Safe as Houses

You know, for a party that is supposed to be all for the free market, private enterprise and local control, the Republicans in Atlanta sure do enjoy absolutely ignoring that apparently hypothetical philosophical approach to governance.

In the latest news, Rep. Bob Smith is favoring the state taking over Hartsfield-Jackson International Airport. At some point - particularly coming on the heels of Gov. Sonny Perdue's aims to have the state arbitrarily replace local school board officials and the Georgia General Assembly taking action to cap local property assessments - you have to wonder when the Georgia GOP opts to officially change their party platform.

Given the economic environment and the struggles the newspaper industry has had, one shouldn't be terribly stunned by the news that Morris Communications is cutting the pay of its employees to cope with the ongoing crisis. 

The newspaper industry isn't on the verge of complete collapse. It's true that some models are struggling mightily as the way people seek out news, commentary and information changes and the economic conditions continue to crunch business of all types. The industry, however, has struggled for  a variety of reasons ranging from its inability to adequately adapt to these new delivery methods to its insistence on adhering to unrealistic profit margins.

While many industries operate on profit margins that range from five percent to 15 percent (the consumer services industry, for example, has peak performers at eight percent), the newspaper industry has for too long, operated on a less than feasible profit margin system that appears to be dramatically out of whack with the rest of the market ...

A typical newspaper with a 100,000 circulation makes a 15.6 percent annual pre-tax profit margin, according to Inland Daily Press Association and the International Newspaper Financial Executives. The Tribune Company, which owns the Los Angeles Times, Chicago Tribune and other media outlets, for example, operates on an 18.3 percent pre-tax profit margin. Gannett, which owns 90 newspapers in the U.S., including USA Today, operates on a 21.4 percent pre-tax profit margin.

When you shift the picture to focus more on Morris Communications, all you have to do is take a glance at this investor's presentation from 2004 (that they conveniently left online) to see how much the emphasis is on maintaining these dramatically high profit margins. While the average is around 21 to 23 percent, Morris Communications was regularly boasting about bringing home returns of 24 to 28 percent.

Let's be clear about this too. The profit, as anyone should know, is the amount of money made after handling all of your operating costs, personnel obligations and outstanding debt. The profit, then, could be directed toward business expansion, new projects, areas of investment or returned to the investors and shareholders.

Morris Communications isn't cutting back to avoid financial ruin, but rather is trimming its costs to maintain the high profit margins it has consistently provided to its investors. In addition, it forecast these high margins from a broader, overtly optimistic revenue projection that saw them take out lines of credit that, with the rise of the internet and digital media, they are finding difficult to pay back and maintain those margins.

And - seeing how it's bogged down by falling circulation rates, slumping advertising sales, free access to online content and an outdated personnel model that places an emphasis on production and delivery - in order to deliver that number and meet its obligations to operations and debt, it's had to take some action.

Rather than put forward more realistic profit margin numbers in the realm of 10 to 15 percent, the company has opted to make its budget by trimming its expenses. And, being a private entity, that is its perogative. The problem, of course, is that rather than truly take on the big, structural changes that are needed by the industry to confront the ever-changing media environment, we're getting a piecemeal approach that hurts a lot of folks in the short-term ... all with the intent, largely, of maintaining these high profit margins for investors.

Newspapers, in my humble assessment, ought to ponder moving toward an even more online-centric approach. They should focus on providing breaking news throughout the day and posting that copy on their web sites. They should expand their blogger/commentator ranks to provide a variety of viewpoints throughout the news cycle (and embrace the model of The Atlantic who went out and hired bloggers to do just that).

I'd also even go as far to suggest that most papers ought to cut their production in half and focus on printing papers two to three times a week (say, Tuesday, Thursday and Sunday editions), with those printed editions featuring longer, more in-depth feature articles, analysis pieces and diverse commentary on the issues of the day. Doing so would cut production costs in half, provide for expansions in reporting staffs to develop said content and still maintain some element of the traditional newspaper model that older generations value.

The problem isn't that the editors and reporters and salesmen don't get it, but rather the publishers, investors and CEOs of these corporations don't get it. The latter is rigidly adhering to an outdated model, promising to deliver the sky-high financial returns through a dinosaur of a model that is getting killed ... often times by its own innovations (i.e. free web content).

Via the tip line, some additional clarity on some questions regarding the Georgia Budget and Policy Institute's commentary on the proposed changes to the state corporate tax ...

The personal income tax losses would be due to corporations now being able to take their tax credits against payroll withholding. If they have zero corporate income tax liability, they could use the credits against the payroll withholding. Meaning, employees’ state income taxes would be going to the company in the amount of the tax credits, rather than the state. Georgia already allows this for certain tax credits, but current proposals would expand the use of this scenario.

Permit me to embark on a little venting that, I'll freely admit, is devoid of scientific evidence to support my argument, but ... I'm getting sick and tired of complaining over Lake Lanier's levels.

It just seems that our state climatologists have embraced pessimism as their prevailing mantra.

Lake Lanier, after roughly two years of drought and overuse, fell to 20 feet below its average level just three months ago. Given the size of the lake, 20 feet below level equals a whole lot of water. Over those past three months, rainfall, snowfall and better conservation tactics have enabled the lake to cut that loss in half as it's gained nine feet since hitting that low point.

I think that's a step in the right direction and, given that April continues to be a time of year when rainfall is more abundant, there's great potential for the lake to rise even more.

Not so says Carol Couch, the state's Chief Pessimist, er, Environmental Protection Division chair ...

But the half-foot gain may be the last big hurrah for metro Atlanta’s primary water source before next winter. As temperatures start to climb along with water use, Lanier most likely is “peaking out,” said the state’s top water official.

“We’re still well off where we’d hoped to be,” Georgia Environmental Protection Division Director Carol Couch said Monday.

Where you'd hoped to be? Listen, you just got back half of what you lost in three months. And you got it back despite Metro Atlanta being a little less than three inches below its average rainfall. 

Were you expecting someone to have to build an ark to cope with the rain you were praying for?

In the past few months, I've been pretty impressed with the work of David Poythress. He's taken time to flesh out some of this thoughts on the issues, he doesn't shy away from a fight and he's assembled a top-notch campaign staff this early on.

In the past few weeks, former governor Roy Barnes has been dropping less-than-subtle hints that he was thinking of jumping into the race, culminating with a recent interview where he said that he was waiting, more or less, for a knight in shining armor to save the day for Georgia Democrats. It was a shot across the bow of Poythress's campaign, as well as the yet-to-be-formalized campaign of Rep. DuBose Porter, who is widely expected to seek the office in 2010.

Just this week, Poythress issued his response and, well, I'm underwhelmed.
 

Read more: Proportional responses

From his weekly update ...

Roy Barnes dedicated almost three decades of service to our great state, performed his duties well and left an amazing legacy.  But let’s be honest, he isn’t nearly as connected to the grassroots or core constituencies of our party in the way he used to be.  This was confirmed to me as I campaigned across the state this week.  Countless Democrats pulled me aside to say that they were put off by Barnes’ remarks about his potential comeback candidacy and encouraged me to respond with a stinging response.  Instead of taking that course, let me give you my thoughts on Barnes’ comments.

If Roy Barnes gets in this race, I’m running.  If other Democrats get in this race, I’m running. Simply put, I’m running for Governor.  I believe I’m going to win this campaign because I’m the only candidate who is offering solutions that will create jobs, transform public education and provide solutions to our lingering water and transportation problems.  Here are a few thoughts on what I’ve accomplished so far:

1.  I’m the only candidate for Governor who endorsed the economic stimulus plan in order to avoid property tax increases and balance the state budget.  All while offering solutions that will create jobs in Georgia and restore the prosperity we enjoyed just a few years ago;

2.  I’m the only candidate for Governor who is taking on ­­­­Eric Johnson's  awful school voucher idea.  All while offering new ideas to empower teachers and transform the way students learn in Georgia’s public schools;

3.  I’m the only candidate for Governor taking on Sonny Perdue’s Transportation Department power grab.  All while offering a common-sense transportation outline that will ease our traffic woes and increase infrastructure that can attract new industries and jobs;

4.  I’m the only candidate for Governor proposing a water plan that will not only provide for our short term water needs, it will also set the stage for plentiful water resources that can attract new jobs and industry;

5.  I’m the only candidate for Governor standing up to Seth Harp’s scheme to merge and destroy Georgia’s Historically Black Colleges and Universities;

6.  I’m the only candidate for Governor standing up to Sonny Perdue and his campaign contributors on the Jekyll Island sweetheart development deal that will put millions in the pockets of developers and leave taxpayers holding the bag.  All while I have supported common-sense development on Jekyll that will protect its pristine environment while providing new infrastructure and jobs.

This 'Buy A Lexus Tax Gimmick' is just the latest in a long line of nonsensical piecemeal plans to dribble out of the Gold Dome courtesy of the Republicans in Atlanta, and, like Flack, I just don't really get it. It slaps on a new tax to roughly one million person-to-person transactions that occur during the year, thus deterring people from actually selling their car to a friend or neighbor.

Again, for a quick refresher, Rep. Tom Rice's bill - H.B. 480 - will eliminate the annual, marginal tax levied on cars and replace it with a seven percent tax levied one time during the passing of the title from one owner to another. At the outset, it sounds like a reasonable place to begin a discussion ... but then, like most of the recent Republican ideas, the wheels come off.

It would bring in more than 900,000 annual transactions made from person-to-person into the taxable arena, thus increasing taxes for many right off the bat. Secondly, it caps the tax paid at $2,000 ... which, of course, overwhelmingly benefits those who have the capacity to buy cars that are worth $50,000 or more ...

Under the bill, someone buying a $25,000 car would pay a $1,750 title fee. If they paid a 7 percent sales tax, the cost would be the same.

The purchaser of a $75,000 car would pay $2,000 under the House proposal. If they, instead, had to pay a 7 percent sales tax at a dealer, they’d fork over $5,250.

Rice has argued that such a structure will encourage people to 'buy up' when they look for a new car, but I think that's, well, crazy for three main reasons. The first is that there is little to gain when you 'buy up' in the automobile arena. As the old adage goes, your car begins to lose value the moment you drive it off the lot. And, if you buy an expensive car and drive it for four to five years, your trade-in value is going to be a fraction of what was when you purchased it. Cars aren't houses, and they can't appreciate in value over time like property.

Secondly, I fail to see how capping the tax at $2,000 will encourage anyone to buy a vehicle that is dramatically out of their price range. It's preposterous. If I go to a dealer - or, now, my neighbor - looking to buy a car, but have only allocated $30,000 to spend, I'm not going to all of a sudden think 'gee I can spend $55,000 for that car because my tax liability will only be $2,000!'

Thirdly, under the proposed legislation, it won't go into effect until 2010. As a result, any purported incentive to buy will be delayed for at least half of a year, thus artificially depressing an already sagging market during an economic crisis.

Like The Georgia Power Ponzi Scheme and The Great Georgia Corporate Giveaway, this is economic madness.

Of course, concocting new ways to shift the tax burden to the middle class and working Georgians isn't anything new for House Republicans, who were falling all over themselves last year regarding The Glenn Tax. It seems to be that their only genuine desire is find ways to make the existing tax structure less and less equitable by moving as much of the tax burden away from big businesses and upper-income earners and saddling everyone else with the costs.

Blake's being funny when he pokes fun at Rep. Paul Broun's selective discernment regarding earmarks, but I think they're valid points ...

Another earmark Republicans have criticized is the $209,000 inserted to improve blueberry production. But that one benefits Georgia, so Broun told the ABH Wednesday that it’s OK. Even though he leaves the job of requesting them to Jack Kingston and Saxby Chambliss, the earmarks for the University of Georgia are worthwhile and a good investment, he said.

So funding for blueberries is good, but, as Broun said Wednesday, Mormon crickets are bad. Does he have a problem with Mormons? What if they were Baptist crickets? And if the crickets’ religion doesn’t matter, why mention it at all?

To me, this shows just how absolutely shameless Broun is. For starters, he has no interest in actually representing his constituents and leaves all of the heavy-lifting to other federal representatives for Georgia as evidenced by his habitual passing of the buck to folks like Rep. Jack Kingston or Sen. Saxby Chambliss. Broun's looking for Broun, and that means sacrificing these supposed principle at every turn when it gets a teeny-tiny bit of public exposure or media coverage.

Secondly, it's flat-out hypocrisy to go on and on about earmarks, but then arbitrarily say some are 'OK' and some are 'bad' ... particularly when your only gauge of 'OK' and 'bad' is whether or not they're in your district. The transparency of earmarks is a worthwhile thing to hold a debate over, but actually having them (i.e. actually having your congressman provide adequate representation and fight for his/her constituent's interests and projects) isn't a bad thing.

This is messy.

In a not-so-surprising move, the State Senate passed legislation that restricts the usage of embryonic cells in research settings, particularly stem cell research. It's full of some vague language, presumably done intentionally, and sets up numerous legal and moral questions for society to deal with.

It's important to note that I have varied views on this issue, and I'm not sure exactly how to process this bill or what I feel about the overarching issue of using human embryos for scientific research. On one hand, while I have deep disagreements with the tactics and plans used by the pro-life movement, I hold deep and strong views regarding the sanctity of life and consider myself to be 'pro-life' (even if the majority of pro-lifers think I'm not). On the other hand, stem cell research saved my father's life ... and it holds the potential to defeat Type One Diabetes, which has afflicted my mother since she was a child.

All that to say, again, I'm not sure where I stand.

Read more: Moral and legal questions

I had overlooked this in his weekly update, but David Poythress gets in a few good observations and thoughts regarding the state's water policy in his campaign's most recent version. Among them are his advocation for the creation of Conservation Property Tax Credits, which would encourage Georgians to install low-flow water fixtures in those household in exchange for a credit.

He also called for accelerating the construction of new water reservoirs, which is good news. The recent rain and subsequent snow storm two weeks ago underlined the need for additional storage pools. All of that water melting down from the northern portion of the state rushed like mad downhill toward the coast, and additional reservoirs would have enabled communities across Georgia to collect that extra water and save it for drier times.