Writings and observations

mendiola MARK
MENDIOLA

 
Reports

Pocatello companies were hard hit by the nationwide recession, and the Gate City is taking longer than Idaho in reaching pre-recession employment levels, an Idaho State University economics professor told a large crowd attending Bannock Development Corporation’s 22nd annual economic symposium.

Dr. C. Scott Benson and Idaho Lt. Gov. Brad Little gave the economic and state keynote addresses, respectively, on Monday, Sept. 9, at the impressive ISU Stephens Performing Arts Center.

An ISU professor for more than 20 years, Benson has been preparing legislative economic forecasts about the state’s general fund revenue for nearly 30 years. He also has been preparing Idaho personal income forecasts for the Idaho Tax Commission for more than 10 years.

“I would like to come here and tell you that happy days are here again, but you know better than that,” Benson said, calling the economic recovery anemic. He concluded, however, that Idaho, Bannock County and Pocatello should continue to add jobs and see accelerating growth after several harsh years.

In July, Idaho’s seasonally adjusted unemployment rate rose two-tenths to 6.6 percent for the third consecutive monthly increase in the rate, which has risen half a percentage point since April. Total employment dropped for the second month in a row, falling 800 to just above 723,000 – the lowest total employment since October 2012.

The Pocatello Metropolitan Statistical Area’s unemployment rate stood at 6.8 percent in July, down from 7.0 in June and 7.3 percent in July 2012. The city’s personal income grew 2-3 percent in 2012 and is projected to grow 4.5-5.5 percent this year and in 2015, slightly faster than the state’s personal income growth rate.

Benson said Gov. C.L. “Butch” Otter’s goal of generating $60 billion in state personal income could be achieved “hopefully sooner rather than later” in Fiscal 2015.

“Idaho and the Pocatello MSA were harder hit than most states,” Benson said, noting Idaho’s unemployment rate tripled while rates in other states doubled. While the recession was severe, the recovery has been slow. “Manufacturing employment is not a pretty picture.”

Benson estimated 9,000 to 10,000 people are employed in Pocatello’s government sector or up to 25 percent of people working in the city, including those employed at ISU and the state women’s prison.

Education and health services picked up jobs during the recession, he said. Construction, natural resources and mining once represented up to 7 percent of total jobs, but that has declined to 4 percent, Benson said. Leisure and hospitality provide jobs, “but they don’t pay all that well.”

The area retail industry has encountered tough times, he said, estimating Bannock County generates up to $28 million a year in annual sales tax revenue for the state.

Meanwhile, Pocatello area housing prices doubled from 1994 to 2007, followed by a negative trend with declines of 20 percent in purchase costs. “There’s an upturn now as traction is being sustained,” Benson said.

Transportation and manufacturing were huge in Bannock County during the 1970s and 1980s with Bucyrus-Erie, Union Pacific Railroad and Garrett Freightlines going strong and wages were above the national average, he noted.

“Jobs in those sectors have disappeared,” Benson said, pointing out that major employers tied to solar and wind — referring to Hoku and Nordic Windpower — also have left the community. He noted there have been years when Pocatello added 3,000 jobs or lost up to 750 jobs.

“What is the identity of Pocatello? As soon as we know, the much easier it will be to brand and grow,” Benson said. “Pocatello has gone from a town with a university to a university town. That’s a very positive direction.”

Addressing national economic issues, Benson ventured it will be 2015 before interest rates start to rise as the Federal Reserve potentially reduces its monthly purchases of bonds from $45 billion to $30 billion. Its massive bond purchases or “quantitative easing” have stimulated the national economy. Interest rates could rise, however, if inflation exceeds 2 percent, he cautioned.

Despite predictions of doom, federal sequestration budget cuts did not cause the national economy to “go to hell on a sled,” Benson said, adding that states cannot expect federal spending to continue going up. “We’re not heading off some cliff.”

The Patient Protection and Affordable Care Act, or “Obamacare,” could cause health care costs to increase to 20 percent of Gross Domestic Product within 10 years, he said.

Little told those attending the symposium that the burgeoning health care costs and the federal government’s $17 trillion budget deficit are double challenges confronting Idaho. When U.S. House Speaker John Boehner recently visited Boise, he told Idaho Republicans that lawmakers can no longer stand idly by as the nation’s fiscal solvency deteriorates.

The lieutenant governor also stressed the importance of education for economic development. Only 35 percent of Idaho students get college degrees or certificates. The State Board of Education hopes to boost that percentage to 60 percent by 2020, Little said, commending ISU College of Technology’s high graduation and placement rates.

Another challenge for Idaho is the fact it is surrounded by states without sales and income taxes, plus Utah, Wyoming and Montana get significant tax revenue from oil, natural gas and coal developments, making it more difficult for Idaho to compete.

Idaho, however, has one of the best operated tax systems in the nation, which helps attract business and jobs to the state, Little said. It also ranks as one of the five top most solvent states in the union.

Share on Facebook

Mendiola

trahant MARK
TRAHANT

 
Austerity

Watch out for fights coming from the Capitol. The Senate versus the House. Republicans opposed to Democrats. And, of course, the most intense battle, Republicans against Republicans.

I grew up with the Spy versus Spy comics from Mad Magazine. Week after week a white clad spy would deliver some sort of lethal device (think exploding toilets) to a black suited spy. The scenarios were always outlandish and neither character ever really won. It’s that way in DC right now, except most of spies in combat are wearing Republican Red.

The Spy versus SpySpy versus Spy battle is alive and well on Twitter where there’s a #dontblink campaign to try and convince those squishes to support the filibuster. It’s not going to happen, but it does increase the possibility of a government shutdown simply because Congress is running out of time to meet the October 1st deadline. (The Senate has rules about how much time is allowed for a debate after cloture.) That means any vote for a temporary budget to fund the government cannot occur until the end of the week, Friday or Saturday. Then it will go back to the House. Perhaps with changes. Senate Majority Leader Harry Reid will send a “clean” resolution to the House, hoping that body will pass it without changes just to keep the doors open. But probably not. Then the process will start again — with the government officially closed. (On Tuesday, Senator Reid announced the measure will only fund the government until Nov. 15, leaving open the possibility of a regular order budget.)

This is as goofy as Spy versus Spy. And just like the comic strip, there’s no real winner in sight. The games just go on and on.

There is a bigger problem for Indian Country, however. Actually two issues. First, any “resolution” of this crisis is completely temporary. The same debate will surface again over the debt limit in a couple of weeks and then again when this Continuing Resolution expires. The House bill only pays for government operations until December 15. So, even if the Senate’s shorter version passes, the whole mess will repeat.

The second issue is that neither the House nor the Senate are ready to remove the sequester from the spending bill. That means that the budget will continue to shrink for the federal government — and tribes, schools, clinics, any agency that relies on appropriations.

Ideally the House would have sent over its budget bill — and then the Senate would have added dollars to key programs, such as those that benefit Indian Country, and negotiations would have begun. But the focus on the Affordable Care Act has made time the enemy. In order to avoid a shutdown, the Senate’s leadership is trying to send back to the House a bill that might quickly pass.

The sequester has reduced federal spending for domestic programs by 17.8 percent compared to 2010 levels (including adjustments for inflation), according to the Center for Budget and Policy Priorities. That means the sequestration cuts in 2014 will total $109 billion, ] evenly split between defense and non-defense programs. Congress should not ignore the significant funding gaps in critical public services on the non-defense side of the discretionary budget,” say authors Joel Friedman, Richard Kogan, and Sharon Parrott. “Congress should replace sequestration with a sound package of balanced deficit-reduction measures that take effect as the economy strengthens.”

But debate is not even occurring; the entire conversation is about the Affordable Care Act and what it will take for Congress to keep the doors open.

This past spring, the National Congress of American Indians said Congress should find a way to hold Indian Country harmless from this round of budget cuts. “The sequester cuts pose particular hardship for Indian Country and the surrounding communities who rely on tribes as employers, where the recession struck especially hard,” said the report, A Call to Honor the Promises To Tribal Nations in the Federal Budget. “Tribal leaders urge Congress to protect the federal funding that fulfills the trust responsibility to tribes in the face of difficult choices.”

The list of programs impacted by the sequester are in every corner of Indian Country, on reservations, in Alaska villages, and in urban centers. It ranges from health care delivery to education at all levels, representing a basic federal investment in the future (and in fulfilling solemn promises).

But the sequester isn’t even being debated. Congress is too busy playing Spy versus Spy.

Share on Facebook

Trahant