2008 full of economic hardships
Published 6:47 pm Monday, December 29, 2008
Old-timers once had a monopoly on stories about “hard times.”
But with the economy in a downward spiral, that’s no longer true.
Around almost every corner, there is a “hard times” story waiting to be told.
Although the country is not in a state of “depression” yet, people are having to pinch pennies like never before.
According to Industry News, given the economic turmoil the world has gone through over recent months, most everyone expected a weaker-than-usual Christmas shopping season “however, nobody ever imagined it to be this bad, with overall spending falling sharply.”
Local food banks come up short
In Pike County the shelves of local food banks were nearly empty and the many of those who came seeking assistance left with little to show for their visit.
“We don’t have anything to give them but green beans,” said Florence Mitchell, Department of Human Resources director. “We give the green beans to the people who want them but it’s just kind of sad.”
While DHR’s food banks were hurting the worst, the agency was not alone in feeling the impact of a slow economy.
The Salvation Army’s food bank was the lowest it had ever been and Kim May, director, said there was an increase in people seeking food at a time when the service center had not received as many donations as it typically does.
Gas prices fall, give breathing room to consumers
Plummeting gas prices provided a little breathing room for most people as the holidays approached. Earlier in the year, prices had soared to around $4 a gallon making ends meeting difficult for many and straining the budgets of just about everyone.
Government entities struggled with the rising cost of fuel and fuel became a major factor in budget planning.
“If we don’t budget carefully, we could find ourselves in trouble before the year’s end,” said Robin Sullivan, chairman of the Pike County Commission.
The rising energy costs also impacted the local school systems. The Troy City School System found itself paying up to 36 percent more than last year for both fuel and utility costs.
Then gas prices dropped almost like a lead balloon, easing the burden somewhat for Pike Countians and people all across the nation.
Proration puts the squeeze on school budgets
The declining economy is dealing blows to schools all across the state. Gove. Bob Riley declared 12.5 percent proration, the largest number in the history. However, the rainy day fund reduced the number to 9 percent but still put the squeeze on school budgets. However, Pike County Schools Superintendent Mark Bazzell said the county schools are in good shape to endure the storm. However, he estimated the county schools will have to carry on without $126,000 a month for the next 10 months.
Dr. Linda Felton-Smith, superintendent of Troy City Schools said the city schools will be all right for this year but she isn’t sure the exact way the school system will have to bear the burden but they will be looking at each line of the budget to make the determinations.
Felton-Smith said the Troy City Schools will be looking at cuts of $1.1 million this school year.
Troy University anticipated a $6.7 million cut in state funding and the trustees approved a new tuition plan in which all students now pay $177 per credit hour for all undergraduate classes. The move will help offset some of the losses in state funding.
Fannie, Freddie and Big Three ask for handouts
Robert Earl Stewart, professor of finance at Troy University, said Pike County residents could take a big economic hit if something isn’t done to alleviate the nation’s economic crisis.
Stewart said the crisis has put a hold on lending institutions, which is bad news for businesses and, if a federal government bailout, or something like it, doesn’t happened some people could be without jobs.
“Our nation operates on credit,” Stewart said. “Businesses operate by having money to get short term loans. If businesses can’t get those loans, businesses will go down, which means investments will go down and unemployment will go up.”
Federal government bailouts for Fanny Mae and Freddie Mac (Federal National Mortgage Association and Federal Home Mortgage Corporation) trickled down to the auto industry, which wants its piece of the money pie.
Detroit’s Big Three auto makers, General Motors, Chrysler and Ford, are asking for a Federal government bailout to help them get back on their feet.
Jim Jackson, co-owner of Bill Jackson Chevrolet in Troy said that, if the bailout doesn’t pass, the public perception of GM would become the biggest issue because consumers have the misconception that it would automatically void auto warranties if GM was forced into bankruptcy.
While Ford appears to be in much better shape than Chrysler or GM, they, too, are faced with negative publicity, which could affect sales greatly.
According to Stewart, a bailout would provide an advantage to help keep car dealerships of GM, Ford and Chrysler operating for a longer period of time. The bailout would continue to allow employees of the dealerships to keep their jobs for a period of time.
Local sales tax revenue up
Even in trying economic conditions, Pike County residents haven’t stopped shopping locally. City and county governments have seen growth in sales tax revenue this year despite a nationwide economic slowdown.
“With the downturn in the economy, we’re seeing other people around us experiencing a loss of sales tax,” said Troy Mayor Jimmy Lunsford. “But we had incurred a considerable amount of retail growth and it’s helped us beat the economic downturn.”
Troy receives 2-cent revenues from local sales tax has seen a little more than $200,000 in sales tax growth in the last year.
In Brundidge, the city’s 2-cent sales tax has brought in a 6 percent increase in revenues with more than $381,000.
The county receives 25 percent of a 1-cent sales tax and has also seen growth with about 3.92 percent above last year as of July.
The economy got a boost from the extra dollars coming to citizens via of tax rebates from $300 to $600. President George Bush signed the national economy stimulus package. According to the IRS, in most cases, the payment will equal the amount of tax liability on the return with a maximum of $600 for individuals and $1,200 for those who file jointly.