similar and even greater success in influencing politics in Utah. People don't go to the Tribune website and search a topic, they Google it!  Our blogs come up first; our opinions, research and links to news articles are what they find.  A new era in Utah news and political blogging is in the works.  I am happy to play a small part in it.

Blogger Press - Meeting Today

After taking another week off from blogging, I am happy to back at it.  Starting today I am blogging from the Utah State Legislature.  I am catching the afternoon piece of House and Senate debates.  Later I will be attending a Blogger Press Meeting,  I am sure we will have some live tweets. 

I will have a summary of the bills I have been following soon.

Weber County Lincoln Day Dinner

Last night was the annual Weber County GOP Lincoln Day Dinner. This was my first time attending as a paying customer of the GOP. Usually I have attended as a guest or staff member of some campaign. So instead of running around talking to people about our candidate I was able to sit and enjoy the evening. Besides getting started late, the dinner was great and the evening was well planned. My wife and I have had the privilege of sitting next to Noall Knighton and his wife.

 

Vice Chair Christie Moore conducted the meeting since Chari Matt Bell was out sick.  National Commiteman Bruce Hough spoke on the election of Michael Steele.  Lt. Gov. Gary Herbert spoke for about 20 minutes on some topic that went on for a long time. Then finally our keynote speaker was Jeff Thredgold. He did a great job speaking on the economy and kept it simple for everyone to understand.  I left feeling positive about the Republican Party and the economy. Jeff did a great job explaining where we are and where we are headed.

I made the effort to Twitter the entire event and you can see my updates below, they are in reverse order so you will have to start from the bottom and work your way up.

• Thredgold was very enlightening about 14 hours ago from txt


• Utah will see higher unemployment. We've gone from 2.6 to 4.6 percent about 14 hours ago from txt


• Economics is intimidating in the hands of a beginner even more so with expertsabout 14 hours ago from txt


• First time canada, us, japan and europe has been in a recession at the same timeabout 14 hours ago from txt


• The fed is targeting the fed funds rate to 0 - 0.25 percent.about 15 hours ago from txt


• Just explained to wife what the CPI and she got it! We do I even doubt her, she is pretty dang smartabout 15 hours ago from txt


• CPI rose 0.1 percent lowest in 54 yearsabout 15 hours ago from txt


• Weber state sounds system sucks lots of feedbackabout 15 hours ago from txt


• Thredgold: People computer skills are getting paid 15% moreabout 15 hours ago from txt


• This is the same thing we go through every 10 years we will get through this economic time.about 15 hours ago from txt


• Thredgold forcasts growth will begin in the 4th Quarterabout 15 hours ago from txt


• Speaker Jeff Thredgold now speakingabout 15 hours ago from txt


• Rep Wallis is on his blackberry. Is he reading email or twitteringabout 15 hours ago from txt


• Herbert has learned the Huntsman pointing finger technique while speaking...cool.about 15 hours ago from txt


• Ok Herbert was supposed to give a few comments he is now going on 20 minutesabout 15 hours ago from txt


• Herbert is worried some things are backwards in our country. I have to agreeabout 15 hours ago from txt


• Herbert says the reason we have the best managed state is due to the republican leadershipabout 15 hours ago from txt


• Bring on Gary Herbertabout 15 hours ago from txt


• Mr. Hough is a fan of the GOP chairman Michael Steele. He thinks he is an articulate chairman and will help the partyabout 15 hours ago from txt


• Bruce Hough is speaking about Dancing with the Stars. He has reminded us to vote for his kids.about 15 hours ago from txt


• Now going through the announcements of all the dignitariesabout 16 hours ago from txt


• Just saw Rep. Wallis, Zions and America First are a stones throw away from each other.about 16 hours ago from txt


• Just arrived at the Lincoln Day Dinner things look good all the big wigs are here.about 16 hours ago from txt


• Getting ready for Weber County Lincoln Day Dinner

Standard Examiner and SB 208 - Editorial

This mornings Standard Examiner editorial attempts to explain why newspapers should be the distributors of the coveted Legal Notices. (See Here)  They lay out a set of unorganized scare tactics to encourage older readers to write their legislators and vote against this money saving piece of legislation.  Where many cities will be savings $10,000 to $50,000, the Standard Examiner would ask you keep the money flowing to them because "newspapers are the best, most efficient place to publish these notices."  

Std-X claims more people than ever read the newspaper:  - True nearly 70 percent of Internet users in America go online to read the news (See Pew Research Center).  Their next claim is they already recognize legal notices need to go online, so they publish their notices online to the Standard Examiner Website.  They failed to mention they charge you a subscription fee to go online and read them. If legal notices are on their free site, I did a search and couldn't find them.  

Next, the editorial staff makes an interesting claim regarding Internet usage: 

"A third of all people will lose access to the notices"

Where did this statistic come from?  Did they really just make this up?  This argument makes no sense. Yes, nearly a third of Americans do not log on to the Internet for news.  But does that mean they read the newspaper too.  The Deseret News has report only 12 out 100 residents receive the print newspaper.  That is 202,000 people.  Moving notices online would give access to a lot more people nearly 498,000 people. (See Here)

One of my favorite lines was in reference to the future state website:

 If by legislative fiat, legal notices are relegated to a clunky, non-user friendly government Web site, fewer Utahns will have access to the notices.

I am sorry, have you seen UtahLegalNotices.Com.  If this isn't a clunky, non-user friendly website, I don't know what is.  They website isn't even formatted right for regular browsers and some of the info on it is from 2005.  There is a six step guide on how to log on, which was last updated in 2006.  I will admit they are working on a new beta site which is supposed to be much better, but they have been trying to use their web technology for nearly four years and all they have come up with is a clunky, non-user friendly website.    The infrastructure for a legal notices website is already in place and to get a good idea of what the state-run website would look like check out Utah Public Meeting Notices. Then feel free to compare the two websites.

The Standard calls SB 208 a loser because it will not reach enough people, but by their own statements people go online to read the news. If we can make the comparison of 498,000 Internet users in Utah and 70 percent go online for the news, that is 348,000 people. In comparison to 202,000 newspaper subscribers, I am not worried about reaching everyone.  The real worry is people who only subscribe for legal notices possibly will leave stop subscribing, but don't worry that Standard will still charge you for their website.  

They call SB 208 a loser because there will now be political influence on legal notices. I can see it now, Sen. Urquhart is looking for a good foreclosure because he will soon have the power to hold up the publishing of a notice so he can get his hands on it.  Seriously, is this really an argument.  

SB 208 is a loser because it will cost the state money to house these notices.  Lets not forget the $100,000 SLC will SAVE in the first year.  Lets not forget hundreds of thousands of dollars local cities will save or the hundreds of dollars local residents will save by this effort.  

Finally the Standard claims media is - free of bias.  To believe any of us are free of bias is absurd and ignorant.  The Standard Editorials are always the bias of the editorial staff, how can one claim they are free of bias.  That is like saying Fox News caters to republicans and democrats alike.

I thoroughly enjoy reading Standard Editorials; however not only was this the worst written editorial, but they are completely wrong.

To see more posts and actually facts read the following:

• Internet Usage vs. Newspaper Subscriptions - From Where I Sit
  
• Online Legal Notice Posting - Lincolns Legislative Blog
  
• SB 208
  

Oh and here is the editorial:

• The Standard Editorial