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How Many Zeros in a Billion?

Columnist: Norman Rosinski
August, 2008 Issue

Norman Rosinski
All articles by columnist

Welcome to the August “Green Tech” issue of NorthBay biz magazine. This month’s issue focuses on the evolving world of green technology and reports on emerging trends and innovations in this increasingly important business niche. The cover story, Leading the Charge, goes in-depth with PG&E and its plans for greening both the North Bay and the power industry’s image at the same time. Beyond additional stories, you’ll find the usual complement of columns and special features, including a new one, as Sonoma County’s own Charles M. Schulz’ Peanuts cartoon debuts in this issue. Peanuts will become a regular monthly feature. We welcome your comments, suggestions and ideas on how NorthBay biz, the area’s only locally owned business publication, can continue to serve the business community and fulfill its mission as the voice of business in the North Bay.

With the certainty of the annual bud break in Wine Country, California once again faces its annual budget deficit. Five years ago, we had a $6 billion budget deficit and a Democratic governor who was accused of cutting sweetheart deals with special interest groups. It cost him his job. Today, we have a Republican governor, and nothing has changed. Well, that’s not quite right, he still has his job, but the deficit now stands at $20 billion. I guess the only conclusion you can draw is, it doesn’t really matter which party inhabits the governor’s mansion—deficits remain king. Here’s the maddening part: Despite California’s General Fund revenues increasing $32 billion over the past four years, the deficit has grown by 333 percent! That information leads to another unavoidable conclusion: state legislators are “hooked” on spending. They continue to serve the needs of special interests instead of serving taxpayers’ best interests. What will it take before they stop spending money they don’t have? When will they realize they can’t spend and then tax their way to fiscal responsibility on the backs of the taxpayer?

How many zeros in a billion?

Politicians use the term “a billion dollars” almost casually these days when talking about spending our money. To paraphrase and update former Illinois Senator Everett Dirksen, “a billion here, a billion there, pretty soon you’re talking about some real money.

A billion is a difficult number to truly comprehend, but an uncredited Internet source did a good job of putting that figure into some perspective.

• A billion seconds ago it was 1959.

• A billion minutes ago Jesus was alive.

• A billion hours ago our ancestors were living in the Stone Age.

• A billion days ago no one walked on the earth on two feet.

• A billion dollars was only 8 hours and 20 minutes ago, at the rate our government spends it.

Ron Getty, in his article “California Smackdown 2008-09” published online at The Libertarian Perspective, had an interesting take on how California could easily reduce its budget deficit. He writes, “California faces a $20 billion budget deficit, the result of politicians’ erroneous financial assumptions, a housing market downturn with reduced property taxes and a possible recession brought on by the federal government’s inflationary monetary policy.

“California’s government itself is a part of the deficit problem. It’s a huge behemoth with 500 agencies, departments and divisions in eight broad categories. There are 345,000 state employees averaging $85,000 annually in pay and benefits, which costs taxpayers $29 billion alone. In comparison, private industry per capita pay and benefits average $45,000. One method to cut the state deficit would require California state employees’ pay and benefits be scaled to meet an average equal to private industry’s pay and benefits. This $40,000 cut per state employee would reduce the budget deficit by $13.8 billion in one short stroke.”

OK, I admit Mr. Getty’s partial solution to the budget crisis is slightly draconian, but he does make a valid point. Are employees of the state so skilled—so superior—that they deserve to earn an average $40,000 more in compensation than their counterparts in private industry? I think not, but they’re being paid (by us) as if they were.

Meanwhile, how is small business faring in this sea of deficits and uncertainty? According to the National Small Business Association’s most recent survey of small and mid-sized businesses, 71 percent have a negative outlook on the economy. Nearly half (45 percent) of those surveyed expect a recession in the next year, while only nine percent harbor expectations of economic growth. The survey found economic uncertainty, the cost of health insurance and the lack of available capital to be the top three concerns small business faces. Additionally, energy costs have negatively impacted 77 percent of small business owners. In response to these rising costs, 37 percent have increased prices, 33 percent have reduced business travel, 11 percent cut their production schedule and 10 percent reduced their workforce. On the positive side of this equation, 18 percent have, or are in the process of, investing in more energy efficient equipment.

In the spirit of true entrepreneurs, even though small businesses have a negative outlook about the overall economy, the majority (70 percent) still expressed confidence and remain optimistic when asked about their own business prospects. When asked to identify the most important political issue in this election year, the number one concern was reducing the tax burden on small businesses.
To paraphrase Pogo yet again, “We have met the enemy and he is elected by us.” That’s it for now. Enjoy this month’s magazine.



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