Budget, Jobs and Growth Trends
I gave a couple of radio interviews this week and focused mainly on the economic status of our state. The following is a budget snapshot as well as some historical information and projections. The topics covered will be revenues, jobs and trends. Altogether things look pretty good, but there are some red flags I hope you’ll catch.
The first concern is that the budget is growing twice as fast (and in some areas even more), than our personal incomes. Another concern is that there are many second tier automotive parts manufacturing companies that are closing or downsizing. We have a lot of eggs in the automotive basket here in Tennessee in one form or the other. Any degradation of these industries is cause for alarm.
-The 2007-2008 budget totals approximately $27.8 billion, representing a 6.6% increase over 2006-2007.
-At the close of the fiscal year 2008, the Rainy Day Fund will be $750 million. $207 million will be deposited this fiscal year alone.
-The cigarette tax increased from 20 cents by 42 cents to raise $239 million. Two cents of this increase will go to fund the operations of 6 level I trauma centers in Tennessee, for a total of $9.9 million.
-Sales tax on grocery items have been reduced from 6% to 5.5%, saving Tennessee consumers $38.9 million.
-Local governments can now participate in an optional property tax freeze for seniors. The income level on which elderly property tax relief can be sought will increase from $20,000 to $24,000.
-Property tax relief has been allowed for veterans with combat-related disabilities, but has now been extended to those with service-related disabilities also.
BUSINESS AND ECONOMIC DEVELOPMENT
-$40 million new dollars have been added to the Tennessee Department of Economic and Community Development. In past years, more emphasis was placed on attracting new business rather than helping our existing ones grow in a more enabling environment. Many of us have realized for some time that the greatest potential for job growth can come from our existing industries. New strategies within this department have been working hard in that direction for several years now in order to help retain the manufacturing base that continually finds it more profitable to operate overseas.
-$72.6 million will fund an alternative fuel initiative. This can be a boondoggle if not properly administered, but I believe we do need to explore every possible option to decrease our dependence on foreign supplies and to help preserve our environment…without creating too many restrictions on private business.
-$21 million in agriculture enhancement grants was appropriated. Thanks goodness, as the farmers have been literally ripped off over the years because the monies from the master tobacco settlement should have gone directly to them to help diversify their operations.
-$10 million has been added to help foster our growing film and television industry in Tennessee
Check out the Tennessee Department of Economic and Community Development for more.
WHERE DO WE WORK?
-Total private sector employment in
-532,500 of these jobs are goods producers, a net increase of 21,500.
-2,290,600 of these jobs are in the service industry, an increase of 23,900 jobs.
-423,800 people work for government on all levels:
-Tennessee has 48,700 federal employees, a net increase of none over the last year
-99,500 people work for Tennessee state government, another figure which, thankfully, has not increased recently.
-275,600 people work for local governments, representing a net increase of 2,500 jobs
WHERE ARE WE EXPANDING?
-Internet Service Providers, Web Search Portals and Data Processing Services jobs have grown at a rate of 4.9%, with a median wage of $56,400.
-Water Transportation opportunities have expanded at a rate of 4.3%, for a median wage of $51,700.
-Religious, Grant-making, Civic, Professional, and Similar organizations have seen a growth rate of 3.8% and draw a median wage of $24,600.
-Animal Production is up 3.8% and earns an average of $28,100.
-Administration and Support services up 3.6% and earning $26,100.
-Warehousing and Storage increased by 3.5% and earning $35,400.
-Truck Transportation up 2.8% and at $39,900.
-Professional, Scientific and Technical Services grew 2.8% and draw a median wage of $52,800.
-Performing Arts, Spectator Sports and related industries up 2.8% and making $75,100.
-Social Assistance jobs up 2.2% and making $18,100.
-Waste Management and Remediation Services up 2.1% and making $53,000.
-Motor Vehicle Parts and Dealers risen 1.9% and making $39,700.
WHO IS GROWING THE QUICKEST?
Based on the current size of the respective industries:
-Computer and Mathematical occupations up 2.9% for 2,500 new jobs
-Building and Grounds Cleaning and Maintenance up 2.6% for 6,300 new jobs
-Healthcare support occupations up 2.5% for 3,500 new jobs
-Food preparation and serving and related fields grew 2.1% and added 10,000 jobs
-Healthcare practitioners and Technical occupations in that field have grown 2% and added 6,300 new jobs
-Education, Training and Library occupations up 1.6% with 5,300 jobs added
-Farming, Fishing and Forestry up 1.6% with 700 new jobs
-Construction and Extraction occupations up 1% and 2,800 jobs
WHO IS DECLINING?
Almost exclusively, our manufacturing (goods producing) industries are moving backwards…a most disturbing trend. We have seen negative growth in manufacturing due to offshore relocation, unfriendly business environments, worker’s compensation costs, high fuel costs, etc. This past year we had a net decrease in these jobs of 3,900 positions, representing a 0.6% decrease in our foundation.
IN THE LAST SIX MONTHS…….
-King Pharmaceuticals laid off 33
-Hoover Precision Products closed and we lost 67
-Epic Technology laid off 220
-MPI closed with 160 jobs
-Lear Corporation laid off 68
-Sea Ray Boats, Inc. laid off 158
-Boeing closed and lost 235
-Ceramaspeed, Inc. laid off 128
-Collins and Aikman laid off 110 and terminated 370
-Shoney’s closed and we lost 28
-Berkline Benchcraft terminated 250 and laid off 133
-Averitt Hardware closed with 86
-NEMAK of Tennessee laid off 87
-WABASH Alloys closed with 51
-Toshiba laid off 376
-TRW Automotive closed and we lost 144
-Quality Industries laid off 115
-YKK Snap Fasteners America closed with 68 positions
-General Cable laid off 78
-Whirlpool Distribution
-Memphis Housing Authority laid off 48
-Federal Reserve Bank laid off 54
These are, unfortunately, less than half of the numbers and businesses adversely affected in Tennessee for a variety of reasons. You can see more, which I encourage you to do, on the states website with the Labor Market Reports. The challenges facing the second half of the 105th session of the Tennessee General Assembly are enormous. Equal responsibility rests with Governor Phil Bredesen and his cabinet. It is my hopes we can all continue to work together to pull in the same direction. Whatever the party, race,age or particular demographic you represent, we all want the same things. Please encourage yourself and elected and/or appointed officials on all levels to put down their swords and pick up their plows. If nothing else, remember this is YOUR money we’re dealing with.