Archive for August, 2009
HERE. It’s not looking good for cities around the US.
From AZ Central/KOLD news. A study commissioned by the City of Mesa found that the Cubs organization pumped $31.1 m into their city and another $52m into the State of Arizona. The Cubs are rumbling to move for greener pastures.
Two things are for sure, MLB teams are fickle and spring training brings tourists into your city. We’ll get another bite at the apple soon enought. The AZ Legislature has given us 5 years to set up a special taxing district to build new baseball facilities.
The powerful AFL-CIO and democratic leaders are proposing a tax on stock transactions. Why is the AFL-CIO behind a tax on Wall Street? Guess who the new NY Federal Reserve member is: Denis Hughes non other than head of the AFL-CIO. He’s replacing Stephen Friedman the director of Goldman Sachs. This stuff is better than an episode of Days Of Our Lives.
The AFL-CIO, one of the Democratic Party’s most powerful allies, would like to assess a small tax — about a tenth of a percent — on every stock transaction.
Small and medium-sized investors would hardly notice such a tax, but major trading firms, such as Goldman, which reported $3.44 billion in profits during the second quarter of 2009, may see this as a significant threat to their profits.
OPINION: They don’t see it
By Steve Kozachik, special to Inside Tucson Business
Published on Friday, August 21, 2009
In the course of developing our downtown region, it has far too often been the case that the playing field on which ‘winners’ have emerged has been anything but level. We have seen a cascade of land swaps, development agreements skewed in favor of those who have stepped into the political fray with fundraising events in support of incumbents, and rent and lease deals cut on behalf of agencies and businesses with whom our elected officials have personal and campaign affiliations.
Far too often we have seen sweetheart deals at taxpayer expense, developed away from the view of public scrutiny and in a manner that leaves those who are struggling to survive the difficult economic times wondering how they are to compete with what is clearly a game of picking the winners by those in office or highly placed staff.
The clear language of Tucson’s city charter states all construction contracts are to be awarded through “competitive sealed bidding” and that “any officer” who contracts for construction in violation of the rules “shall be removed from office.”
And yet if one looks at recent development agreements you will find language declaring a public emergency, or awards based on the chosen winner having performed other work in the downtown area and thus being ‘uniquely qualified’ for the award. These pivots away from the requirement for competitive sealed bids certainly appear to be creative techniques used to ensure a preferred result.
But when governing officials have an agenda, they’re not about to let the city charter get in the way. For example, Councilwoman Nina Trasoff recently suggested balancing the budget deficit on the back of the local pornography ‘industry.’ The plan was set aside based on the legal opinion she could not select out a particular class of commercial establishment for uneven tax treatment. The solution was seemingly found in shifting that proposed tax from porn shops to the hotel and tourism industry instead.
This is simply inflicting the same penalty on our hoteliers that was originally proposed for adult book stores — a bed tax that flies in the face of the city charter section that states “all taxes shall be uniform upon the same class of property within the corporate limits.”
All lodging accommodations fall under the “Commercial Establishment” land use class. So do automotive repair shops, financial service providers, child care facilities, and more. Why the added tax on beds and not an additional tax of the same amount on the rest of the establishments that fall within that “class”?
Within the City of Tucson there are competent and energetic small business operators. What they need to succeed is to be allowed to compete in the marketplace according to a single set of rules.
During my 21 years awarding and managing contracts of various sorts for the Department of Intercollegiate Athletics on the University of Arizona campus, I have yet to encounter a vendor who was afraid to compete for work. What I do find, though, is disgust that filters through the business community at a process that leaves some seated in a higher chair at the same table – if they have a seat at all.
What I find is disgust at the failure on the part of our elected officials for their continued actions that drive a stake through the heart of some in our private sector, thus leaving others at a competitive advantage. Our sales tax base is hemorrhaging, “space available” and “for lease” signs can be seen in every corner of our city.
Last week we saw elected “dignitaries” riding the trolley through the newly opened Fourth Avenue Underpass blissfully ignoring that it came in $20 million over budget. It is emblematic and our elected officials make a parody of themselves by such carrying on – and yet there is little else to ‘celebrate’ when it comes to the vitality of our private sector and the development of our community.
We need to level the playing field. Stop running our private sector out of town through the imposition of unfair and unwise taxes and fees.
Contact Steve Kozachik, candidate for Tucson City Council in Ward 6, through his website www.votestevek.com or (520) 784-2101.
The debate rages on about what the City of Tucson can and can not afford. The Tucson ASSOCIATION OF REALTORS® and SAHBA among other business groups have stepped up to push a mandatory police staffing initiative which will take our police officers per 1000 population from 1.9 to 2.4 (closer to a national average) and will establish minimum response times for fire and emergency services when we need them most. Those crazy business people somehow feel that safe streets, neighborhoods and businesses will actually make people want to live in our community. With an absence of leadership from our elected officials someone had to step up.
No sooner than the initiative hit the streets did the spin machine from city council and the county go into effect scaring the community by bemoaning the high cost to increase the police force and process the criminals. What’s the cost of not doing it gang?
City Council members and city staffers have declared the initiative would cost the city $50 million more per year to pay for the 350 additional police officers and firefighters required, and have questioned where the money will come from. County Administrator Chuck Huckelberry has also indicated the additional officers will result in higher court and jail costs for the county.
* Does the City of Tucson have the money to pay for:
* Public Safety First Initiative;
* Convention Center Hotel;
* Balance the budget
(the rating agencies recently lowered Tucson’s credit rating and cited a “structural budget deficit”)
My contention is that there is plenty of money to pay for things; it is just a matter of priority and political will. These are difficult times but we expect our political leaders to make those difficult decisions. The 2008 Comprehensive Annual Financial Report (CAFR) for the City of Tucson reveals several funds that are running large deficits. Reducing or correcting these deficits frees up vital funds to help with other priorities. (This information is a year old but many funds are operating about the same or worse. 2009 CAFR will be available in a few months; should be an interesting read.)
The Mayor &Council authorized an increase in fares recently. It was decided to use the funds to enhance transit services rather than reduce the subsidy.
Remember the ‘trash fee’. This basic support function simply needs to charge properly so they break even. Is this function ripe for outsourcing to local trash companies?
I believe basic utilities such as this need to break even each year.
Let’s just say that as a stand-alone entity, the TCC loses plenty of money. Does this facility provide sufficient ancillary benefits from events held there?
Capital Improvements Fund: $38.5 million negative cash flow (page 83)
This fund had a nice fund balance at beginning of year ($86 million) but $38 million was taken from it. Could be that the City built stuff they did not have the money to pay for? It is also possible some of these funds were shifted to help balance the budget (dip into reserves to balance the budget – the rating agencies notice this stuff).
H.U.R.F. Fund: $8.6 million transferred to “Other Funds” (page 83)
HURF Fund ran a $1.6 million deficit and then transferred $8.6 million to “Other Funds”. Just wondering out loud where the money went?
Development Fee Fund: $5.5 million PROFIT (page 83)
We found a profit center! This money comes from ‘Developer Fees’.
Should greens fees be raised? City golf is one of the best deals in town. Golfers could probably kick in a little more to help clear this deficit.
Public Housing (AMP) Funds: $3.8 million deficit (page 91)
What is the City’s role in public housing? If the City simply matched -dollar-for-dollar what the Feds kick in, the deficit is cleared. But we kick in much more.
Fleet Services: $6.1 million deficit (page 94)
This basic support function simply needs to break even. The motor pool charges various units for operating their vehicles. They just have to charge properly for their services. Perhaps this function is ripe for outsourcing to local automotive shops?
Self Insurance Fund: $5.7 million operating deficit -and- $17.6 negative fund balance (pg 93/94)
This issue came to light earlier in the year when the City considered dipping into this fund to help cure the budget deficit (just about the worst idea I have heard all year). There is the potential that the City will get whacked with a large legal verdict and have to take money from the general fund to pay the settlement. The rating agencies have this on their radar screen and this hurts the City’s credit rating. The City needs to charge each department properly according the risk. This function is screaming to be outsourced to private companies – the City should not be in the insurance business; they are not good at it. Political temptation is simply too great: politicians tend to under-charge for risk and like to dip into this piggy bank.
We covered the ongoing fight between Basha’s and the union HERE. Looks like another grocer is feeling the pressure.
From today’s WSJ:
These are views held by plenty of voters, but no matter; the hardest cases on the left have had it in for the Whole Foods CEO for a while. Instead, the company adopted a raft of its own progressive employee policies, such as letting workers vote on their own benefits packages, including health savings accounts.
Too often, business leaders who have useful contributions on a public issue are too fearful or self-interested to say what they really think. Detroit CEOs paid lip service to fuel-mileage standards even as the rules destroyed their business. The pharmaceutical industry after years of defending its business model hopped quickly into line for the Administration’s health-care reform.
Whole Foods is a publicly traded company, so the effects of a real boycott would mainly damage the pocketbooks of those nice Whole Foods employees and its stockholders. They may have little to worry about. Summer is nearly over and when the weekend farmers markets close, a real protest would require the store’s hyperprogressive customers to withdraw forever from the Whole Foods community to get their artisanal foods at the supermarket chain down the block.
Arizona Daily Star
August 10, 2009
Tucson election change long overdue
Re: the Aug. 2 article “Council likely to resist election change.”
The city should not waste its time and limited resources in challenging the new law that requires nonpartisan elections and election by ward. It is a change that is long overdue.
The quote from Regina Romero showed how out of touch she and the others are. All one had to do is read a newspaper to know that this issue was being discussed for months at the Legislature.
We citizens can only hope for change as the poor leadership and ineptness of this and previous City Councils this decade have hurt all of Tucson’s citizens and its businesses, and our quality of life has been diminished as a result.
Can Tucson stay king of the hill?
Photos by Benjie Sanders / Staff
High-tech gear surrounds Michael M. Morrell at NP Photonics. The industry faces domestic and global challenges.
By Alan D. Fischer
ARIZONA DAILY STAR
Tucson’s optics industry is widely considered the best in the nation, with a vibrant company base, enviable business-to-business cooperation and top educational opportunities.
But optics, government and education leaders agree they must do more to keep Tucson’s Optics Valley No. 1.
The local industry – which is low-polluting, high-paying and pumps more than $650 million a year into the local economy – faces challenges from domestic and international competitors, which are trying to overtake Tucson by luring optics firms from here and other areas.
Supporters are working hard to make sure the industry – dubbed “Optics Valley” in 1992 by Business Week Magazine – stays ahead:
* The University of Arizona is spending $17.5 million to expand its Optical Sciences Center doctoral program, one of only two in the nation.
* In the past year almost $1 million in government funding has helped expand seven local high-tech clusters, including optics, through which businesses work together to grow their industries.
* New training programs are helping to fill jobs.
* Venture capital is emerging to launch new optics firms, often spinoffs from the UA.
* Agencies like the Arizona Department of Commerce and the Greater Tucson Economic Council are recruiting optics firms to move here.
Those efforts must continue – and grow, said Dick Powell, president of the Optical Society of America and the UA’s vice president of research.
“It’s an enormous threat and challenge,” Powell said. “We want to maintain our leadership and still be better than anyone else.”
Foundation of “new economy”
Optics touch your life in more ways than you might imagine. It’s not just telescope lenses and mirrors, although they play an important role in research and business activity here. Area optics operations design, develop and manufacture products ranging from auto headlights to X-ray machines to high-speed Internet connections.
“Without optics, you don’t have the ‘new economy,’ ” Powell said. “Optics is now being used for almost everything – from checking out at the supermarket to laser surgery.”
The industry has grown significantly in recent years and is expected to get even bigger, said Brian C. Catts, director of the industry relations program at the UA Office of Economic Development. Statewide optics employment grew 81 percent in five years, from 3,818 in 1995 to 6,907 last year, he said. Pima County accounted for 4,573 – 66 percent – of state optics jobs in 2000, he said.
The state has about 150 optics-related firms, 90 percent of which are in the private sector and account for estimated annual revenues last year of about $650 million, Catts said. That’s up from $100 million in 1989 and $300 million in 1994.
Early emphasis on astronomy
Early optics activity here focused on astronomy. Stargazers at the Steward Observatory and other facilities needed optical equipment, and companies sprang up to fill those needs.
So in the early 1960s, when the space race created a need for optical scientists, Tucson stepped up. With the backing of the Air Force Institute of Technology and the Optical Society of America, the UA Optical Sciences Center was established in 1964 and has established a national reputation for excellence.
The program attracts top instructors and students. It and the University of Rochester in New York offer the nation’s only doctoral programs in optics, said Valerie Vance-Goff, co-chair of the Arizona Optics Industry Association.
“There is no question it has been a catalyst for growth,” said Jim Wyant, the center’s director. “Graduates have started companies. And companies have opened here, or moved here, because it is easier to hire optical engineers here than in most places.”
Wyant himself is a locally grown optics success. He founded the WYKO Corp. in 1982 while on the UA faculty, and sold it in 1997. Now Veeco Metrology Group, the company makes devices that test the shape and roughness of surfaces to ensure they meet precise specifications.
“The UA is so massive with the optics industry – they can do the engineering, development and manufacturing,” said Tim Kanavel of the Arizona Department of Commerce. “You just need to come up with an idea. You can do it all right here.”
The program’s 30 graduates a year fall far short of the number of skilled workers the industry requires, said the UA’s Powell, who headed the Optical Sciences Center from 1992 to 1998. Graduates with doctorates in optical science can expect to start at about $100,000 a year.
“We’ve had a single company come in, and they wanted to hire 200 graduates,” Powell said. “We could increase the number of graduates by a factor of 10 and not have trouble finding jobs for them.”
To boost local graduates:
* A $17.5-million expansion is in the works for the Optical Sciences Center.
* Proposition 301, which voters approved last November, will provide sales-tax funding for education.
* Pima Community College has launched a program to train optics technicians.
|Like this expert, Tucson has displayed a deft touch with optics. But now challengers are trying to lure away the top companies.|
Can’t rest on laurels
Despite the local industry’s strengths, experts say the area must work hard to retain its title as the nation’s optics capital.
Other areas are aggressively challenging Tucson’s role as the nation’s optics capital, Powell said. Boston has invested $80 million in a new photonics center, and Florida is spending millions of dollars to attract companies and develop local talent.
Colorado; Austin, Texas; and Vancouver, British Columbia, all are pumping money and effort into boosting optics education and luring optics firms – often with economic incentives.
“It’s very hard to compete against programs where the state government is putting a lot of money in,” Powell said. “If we don’t get the resources we need to keep our program going, they will bypass us.”
That could be devastating, said Wyant, director of the Optical Sciences Center: “If we don’t do something within the next two or three years, it’s all gone.”
To keep that from happening, Tucson must attract a major optics company, Wyant said. “If we could bring in a single company with 1,000 workers, then others will follow,” he said.
Tucson’s largest employer with optics ties is Raytheon Missile Systems, with 10,149 workers. By comparison, Eastman Kodak Co. has 26,500 people at its Rochester facility. The area also must expand current efforts, industry leaders said.
For example, the Arizona Department of Commerce and the Greater Tucson Economic Council are recruiting established optics firms and local venture-capital groups are offering funding for optics start-ups.
Also, state, county and local support is increasing. During the current fiscal year, which ends in June, Southern Arizona’s seven high-tech clusters, which include optics, have received $700,000 in state funding, $140,000 from the city, and $136,000 from the county, Vance-Goff said.
“Prior to this fiscal year, we had received absolutely nothing,” she said.
The money can be used for marketing and image-building, technology transfer, work-force development, telecom infrastructure and local supply chain development.
“This is exactly what we need to be doing,” Powell said. “It’s an enormous step in the right direction.”
* Contact Star Business reporter Alan D. Fischer at 573-4175 or at email@example.com.
First, the spending bill was sold as a way to fund important infrastructure projects. But less than 15% of the bill is directed toward infrastructure building. In fact, the bill spells out that the new spending on infrastructure has to be directed toward “shovel ready” projects.
Big mistake! This means that instead of starting new projects that would create jobs in sectors outside of construction—and therefore benefit future generations—most new projects are only short-term road repavings.
Under the stimulus, there is limited ability to build transit systems or major power generating facilities, upgrade water systems, or undertake significant environmental cleanups. While President Roosevelt built dams and President Eisenhower built an interstate highway system, President Obama’s stimulus fills pot holes.
The second flaw is that mayors and governors across the country are spending massive amounts of stimulus grant money on short-term operating expenses. Yes, we are hiring new police officers, adding summer job youth programs, and buying much needed buses. However, we are spending on already budgeted items, and we are artificially fixing local budget deficits with federal grants that come from deficit spending.
Every accountant knows that this creates long-term financial trouble. We are filling short-term, government jobs that do little to help expand the economy, and we are delaying making difficult cuts. This is the type of financial scheme that got us into our current economic mess.
Our nation cannot afford another stimulus package—particularly one that is basically funding a social wish list and is not investing in our future. Let’s re-examine the first stimulus bill’s spending rules, or better yet redirect its money toward health-care reform. I urge Congress to read the proposed health-care overhaul bill and ask questions without fear of being portrayed as callous to the health of our citizens.
Just because we are experiencing an economic crisis and Congress wants to “do something” does not mean federal action should not be transparent, fiscally responsible, strategic, and sustainable for future generations.
Mr. McCrory is mayor of Charlotte, N.C.
Tucson Named One of the Top 10 Metro Areas for Aerospace/Defense Manufacturing
Tucson, AZ (August 12, 2009) – Business Facilities magazine has named Tucson No. 6 on its list of the top 10 metro areas for aerospace/defense manufacturing in its fifth annual ranking report, released in the magazine’s August 2009 issue. The ranking is primarily based on a comparison of industry sector employment and wages. Also evaluated were major projects and facility expansion/relocation activity for a region in the past 12 months, and the number of major aerospace and defense contractors headquartered in the region.
The 10 metro areas included on the list are:
1. Wichita, KS
2. Huntsville, AL
3. Seattle, WA
4. Forth Worth, TX
5. Tampa, St. Petersburg, FL
6. Tucson, AZ
7. Orlando, FL
8. Phoenix, AZ
9. Los Angeles, CA
10. San Diego, CA
Aerospace and defense is one of four targeted industries in TREO”s business development efforts. In Fiscal Year 2008-2009, 16% of new jobs in the region were in the aerospace and defense/homeland security industry.
“Tucson, Arizona, clearly has established itself as a leading aerospace/defense hub. It is home to Raytheon Missile Systems, the world’s largest missile manufacturer, which generates about $5 billion in annual revenue and supports more than 12,000 jobs. With a solid footing in the production of advanced defense systems, Tucson has positioned itself for steady growth in this critical high-tech sector for years to come,” said Jack Rogers, Editor-in-Chief, Business Facilities.
“Business Facilities’ ranking of Tucson as a top metro area for aerospace and defense manufacturing proves that targeted efforts to recruit high-skilled jobs in this industry are paying off,” said Joe Snell, TREO President and CEO. “The aerospace and defense industry is a critical component of Tucson’s economy and a national ranking like this is great recognition for the region.”
Tucson has also recently ranked as a hotspot for young professionals as well as a “Fast City.” In June, Next Generation Consulting ranked Tucson No. 16 on its list of the best places to live and work for young professionals in cities with a population of more than 500,000. And in May, Fast Company magazine ranked Tucson as one of the top 12 “Fast Cities” in the world. For more information on these rankings visit www.treoaz.org.
About TREO (Tucson Regional Economic Opportunities, Inc.)
TREO’s mission is to provide insight, infrastructure, resources and development efforts to accelerate economic prosperity throughout the Southern Arizona region. TREO supports the creation of new business, the growth and expansion of existing businesses, and the attraction of companies that offer high-impact jobs and share the community’s values. For more information, visit www.treoaz.org.
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