November 19, 2006

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Georgia's Economy: Where Are We Now?

Is the thought of tackling "economic" data causing you some anxiety? It shouldn't. This presentation is not a study of micro and macro economic charts, tables and graphs. You don't need a degree in economics nor know anything about the stock market. You don't need "business" experience. I've kept it simple. Anyone will be able to understand it. Everything I address is about you, your family and how the economic environment in Georgia affects all of us- now and in the future. You will find it informative and interesting. You should also find it alarming. Let's begin.

In the mid-eighties Georgia began to emerge as the economic capital of the South. Georgia benefited from a confluence of factors. One of those factors was focused, visionary and strong leadership. Governor Joe Frank Harris made the connection between the education level of the population and the economy. Therefore, he enacted QBE for our schools to raise the education level of Georgia's population and provide adequate funding to schools. Senator Sam Nunn and Speaker Newt Gingrich protected Georgia's military bases from reductions and closures. Mayor Maynard Jackson and Speaker Tom Murphy worked together for construction of Atlanta's Hartsfield-Jackson airport. Governor Zell Miller furthered education with the HOPE Scholarship. Ted Turner made the Braves "America's Team" and created cable network news. There were many others. Georgia was greatly blessed with leaders during this era. Collectively, Georgia's leadership paved the way and made possible the Georgia Dome, the World Congress Center, the Olympics and a myriad of other projects that literally put Georgia and Atlanta on the international and national maps. Georgia was the preferred state for businesses relocating from the "Rust Belt" and the Northeast. Georgia became an international center for commerce, banking and finance, trade shows and the convention center of the South. Many major companies chose Georgia for location of their headquarters, regional distribution centers and manufacturing plants. Many new businesses emerged and many more existing industries and businesses expanded.

Georgia's leaders had a vision. The vision was comprised of several component parts. They worked together to make that vision happen. Most importantly, their agendas were not self-serving. They were "all for one and one for all". They were for Georgia. They had a game plan to create greater opportunity for all Georgians- to make Georgia a better place to live, raise a family and do business. And, they succeeded.

Yes, it was "boom" times in Dixie. Georgia was the land of opportunity. Many took note. The population began to explode in the '90's. New commercial, business and residential construction exploded with it. Georgia emerged at the turn of the century as the 9th most populated and 5th fastest growing state in the country.

But, rapid growth is not without its problems. When things are going well people have a tendency to become complacent. They assume a false sense of security. That's human nature. But, human nature is not a luxury leaders can afford. Effective leadership does not celebrate its successes. Effective leadership is continually searching for weaknesses and potential problems that, left unattended, could bring the party to an end. All leaders are acutely aware that remaining at the top is much more difficult than the climb to the top.

Governor Barnes realized. He was wise enough and intelligent enough to make that assessment. His posture was: "Whoa. Let's take a pause. We have some underlying problems that have been concealed by our many years of success and explosive growth." Unfortunately for him, and I assert for Georgia, Georgians didn't want to hear his message. He was unsuccessful convincing Georgians that all is not well. Governor Barnes was defeated in his re-election effort.

My message is the same. However, it is no longer based on speculation.

The tragic events of 9/11 happened. The rest is now history. That which served as a major contributing factor for Georgia's growth, tourism, was also a major reason Georgia's economy suffered disproportionately worse than many other states. Four years later, they have recovered. Georgia's recovery continues to lag.

And, as Governor Barnes accurately forewarned, the downturn revealed some very serious underlying problems. He recognized the investments in education had not achieved stated goals. The education level of the population had not improved. The high school drop-out problem had grown worse. Recipients of the HOPE Scholarship were not succeeding at anticipated rates. Georgia had become a preferred destination for Hispanic immigrants and their population was growing at dramatic rates impacting greatly on schools and communities.

As a result of all these factors, social assistance programs were reaching unmanageable levels. Crime, illegal drugs and gangs were on the rise. The court system was over-burdened. Jails were over-crowded. A crisis was brewing, but it was early in the process and solvable. All the while, revenues were anticipated to decline.

Unfortunately for Georgia and for Georgians, the newly elected Republican leadership did not pay heed to Governor Barnes' warnings. Whether they didn't believe them or they simply chose to ignore them is irrelevant. The fact is, these problems not only existed, they have grown worse.

And, as these problems continue to worsen, the Republican leadership seems to be pre-occupied with political games of power. They give the impression that Georgia's present dilemma is a temporary interruption of the "boom" times. And, given sufficient time, the problems will solve themselves. In the meantime, they will be content to "manage our way through" the problems, recognizing no need to "lead us out of them".

Georgians, I believe they are wrong. I believe we are in the midst of writing a new definition of "normal". I believe the problems Governor Barnes recognized have worsened. I believe those problems will continue to worsen because the Republican leadership is devoid of a vision and is too pre-occupied with celebrating their rise to power and punishing the Democrats. I further believe that the political environment has become so partisan and hostile that changing leadership from the Republicans to Democrats will result in more of the same- political games of power: vendetta, punishment and currying political favors to special interests. I believe we are witnessing an era of hodge-podge legislative initiatives that satisfy "hot button" issues of a select few, but have nothing to do with an overall game plan to address and solve serious problems that, left unsolved, have the potential of sending Georgia in an economic downward spiral that could take years to reverse.

If, after reading the rest of these pages on the economy, you believe as I do, you will agree it is time for Georgians to send a message: "Enough is enough. While you're scrapping with one another you aren't tending to business and we're feeling the pain."

What pain?

• Job security? We have a sense of insecurity about our jobs. We've seen too many of our neighbors lose their jobs. We've watched them spend months trying to find a good job. Then, sadly, we see them lose their homes. Will we be next?
• Job growth. Why aren't there more good paying jobs? The jobs that are available are on the low-end of the pay scale. Who can make a living, support a family, and provide for a future working in a hospitality job? Why are businesses relocating to our neighboring states instead of Georgia? How are my children going to find a good job when they finish their educations?
• Why are costs of social assistance programs beyond manageability? Why are the populations of those in need growing so rapidly? How much are these programs going to increase in costs? What are you doing to solve the problems that contribute to poverty? How much are our taxes going to go up to pay for them?
• Why do we pay more for the education of our children than all other Southern states? Why do our schools continue to be at the bottom in every measurable category of academic performance? Why is the drop-out problem growing worse? How much do drop-outs cost us? What are you doing to solve the problem?
• Safety and security. Why can't we let our children out of our sight at home, in our neighborhood or in their schools? Why do crime, illegal drugs, and gang problems continue to grow worse in our schools and our communities? Why is our court system over-burdened? Why is Georgia's prison population, combined with parolees and probationers, the worst in the country? How much more will it cost to make us safe? Why? Don't we already pay enough in taxes to make our schools and our neighborhoods safe?
• Taxes. Why do our local taxes keep going up? Why did you increase the state debt to a record level of $10 billion dollars and turn around and give major corporations big tax reductions? Weren't their taxes fair and competitive with other states?

Georgians, your concerns are real. Sadly, they are also justified. Just as poor parenting skills come to roost in Georgia's classrooms, all of the problems I mentioned above come to roost in the economic performance of our state.

Georgia's economy is a simple, two-sided equation. On one side of the equation are revenues. On the other side of the equation are "needs". The object of managing Georgia's economy is to maintain balance. When revenues are in balance with "needs", or both are expanding or contracting in balance, there are no problems. Problems occur when revenues are declining or "needs" are increasing faster than revenues are growing. Georgia's economy is out of balance. Therefore, Georgia's economy is in trouble and will continue to worsen until underlying problems are solved. As sad as that is, even sadder is the fact that a solution is not in place. Unlike Georgia's leaders of the era of the "boom times", there is no vision. There is no game plan.

These are bold statements I have made. It is my responsibility to support them. Following is an examination of both sides of Georgia's economic equation.

Revenue. Georgians, your primary source of revenue is your job. It is the same for our state government. Why? Jobs ARE Georgia's economy! Directly and indirectly, your jobs fund 92% of the state's revenues. Am I exaggerating? No. All but 8% of our state's revenue is derived from taxes you pay. You pay personal income taxes when you earn your paycheck. You pay sales taxes when you spend your paycheck. And of course, you also pay fees, personal property (ad valorem), and fuel taxes. Georgians, there is no mistake about it. Collectively, your jobs are the life-blood that supports you and your families and the State of Georgia!

Therefore, isn't it simply a matter of common sense that your job should be just as important to Georgia's leaders as your job is to you?

Assuming that to be the case, doesn't it stand the test of reason that your leaders would place job retention and job creation of good-paying jobs as their number one priority? Furthermore, with all of the resources available to your leaders, wouldn't you also assume that they would achieve high levels of success creating good paying jobs with benefits? But, are they? Let's see.

Our state department of labor periodically informs us of an array of data on jobs through press releases. On the surface, press releases create the false impression that job creation is healthy. Why? Press releases emphasize positive news and focus on quantity, not quality of jobs. In other words, they are politically tainted. For example, in April 05 the governor informed us that 40,000 jobs had been created. He failed to mention a similar number had been lost. He further failed to address the "quality" issue. Had he done so, we would have learned that many of the "lost" jobs were "quality" jobs, but few good quality jobs were created to replace them.

In May 05 Dr. Rajeev Dhawan, GSU's economic forecaster up-dated his job creation estimates for '05 and '06. He forecasts 73,730 jobs will be created this year and 85,000 next year. Looks impressive, right? Only 8% and 10% respectively are forecast to be "good jobs". The bottom line: 67,000 (92%) and 78,000 (90%) are low paying jobs!

So? A job is a job is a job, isn't it? No, not quite. There is a great difference between a good paying job with benefits and a minimum wage job.

The obvious difference is the compensation, but there is more to it than that. A good paying job, like the one you probably have, enables you to support your family, meet medical needs, live comfortably and provide for your retirement. Your good paying job provides revenue the state needs to meet its expenses, too. Also, your good paying job relieves the state from any financial obligation to provide support for you or your family. In other words, your good paying job is good for you, good for your family and good for the state.

The same is not true regarding a minimum wage, or low paying job without benefits. A full-time minimum wage job produces $10,000 dollars of income annually and typically has no benefits. Depending on the number of dependents, the jobholder will either fall into the federal classification of poverty, or that of the "working poor". Regardless of which of the two categories it is, low paying jobholders will pay no income taxes. Furthermore, if low paying jobholders spend 100% of their income on taxable items, each job would only produce $400 dollars of revenue to the state. Since these jobholders qualify as impoverished, or the "working poor", they receive many times more in government assistance programs than they pay in the form of taxes. In other words, most minimum wage, or low paying jobs cost the state money - more often than not, thousands of dollars annually.

Reflecting on Dr. Dhawan's forecast, Georgia's economy will generate 14,000 good paying jobs with benefits and 144,000 low paying jobs without benefits! There is an implied deficit. The 144,000 jobs will produce no more than $57 million dollars in revenue ($400 sales tax revenue x 144,000 jobs). The holders of these 144,000 jobs will require $288 million dollars of support in government assistance programs (144,000 x avg $2,000/person cost of people on government assistance). That creates a net deficit of $231 million dollars on the backs of the 14,000 holders of the good paying jobs! In other words, each of the 14,000 holders of good paying jobs must provide $16,500 each in revenue to the state for the state to maintain economic balance. Since the state income tax rate is 6%, each of these 14,000 holders of good paying jobs must earn $275,000. Admittedly, that number is a bit high, because the 14,000 holders of good paying jobs will also spend a percentage of their earnings, which will generate 4% in sales taxes. (Forget the mathematical gymnastics to arrive at the actual figure. Let's settle on an average salary of $200,000 dollars.) Here's the question. How many of the 14,000 good paying jobs does anyone believe are going to be anywhere near $200,000 a year jobs? Not many, right? Then let's be more practical and assume the average compensation for a good paying job is $50,000. That means there must be FOUR times the good paying jobs as is forecast for the state to break even! Do the math. It will take 56,000 good paying jobs @ $50,000 per year compensation to absorb the implied costs of the low paying jobs!

Here's the bottom line on the foregoing presentation regarding the impact of Dr. Dhawan's forecast. Georgia's economy is losing ground! We're going further out of balance. We need more good paying jobs! Since creation of good paying jobs should be a high priority of our leaders and they have the tools to get the job done, why haven't we gotten better results?

Let's see if we can find out. Following is not information you will find in press releases from the governor, or his spokespersons in the Department of Labor. You have to dig for it. I did and this is what I discovered:

• Home Depot, a home-grown Georgia company, is relocating many jobs from Georgia to the vicinity of the University of Texas. Don't believe it? There was one very small article buried in the business section of the AJC in July 04. That was it! Our leaders aren't talking. But, Texans are talking! It's all in the Austin Chronicle. Here is some of what the articles said, "Home Depot will actually give the district $1½ million of goodies……… the $30 million in incentives given to HD seem to be a high price for 500 jobs paying an average of $58,000….. in HD's new Data Center….. HD is building a new $250 million facility to house the data center….. ALSO, HD is building a new facility in New Braunfels, Texas to house it's new customer service center…… up to 375 workers are expected to be hired." Bottom line: a defeat for Georgia.
• Char-Broil, another home grown Georgia manufacturer, announced plans to relocate to China. Char-Broil has been manufacturing grills in Columbus since 1949. They employ 840 full-time people and another 1,000 seasonal jobs. This summer, 2005, they will begin phasing out 250 full-time jobs.
• Import trade quotas for textiles were eliminated in January 05. According to a January 05 article in the AJC, 650,000 jobs will be lost (not all in Georgia). Haven't heard much about the plight of those folks, have you? I can tell you this from personal observation. The greater Concord, North Carolina area has been devastated by loss of textile jobs. How bad is it? One of the oldest, and at one time one of the most influential trade associations, The American Textile Manufacturers Association, exists no more! What will be the long-term impact on Georgia? How many more jobs will be lost? What is our leadership doing? It's difficult to find anything specific. But, I can assure you this: when the governor dedicated time in his state of the state address to inform us that he sold a fire truck on eBay for $5,000, if anything AT ALL positive had been done for these folks, we would have heard plenty about it!
• Base Reduction and Closure (BRAC) report was recently announced. The governor said, "We're not taking defeat as an option!" (Governor, shhhhhhhh! We didn't lose. We won.) There's a time to fight and a time to sit back and be quiet. Georgia is gaining 9,000 jobs. Instead of running up to Washington and singing another verse of the same, worn out song all of the other states are going to be singing, let's be thankful. Our effort would be much better spent making the best of a bad situation for the folks that don't care about us having a "net" gain. Of course, I'm referring to the ones that are actually losing their jobs and the business owners in the general vicinity of the closed bases. We have two years between now and the beginning of any of the closures. We may have more time than that. IT'S TIME TO PLAN!!!!! These bases are beautiful facilities. They have lots of potential. The infrastructure is complete, operating and in good repair. Cut the deal now. Arrange for a smooth transition from the federal government to Georgia. Begin the brainstorming now! It can all be salvaged! All that is needed is ingenuity, initiative and determined leadership. Instead of thinking "win-lose", we should be thinking "win-win"! No one needs to be "net" out of a job. No business owner should feel hopeless. It's time for that commodity called leadership to step front and center. Don't expect that leadership to come from the governor. He has already shown his hand. He'd rather "wolf" than act. If leadership is going to step forward it will be a new leader.
• And, while we're on the subject of job losses, we may want to expand the plan to include all of the jobs to be lost by the folks on the north end of Atlanta involved in the manufacture of the C-130 and Raptor airplanes. Hundreds of them are losing their jobs, too.
• A job loss contingency plan won't be complete unless it includes consideration for anticipated cutbacks at GM, Ford, Wynn-Dixie, Hewlitt-Packard, Kodak and IBM.
• One last chapter needs to be added to that job loss contingency plan. Just in case Delta Airlines doesn't make it, lots of folks may very well need jobs. Hospitality jobs associated with tourism are not going to do them much good.
• Makes one wonder, how many other major employers in Georgia are on the verge of bankruptcy or major reductions in jobs? Is anyone in our state government monitoring?

Folks, do you think this is bad? It is. However, it may be much worse. These are situations I am aware of. How many more are there? So much for looking at specific businesses or isolated situations. Let's look at some existing industries.

• Tourism.
  • The governor's major thrust for economic growth: tourism. In Aug 04 his head of the Georgia Office of Rural Development offered a solution of how our rural communities could participate in the "Global Economy": promote the arts! This is great for mom and pop retail stores, but you can't build an industry of significant economic impact around it. Folks, I concede we should attract all of the tourist dollars we can, but we need to recruit businesses, companies and industries that create good paying jobs with benefits!
  • Atlanta's economy is dependent on "tourist" dollars, too. But, the "tourist" dollars are not the same.
  • Trade shows, conventions, conferences and business meetings conducted in the World Congress Center and other venues around the city are a major source of this type of "tourist" dollars. These are serious dollars. But, sometimes it takes years to attract an association that conducts large annual events. It's difficult to close these deals. All stops should be pulled to get them and to keep them. Such is the case with the Homebuilders Show. It had been the crown jewel of trade shows in Atlanta for years. They are leaving. Why are they leaving? They had outgrown Atlanta's ability to supply their needs, was the published reason. Only a few know the real reason. And, even fewer know if the governor offered Mayor Franklin any help? The bottom line: another defeat for Georgia. Folks, these are serious dollars. It takes lots and lots of out-of-staters stopping at our convenience stores and fast food outlets while passing through Georgia to make up for a lost trade show or convention.

Remember this, Georgians: the subject is job creation. Not any ole job. We're looking for good paying jobs with benefits. Most jobs created by tourism are "hospitality" jobs that are on the low end of the pay scale and are jobs without benefits. And, the governor has clearly stated that tourism and tourism jobs are his priority.

In other words, the governor is aiming too low! How can you achieve a high result with a low expectation? By fluke luck, that's how!

• Dairy farming. Georgia's dairy farming has been in steady decline for 15 years. A couple of reasons explain it.
  • One: is Dairy Compacts. Actually, they are more like cartels. Yes, cartels similar to OPEC. However, their plan to control the market backfired. As they increased the price of milk, people decreased the amount of milk they buy. Less milk bought, less milk needed. Less milk needed, fewer dairy farms needed. The net result: fewer dairy farmers.
  • Two: Sprawl. Yes, at one time most of the dairy farms were north of I-20. Due to sprawl in the northern arc and the Northeast mountain areas, property values skyrocketed. Farmers sold out. Some relocated south of I-20, many opted out of the dairy farming business. Here's the fact that makes this truly sad. The South has 23% of the population of the country, but only produces 9% of the milk. We import milk. We import primarily from the Northeast Cartel. There is an opportunity here. Seed money and some technical assistance to address environmental issues could make dairy farming a significant agri-business in Georgia again. We could, and should, be exporters to other southern states. All that is absent is leadership.
• Poultry farming. Sprawl is chasing the poultry industry out of the Gainesville/Hall County area, too. Some of it is relocating to south Georgia. However, many poultry producers are taking the money from developers and quitting the poultry business? In 1992 there were 417 poultry farms in this area with 877 chicken houses. Now, there are only 100 farms and 266 chicken houses: reductions of 77% and 70%, respectively. Makes you wonder if the trend is pervasive and continues throughout this region, will Georgia remain the "Poultry Capital of the World"?
  • Speaking of "poultry", if Georgia is the "poultry capital of the world" (that's broilers for meat), why isn't Georgia ranked nationally in egg or turkey production? Again, are there opportunities here? If so, we need to "encourage" development of these industries?
  • (Since writing this original piece in May 05, Perdue Farms of Delaware announced plans for a major investment in processing plants in Houston County, which will create hundreds of jobs)
• Floor Covering. The floor covering industry IS the economy of northwest Georgia. Are there any multi-national venture capital efforts underway in Asia? Will this region have a similar fate as the broadcloth and apparel textile industry? Are the 100,000 jobs in this region secure?
• Technology Industry. The Executive Director of The Technology Association of Georgia, an 800 member association, stated the association ranks Georgia 6th worse out of 8 technology states and that the biggest problems confronting technology companies in Georgia are: fragmentation and lack of relationship with the state government! (Savannah's economic development folks were alert and convinced two of those members to relocate to Savannah as opposed to relocating out of the country!) (Way to go Savannah!!!) Who's tending to this situation? Appears that no one is. Folks, if each member of this association provides just 5 jobs, that's 4,000 jobs! I think there are more jobs involved than that, don't you? Even if it was only 4,000 jobs, I believe these folks deserve a close relationship with the state and I think we should be able to help them find a suitable home where they can develop and manufacture new technologies together.

Another major source for jobs results from recruiting new businesses to Georgia. How are we doing?

• In the '80's and 90's, Georgia was the preferred choice for emigrating companies from the Northeast and the rust belt. However, that was then. Our neighbors didn't like it. They have gotten very aggressive. Competition is tough. Besides, the mass exodus is history. Most of the companies that were going to move have moved. There will always be others, but not like the past. Regardless of the number, we need to develop some new recruiting tricks. One of the easy ones is for the governor to take the personal lead in the effort. I will.
• Loss of the Mercedes plant near Savannah. Our leaders spent $60 million of our money and had conceded $200 million in future incentives. Every state in the South has recruited a foreign automobile manufacturer, except Georgia. That isn't new news. But, this is. Each area has grown into major manufacturing regions. Around each plant (measured in miles, not acres) are manufacturing plants of major components owned by the same auto manufacturer; and, manufacturing plants, distribution facilities and supply houses that support the primary plant. Jobs, jobs, jobs! Not 100's of jobs, but 1,000's of jobs were in the balance on this deal. But, our leaders failed to close the deal. Result: another defeat for Georgia!
• When you aren't having many successes, you try to discover the reasons why. In Georgia Trend's April Issue is the "2005 Economic Yearbook". Every region in the state is covered in the article. Several people engaged in economic development in these regions were interviewed. All reported on present economic activity, anticipated opportunities and their efforts at job creation. Upon completing the article, I was struck by something that wasn't mentioned. As I recall, there was a total absence of credit or recognition given to any state level economic development leader or organization for their assistance or involvement in any effort. Leads one to believe that local communities are at this game by themselves, competing against each other. Seems to me to be an unnecessarily expensive and, perhaps counter-productive effort. In competing against each other, communities must boast of their attributes as part of the selling, marketing and promotion process. Also, part of the process is pointing out the weaknesses of your competition--- other Georgians!
• In the '05 legislative session, our state leadership, including the governor, lobbied vigorously for "secrecy in negotiation laws" (HB: 218). Yet, they could not name one lost opportunity as a result of this "secrecy" issue. Makes you wonder exactly how many opportunities were lost and why they were lost? Every businessman knows once the sale is made, you re-direct your selling effort to the next opportunity. However, when you lose a significant sale, there was a reason. Why did you lose? What lessons can be learned and applied to close the next opportunity? What is the competition doing better than you? I'd like the answers to those questions? The answers, if acted upon, will improve the success rate. Improving the success is the key to more JOBS! Nonetheless, the question remained: had we lost any opportunities, or were they simply not there to lose?
• Applying the lesson I learned on the Home Depot situation (we're not talking, but Texans are), I visited web sites of our neighboring states. Here's what I learned. Tennessee and North Carolina must watch "Blue Collar TV". They certainly know what Larry the Cable Guy means when he says, "Git 'er done!" They do. Both have a long list of press releases announcing successes from all over the country and the world. Alabama and South Carolina web sites look very much like ours in Georgia. Lots of conference meetings announced. Lots of awards given. Lots of appointments made. Lots of South American Consulates opening in Atlanta. Announcements, announcements, announcements interspersed with a couple of recruitment successes. The findings weren't encouraging. However, I discovered the answer to my question: were there any opportunities? There are. We're not winning at the game. But, why? We're getting out hustled! Folks, I'm an entrepreneur. Out of all of the reasons that result in Georgia being at the top of the "first at worst" lists, this is the one that really hurts.

Well, we're not doing so well in the recruiting business. That lends one to assume, for the same reasons, we're probably not doing so well in the last indicator I explored: developing new industries or natural extensions of existing major industries. This exercise was easy to do. I just let loose of my imagination. Here are the results:

• Shrimping is the only significant aquaculture industry along Georgia's coast. It shouldn't be. Georgia is the only southern coastal state from SC to Texas that does not export blue shell crabs to the mid-Atlantic states. Why? Who knows? These delicacies fetch up to $60/dozen at retail. South Carolina, Florida, Alabama, Mississippi, Louisiana and Texas must recognize the economic value. Why hasn't Georgia? Another industry, oystering, does not exist in our coastal waters, either. At one time Georgia had the largest oystering industry in the country. Why, does it not exist?
• Refinery. Georgia is the 9th most populated state. Combined with the all of the commercial and tourist "thru" traffic, Georgia consumes a lot of gasoline and diesel fuel. We have two world-class ports that give oil tankers from the mid-east faster access to the US market. Why don't we have a refinery? Alone, Georgia could consume what it produces, minimizing distribution costs. Why shouldn't we be working with the oil and petroleum leaders to acquire one, or more? Incidentally, do you recall the failure to close the deal with Mercedes? I know where there's a significant piece of real estate improved with $60 million dollars of our taxes that may be a suitable location. All we need is a leader to take ownership of this project.
• Paper. Georgia is one of the largest producers of pulp wood in the country. Why aren't we one of the largest producers of finished paper products?
• Many companies headquartered in Georgia have manufacturing plants located in other states. What are we doing to promote relocation of those facilities and JOBS to Georgia?

If I can think of these ideas with limited access to information, makes you wonder what other potential industries are suitable for Georgia's vast natural resources or natural extensions of existing businesses or industries. It also makes you wonder what role state leadership is providing to assist in discovering, pursuing and developing those potential industries with research, seed money, and leadership. Employing the same reasoning as with the subject of "recruiting", makes one draw a similar conclusion: we're not hustling- the deadliest sin of business!

How did I conclude we were getting out-hustled? We are losing jobs because we are not meeting the needs of employers. We are losing at the recruiting game because our neighboring states are doing a better job meeting the needs of employers. What needs? Following are a few:

Education level of the population and schools.

• Governor Joe Frank Harris made the case for the link between the economy and the education level of the economy. Nothing has changed. The relationship between economic prosperity and the education level of the population is still directly related.
• Far too many adult Georgians lack a high school education. Far too many of our children quit school before achieving a diploma. If the adult prison population is any indication, the education level of the drop-out is 6th grade in English, reading and math. There are over 1½ million drop-outs in our population costing the state $17 billion annually. There are another 30,000 dropping-out each year costing us an additional amount of $300 million.
• Georgia's public education system is a mess. Relatively speaking, student achievement in our schools suffers. Relative to other states, our students are not competitive. Relative to the need of employers, there are 243,000 jobs that cannot be filled with workers produced by our schools due to insufficient levels of education.
• No state in the South (12 states) outspends Georgia for the education of our children. Nonetheless, Georgia remains at, or near the bottom in every measurable category of academic performance.
• Georgian taxpayers pay too much for the results we get. The education system lacks visionary and strong leadership at the state and many local levels. Too many special programs exist. Too much testing is done. Too much money is wasted.
• Failures to advance the education level of our population continue to negatively impact Georgia's economy.
• A full presentation on education is located under "Education".

Quality of life issues

• Who wants to locate, or for that matter keep, their business in unsafe communities where crime is growing, where drugs are prevalent and gangs are forming?
• Much of the aforementioned problems are related to the great influx of the Hispanic immigrant population. Unfortunately for the overwhelming majority of Hispanics who seek only to raise their families in this great state and great country, there is an element of their population that has adversely affected the communities they inhabit. Among this small percentage of the Hispanic community are undesirable "illegals". They must be found. They must become aware of all the force of law enforcement possible.
• Who is willing to relocate their family to an area that is remote, has few modern conveniences, is inaccessible to adequate healthcare, has limited shopping, has limited access to recreation, or there are "infrastructure" problems with roads, utilities, or natural resources?
• Who wants their children attending schools that will not adequately prepare their children for their futures?
• Who wants to raise their families in socio-economically depressed areas with limited job opportunities for their children as they become adults?
• The short answer to the above questions: nobody that can afford to live somewhere else! However, in the above I just posed questions, which implied these were issues. They are. For the full story visit "Social Issues".

Infrastructure

• Atlanta's infrastructure problems are widely known. However, solving them isn't even on the governor's or the legislature's radar screens. But, why? After all, Atlanta's Metro area contains half of Georgia's population and is responsible for half of the GDP of Georgia. That's $90 billion dollars. It may take some big bucks to solve Atlanta's infrastructure problems, but it must be done. It's on my radar screen.
• Traffic congestion is alive and well around Atlanta. As a result, the daily commute for Atlantans is the longest and most expensive of all major cities in the country. There is no viable plan on the table to effectively relieve it. Our leaders are in the process of squandering a once- every-20-year opportunity to acquire Federal DOT dollars for major interstate construction. The proposed interstate link between Savannah, Augusta and Knoxville, Tn may serve a need, but it does little to open up much of Georgia to interstate access, nor will it alleviate much of the "thru" traffic problems in and around Atlanta. Although the proposed link between Augusta, Macon, Montgomery and westward makes more sense, it too is off target. Congress just passed the legislation. Funding is for $268 billion dollars. Georgia's delegation acquired $600,000 for Georgia. (You know, the Georgia with the 9th largest and 5th fastest growing population, largest landmass east of the Mississippi, 11th largest GDP in the world and staunchly Republican state taken so much for granted it was a "no fly zone" by the President during the last Presidential campaign.) I don't want to be too hard on our Senators and Congressmen, though. They are very junior. They are good people. They will serve Georgians very well as they gain seniority. Another note regarding the politics of the proposed routes: Could there be any coincidence that the northern branch runs through Young Harris? (Senator Zell Miller is right up there with President Ronald Reagan as my all time heros, but…………) Regarding the southern branch (the 3rd interstate to serve Macon), is it coincidental that Senator Chambliss and Governor Perdue have large voter support from this region? (Yes, I have a better plan. See the tab to the left, "John's Vision for Georgia".)
• There are proposals floating all over the place for new forms of passenger rail service. One is being discussed to connect Atlanta with Chattanooga and another to connect Atlanta with Greenville, SC. There is more discussion about Ga. 400, and other lesser projects. Theoretically, they are great ideas. However, from a practical, common sense perspective, why would anyone want to create more white elephants that will be financial burdens to future generations of our children? Let me ask you one question: name just one rail system that has paid for itself the past 50 years? The point is this: are you going to ride a train when your destination is within driving distance? I didn't think so. Neither is anybody else. At least, not in sufficient numbers to pay for itself. I don't care how many federal grant dollars are available to do surveys, produce engineering plans and cost estimates. Government grants have a way of costing us half of the project cost when we take them and 100% of the long-term cost of operating and maintaining them. The feds can keep that money and use it to pay down the deficit. Or, they could just give it to us and help us pay down ours!
• Toll roads. In Georgia? Not on my watch! Enough said.

Georgians, we obviously are not getting the job done on the revenue side of the equation. Simply put, we need many more good paying jobs than our economic development efforts are producing.

But that's just one side of the equation. The picture is far from complete without examining the other side of the equation:

Revenues for FY 05, which ended 30 Jun 05, increased 8%. Although the increase would lead one to believe it to be an enviable accomplishment, it is history. Furthermore, it is a relative number. The question is: was it sufficient? Based on the outcries for more funding from each of the three major categories of expense (education, social assistance programs and criminal justice), the casual observer would draw an obvious conclusion. No, funding was not adequate to meet "needs". Therefore, without more significant increases in revenue for fiscal year 2006 and future years, it would seem that shortfalls, relative to "need", will grow greater and greater. Since we have already presented the case that growth in state revenues are, at best suspect, the prudent course of action is to scrutinize the other side of the equation. Let's take a look at the three largest consumers of our tax dollars. Collectively, these three categories consume 83% of the state budget.

Education. The education component consumes 35% of Georgia's budget, which is $8.7 billion dollars, or $7,500 per student. The question we want to answer: Is it enough? That depends on how you look at it. From the educators standpoint, education is grossly under-funded.

• Educators are not happy with their 2% pay raise, increases in costs of their health plans, teacher to student ratios (classroom size), uncompensated extra duties (extra-curricular activities), increased "paper work" burdens, non-funded requirements for professional development, etc.
• The population is growing, which will result in the need for more teachers, classrooms, etc. to accommodate an average increase of 15,000 additional students. As they progress through each grade, there will be an additional $112 million dollar increase in need for funding based on today's average expenditure per student of $7,500 per student. (That's $112 million dollars added to the cost of education each and every year after they begin kindergarten.)
• CASFG (Consortium for Adequate Funding of Georgia's Schools) is a group of 51 of Georgia's 181 public school systems with a lawsuit against the state. If the state loses the suit, which the state has lost 17 of 21 previous funding issue suits, the cost of education could increase as much as $1½ billion dollars.
• In May 05, Neely Young, Editor and Publisher of Georgia Trend Magazine began a campaign to "Restore Funding to Education". The price tag for Neely's campaign is $750 million dollars, which he proposes to provide via a 1% increase your income taxes.
• Many school systems are desirous of building more "Charter and Alternative" schools and expanding normal school hours.
• Presently, there are very few comprehensive ESOL programs in the state, yet there is a need in as many as 75 additional communities. One of the most comprehensive is Dalton's Project Georgia, which is funded by federal grants.
• Security needs in schools are increasing. Funding does not meet this important need.
• As NCLB (No Child Left Behind) expands into middle and high schools, costs are going to escalate.
• There are more, but my list is sufficient to make the case. Some of the needs are real. Some may be perceived.

An equally strong case can be made that funding for education is adequate.

• At $7,500 total spending per student, Georgia spends more than every other state in the South, except Virginia. Virginia spends an equal amount. Despite less funding, most of these states equal or surpass Georgia's academic performance in nearly every measurable category.
• Georgia ranks in the upper third of all states for expenditures per student. Yet, Georgia is ranked in the bottom 6-9 in every national comparison of academic performance, except SAT scores. Georgia is ranked last. Year-in and year-out, Georgia ranks last or next to last in high school drop-outs.
• I spent two days studying the payroll of one school system. It had an absenteeism rate that equated to 70 full-time teachers.
• Educator pay in Georgia ranks 18th in the country. Georgia's fringe benefit and retirement plans are among the best in the country. Yet the cost of living in Georgia is far exceeded by all of the states in the Northeast, Upper Midwest, Southwest and West Coast. The cost of living in Atlanta ranks in the middle of all the major cities in the US. Furthermore, the cost of living outside of the metro Atlanta area is significantly less than within the Atlanta area, yet the state pay scale is universal throughout the state.
• Pre-K programs are widely touted among education "experts" as being necessary to decrease drop-outs. The theory is "better preparation at earlier ages will enhance self-esteem, minimize differences in academic performance based on socio-economic differences and result in better retention rates in high school". The theory has not proven itself to be valid. Drop-out rates in Georgia have not improved since the introduction of mandated kindergarten (1985) and the phasing-in of pre-k programs that began in 1994. Consuming as much of our Lotto funds as is dedicated to the HOPE Scholarship program, Pre-K programs are expensive.
• The scandal in DTAE's (Department of Technical and Adult Education) Office of Asst Comm for Adult Literacy may be an indication this scandal is just the tip of the iceberg. Regardless, it is a clear example of significant waste of our tax dollars. It is a clear example of abuse of the public trust that occurs in large bureaucratic environments.
• The list could be longer, but I believe I made the case. Funding for education may be adequate. It may be that funds could be better utilized.

Social Assistance Programs. Social assistance programs, primarily Medicare, Medicaid and PeachCare, consume 25% of Georgia's budget- $4.3 billion dollars.

• Poverty, "working poor", adult literacy, "fractured" families, births to unwed mothers, high school drop-outs and illegal immigrants represent a majority of the costs associated with these programs.
• Over 2 million Georgians receive some form of government assistance.
• Over 1 million Georgians live in poverty. As much as a third of Georgia's population may be among the "working poor".
• Nearly 30% of Georgia's children are raised in single female heads of household homes.
• In the past two years there were 40,000 and 50,000 births to unwed mothers. Of the 50,000 there were 29,000 whose fathers were identified. There were 22,000 who were not. Guess who pays?
• Georgia has one of the highest divorce rates in the country.
• Each year a minimum of 30,000 students drop-out of high school. The annual cost to Georgia is $327 million dollars each year through lost wages and costs to government assistance programs.
• Georgia's population is growing by 150,000 people each year. The majority of the population growth is on the low end of the socio-economic spectrum.
• With 50,000 births to unwed mothers, 30,000 kids quitting school and the majority of Georgia's population growth on the low end of the socio-economic spectrum, Governor Perdue has already described the strain on social assistance programs as unmanageable.
• Generation after generation of too many Georgians perpetuate the poverty cycle.
• Poverty is the most likely breeding ground for crime.

Criminal Justice. Georgia's criminal justice system (court system, law enforcement, prisons and paroles, etc) consumes 8% of Georgia's budget- $1.4 billion dollars.

• Georgia has the highest combined number of state prisoners, probationers and parolees in the country (211,000).
• The Commissioner of Corrections needs six more state prisons to meet the growing need to house the ever-increasing population of criminals.
• It costs $18,000 dollars per year to incarcerate a state prisoner.
• Georgia's county jails are over-crowded, many refusing to house state prisoners. Jails that house state prisoners constantly battle the state over inadequate compensation for these services. (Basis for increased local taxes.)
• Georgia has 24,000 juveniles incarcerated. The cost of incarceration is $11,000 dollars per year per juvenile. Most juvenile offenders come from fatherless homes. The juvenile offender population is growing meteorically and types of crimes committed by them are becoming more and more serious.
• 70% of Georgia's adult and juvenile incarcerated population was convicted of drug or drug related crimes.
• Governor Perdue identified the meth problem as "growing faster than kudzu".
• Dalton's District Attorney described Northwest Georgia as the "Epicenter" of the meth problem nationwide!
• Dalton and Gainesville requested assistance from the FBI to combat gangs and drugs.
• The Commissioner of the Department of Public Safety is allocated 953 positions for Georgia State Patrolman. Only 800 are funded.

Summary and Conclusions

Georgians, there you have it. I've painted a picture for you. It isn't a pretty picture, but it is the same picture our leaders have seen for the past several years. I painted it for one reason. I had to answer the question: Is our economy (not the budget) in balance, or isn't it? Obviously, it is not.

The future revenue stream (creation of good paying jobs) shows growth. But that growth is fragile and the quality of it is not good.

The other side of the equation, "needs", is growing much faster. The gap between anticipated revenues and anticipated "needs" is wide. Most bothersome is the gap is growing wider at an increasingly rapid rate.

Therefore, I submit to you Georgia's economy is perilously out of balance, but not due to revenue shortfalls. Georgia's economy is out of balance due to lack of leadership. Georgia's leaders have not set upon a course of action to solve the underlying social and education problems that have great negative impact on both sides of the economic equation: job creation and runaway costs.

Makes you wonder, doesn't it? Why haven't our leaders solved these problems? Politics! Under "How We Are Governed" I spell it out in great detail. The short version is this. Leadership of both parties have become thoroughly obsessed with "winning the game"- gaining and maintaining power. They believe the "game" is about themselves and their parties. They lost sight of the purpose of the "real game": to serve Georgia! The only purpose of party rivalry should be to determine whose philosophical beliefs and approach will lead Georgia. Regardless who prevails, the mission of both parities should be identical: identify and solve problems to make Georgia the best place to live, raise a family, work, do business, visit, etc. The sad fact is, what's best for the "red" team and what's best for the "blue" team has trumped what's best for the "you" team- the Georgia team! Must I convince you? Following is their approach to solving Georgia's education and social issues.

Regarding education, party leaders have no interest in challenging educators or any component part of Georgia's Public Education System, even though challenge seems well justified. Republicans have one strategy. They are going to raise taxes and simply put more money into a system that is not getting results. The Democrats have another strategy. They are listening very closely to the "want lists" of our education community. They will make some promises to provide some of the "wants" that Republicans are not supporting. The bottom line: the Democrats will have to raise taxes, too. And, neither strategy has anything to do with solving the problems in Georgia's public education system. Both strategies perpetuate the problems.

Why will each pursue the strategies I set forth? Both are very much aware of the size, sophistication of organization, voice and influence educators possess. They are both willing to pull all stops to gain or maintain support of education's voting block. Both will do so even at the expense of real improvement in educational performance; at the expense of our future economic performance; and, even if it means increasing taxes for all Georgians.

Regarding social issues and crime, despite the case that there is overwhelming need in these areas (I'm not talking about more money, I'm talking about more ideas), both parties take an opposite approach as they do to education. Why? That component of our population that is impoverished, among the "working poor", unwed mothers, and criminals are not organized. They are not a political force. They are not a political threat. Most of them don't vote. They have no advocate accept the conscience of their leaders. Therefore, both parties are content to "manage their way through" problems associated with demand on government assistance programs. What do I mean, "manage" through the problems? There are two parts. First, you do the unspeakable. You apply the "feed them" philosophy instead of the "teach them to fish" philosophy. Secondly, you only "feed them" with whatever money is available. If revenues shrink, "feed them" less. If revenues are sufficient, "feed them" more. That's too bad.

Is it not crystal clear to anyone that has taken the time to read all of the information I presented in all of the sections: most of the "root cause" problems that reveal themselves in Georgia's classrooms, courtrooms, jails, prisons and Georgia's economy are social issues?

Is it not crystal clear that solving the social issues that I have repeatedly mentioned throughout all of my presentations IS one of the most significant courses of action that will improve both sides of the economic equation?

Is it not crystal clear that the biggest "root cause" problems are failures of Georgia's leadership?

Georgians, is it not crystal clear that circumstances are screaming for a dramatic change in leadership? If you still aren't convinced, read the following.

Regarding leaders of both parties, it's their game, folks. They are the players and we are the victims. They are not dummies. Nothing I have presented is news to them. It's news to you. We let them use us as pawns in their game to victimize ourselves: it is our jobs, our futures, our security, our prosperity at stake- not theirs. They all have good paying jobs. They live the good life and they do so on the backs of your tax dollars. They occupy prestigious positions. They are well connected. They are the inner-circle. It is us folks, that are on the outside. And they, both parties, are going to do their danged, level best to keep us on the outside. For sure, they want you "involved". That is, they want your vote. Then you are no longer needed. Your voices are no longer heard. That's why the problems go unsolved. To solve them is too risky. To solve them is too controversial. To solve them is to alienate large voter blocks. All the while, you lose! Georgians lose! Georgia loses!

Folks, we've been taken for granted for too long. Our money has financed their games far too long.

If you agree, it's time to share the pain. It's time to create a new game. It's time for a new set of rules. It's time for a new winner- Georgia! And if you believe as I do, if Georgia wins, Georgians win- all Georgians win!

It's time for a shift in the balance of power. It's time for a real change. It's time for Georgians to come together and communicate a message, "OK, we have some pressing problems. Let's install someone that's willing to tackle and solve them. OK, it might be a little painful. But, at least, we'll be told the straight of it. At least the problems will be solved and we'll be part of the solution. OK, maybe taxes will be raised, but at least we'll be confident the money is being invested on our own behalf and not thrown into an abyss as payment for political debts. Yes, there's some risk involved. Yes, an independent has never been elected in Georgia. So what? At least the guy is willing to work for us and he's willing to work for what's best for Georgia. And, no we're not worried about him being ineffective. Part of our motive for electing him is to send a loud and thunderous message to the legislators and the leaders of both parties- we want change and we want it now. Get the message, or in two years we'll toss you out too! Work with this guy. Give him a chance. We are! Lastly, above all else, be reminded of this. Georgia is our state! We're the bosses!"

Folks, it's the only chance we have to solve the problems that impact on our economy- the economy of Georgia, our personal economies and the economies of those in poverty that don't presently understand what an economy is!

But, before you decide to jump aboard my cause, visit the tab to the left "John's Vision". Understand fully what you are supporting. Unlike the other candidates who set forth no ideas, no vision, no plan; I spell it out as clearly as I am capable of doing. Yes, you will find a few platitudes and some catchy phrases. But, they are sparingly interspersed. However, unlike the other candidates, they are not my entire campaign. I have a vision. I have a plan. I have new ideas. My motives are to solve the problems, then go back home.

Let me close with one of those catchy phrases I mentioned. John Dashler is not about raising millions of dollars to buy votes. John Dashler is about winning people's confidence to earn their votes! Remember, for every "big money" person that contributes $5,000 to the party candidates, there are 1,000 average Georgians that can contribute $25, $50, or $100 dollars to my campaign! (Incidentally, that's a 1,000 to 1 ratio of votes, too!)

If you want to see us succeed, I need your help. Click on the yellow or red buttons to the left. Actually, I need you to click on both. Our present campaign efforts are to get on the ballot. We must collect 40,000 signatures on nomination petitions between January and June of '06 to get on the ballot for the general election. After we accomplish that mission, we'll set our sights on winning the general election.

Whether or not you become one of my supporters, thank you for taking the time to read what I had to say.

John W. Dashler
Independent Candidate for Governor
"Georgians, make it about you, not the few!"