08-04-06

Hi friends, this is Harry Blalock; General Manager for radio stations KZMI & KCNM. It's that time once again to take a look at the issues of the week, and to offer some Food For Thought.

As far as financially challenging weeks go, this past one definitely takes the top spot. Of course we had recently gotten the news that our power and water bill would be increasing by over 100%. When you're a very small business, and your power bill goes from $4,000 to over $8,000 that's very hard to swallow. You automatically go into cost cutting mode, but is there enough to cut to actually make up for that kind of an increase?

And then as if you don't already have a migraine headache from trying to cope with the situation, your health insurance provider notifies you that your premiums are increasing by 40% effective immediately. So all within a week's time, your cost of doing business here has just increased by nearly $8,000 a month. That's very sobering news for a small business whose profit margin was much smaller than the $8,000 a month increase that we are now facing.

If that were the end of price increases, you could take a look at what you have to do to make ends meet and cut accordingly. But unfortunately, I think this is only the beginning of the price increases, and the top story in Friday's Saipan Tribune would tend to back that up. The story talks about how all businesses have to raise their prices to absorb the electric rate hike, and they are passing those costs along to their customers. So if you take one of the examples from the paper, the wholesale distributors have to raise the prices of their goods to make up for their electric rate increase. That means that the retail stores have to pay more for the goods they buy from the wholesalers now. But you need to keep in mind that the retailer also just had their electric rates increased, and they are going to have to charge more for their goods as well. So on top of having to charge more because the cost of goods increased from the wholesaler, they have to tack on their own increase to pay for their additional power bill. This is called the domino effect, and the end result is a huge increase in what the end consumer winds up paying for goods. So not only do you have to pay for your own increase in your power bill, but you will wind up paying for the increase in every businesses power bill that you buy anything from as well. The cost of everything will wind up going up over the next couple of months.

The end result of all of this means much less money in your pocket at the end of the month after all your bills are paid. When you couple this with the fact that many businesses are also cutting back on overtime and the hours their employees work, that takes even more money out of your pocket.

We have approximately 1200 government employees that may wind up being laid off for the month of September because the government has run out of money and simply can't afford to pay them. And we are also looking at operating on $20 million less for the next fiscal year starting October 1st. That means some severe cuts in the operating budgets for various government departments. That will no doubt mean that more people will wind up losing their jobs as a result.

From a business perspective, this sets the scene for a business horror movie. Your costs are escalating, and at the same time, people's incomes are shrinking or disappearing all together, which means that consumer confidence is all but non-existent, and people will be spending less for new cars, groceries, clothing and leisure activities. Larger businesses have more options available to them as to how to ride out a storm like this, but for many small businesses, this is a time of real soul searching. Many will have to decide whether they think things will improve quickly enough for them to survive, and for many more, it will be a time of cutting their losses and moving somewhere like Guam, which is going to be seeing an economic boom thanks mainly to the U.S. military build up there.

It's true that there are some real opportunities during an economic downturn, but those opportunities are usually mainly for the bigger players who can afford to buy up the businesses and properties of those who can no longer compete.

One of the factors that businesses will be looking at and using to determine whether to stay or go is the governments attitude toward business and the legislation that they pass. I believe that we finally have a governor who understands business and will do everything within his power to improve the business climate here. The problem is that the governor is only half of the equation; the other half is the legislature. As we seen recently, they have a mind of their own and are more than capable of overriding the governor's veto. So if you have legislators that have a business background and expertise in that sector, you can always hope that translates into business friendly legislation. Because let's be honest here, if you don't have business friendly legislation at a time like this, there is really no reason to stay here.

We do have a couple legislators with a successful background in business, but they are in the minority. The way our system is set up, it encourages career politicians, and we very, very rarely ever see businessmen or professionals running for a seat in the legislature. Why would they, in most cases they would have to take a fairly sizable cut in pay, they would lose their position in the private sector, and then they would most likely be outvoted on nearly everything once they got in the legislature, where politics rules supreme.

I truly believe the first step in turning things around in the Commonwealth is to go to a part time legislature. In my mind, the money that you would save is really a secondary issue. The true benefit of going to a part time legislature is that it would encourage professional people to run for a seat. They wouldn't have to give up their day job or their income. In fact, most of them would probably be willing to serve for no compensation whatsoever. They would also know that there would be far fewer career politicians to contend with, so politics wouldn't play such a prominent role in legislation and the votes on it. They would undoubtedly approach the problems and solutions much differently than our career politicians. They are much more result oriented and practical in their approach. They understand budgets and profit and loss statements, and know the importance of living by them. Career politicians seem to think that spending money is their God given right and they shouldn't have to worry about how much of it they have or where it comes from.

I have heard all the arguments about the dangers of conflict of interest if you have business people and professionals in the legislature, and yes, there would need to be some safeguards put in place. But if you think there is no conflict of interest in our current legislature or the legislatures of the past, you're fooling yourself. But with all the other challenges we're currently facing, we don't have the time or money to waste on career politicians playing politics at our expense. We have debated the pros and cons of a part time legislature for several years now, and many people all seem to agree that it is something we need to do. We saw from the last legislature that even if there is an attempt to pass a legislative initiative for a part time legislature, it will fail because the career politicians are all too busy protecting their own self-interests. They don't want to put the question to you on a ballot, they're afraid of what you'll say. And they're banking on the fact that it is just too much work for a popular initiative to pass, and that there aren't enough dedicated people out there to gather the signatures. So far, they've been right, but that doesn't mean it can't and shouldn't be done.

Putting the issue of a part time legislature on the ballot for the people to decide seems like democratic way of dealing with the issue. Let the people speak up on the issue and we'll all have to abide by their wishes. The politicians are afraid of that, they don't believe you will continue to support the idea of a full time legislature, which is exactly why they won't even bring the issue up for a vote on the floor. They've got a pretty good deal going, and don't want to do anything to jeopardize it. The question is, are you content to just sit back and let the status quo prevail, or are you ready to start the ball rolling for change? Would you sign the petition if it were presented to you? Would you be willing to take it a step further and circulate a petition like that to put it on the ballot? We badly need change, and we need to take matters back into our own hands and chart out the course of our future. Like the old saying goes, if you fail to plan, you are planning to fail. I don't think it takes a rocket scientist to figure out whether we are prospering or failing at the moment. The big question is, what are you going to do about it?

I'm Harry Blalock, thanking you once again for giving me a generous slice of your valuable time, and allowing me to share my Food For Thought.