Tuesday PM January 27th, 2009
by: Ed Mayberry, January 27, 2009 9:01:27 pm
Governor Rick Perry says he wants to keep pumping money into job creation funds and increase exemptions for small companies under the state's business tax. He's proposing freezing tuition for college students for four years of schooling. And he wants to create a disaster contingency fund for catastrophes like Hurricane Ike. The governor offered the ideas in his State of the State prepared remarks and address delivered to lawmakers. Perry wants to pump more than $500 million combined into a Job Creation Fund, an Emerging Technology Fund and a movie-making incentives account. He said all have a track record of success. Perry supports raising the small business tax exemption to $1 million, up from the current $300,000 in gross receipts. The tax was put in place in 2006 to change the Texas system for public funding schools. Perry uses the State of the State speech to set out his legislative agenda and to stake political ground. He's facing a Republican primary challenge from U.S. Senator Kay Bailey Hutchison next year.
Governors across the country are trying to come up with creative ways to keep state treasuries full at a time when tax revenues are falling. California Governor Arnold Schwarzenegger wants to help close a nearly $42 billion budget deficit by taxing things like rounds of golf, auto repairs, veterinary care, and amusement park and sporting event admissions. New York Governor David Paterson is proposing levies on mp3 downloads, taxi rides, movies, concerts and more. Pet groomers, pool cleanings, and even dating and diaper services could be taxed in other states. The proposals have several services and industries being targeted complaining about those that aren't. And critics say actual revenues won't match expectations, and will instead lead to layoffs and fewer customers.
State unemployment rates shot up around the country in December, with Indiana and South Carolina racking up the largest monthly increases. The Bureau of Labor Statistics says Indiana's jobless rate soared to 8.2 per cent in December from 7.1 per cent in November. South Carolina's bolted to 9.5 per cent from 8.4 per cent. Each state logged a 1.1 percentage point rise in unemployment from November to December. The unemployment rate in Texas for December was at six per cent, compared with 5.7 per cent in November and 4.2 per cent in December 2007. The U.S. unemployment rate, issued earlier this month, jumped to a 16-year high of 7.2 percent in December.
With Cooper Industries reporting a 38 per cent drop in fourth-quarter net income, the company plans more job cuts than previously announced, according to Bloomberg News. The company cites worsening economic conditions. The lighting manufacturer, with administrative headquarters in Houston, now plans to increase job cuts to more than 2,200.
Baker Hughes has begun the layoff of nearly four per cent of its global work force, including some Houston employees. The firm will cut 1,500 of its 40,000 employees over the next couple of weeks. About 850 of its 17,500 North American employees are being let go, including about 200 of its 7,300 employees in the Houston area. Reductions include positions in the drilling and evaluation division and well completion unit.
A private research group says that Americans' mood about the economy has darkened even further in January. The Conference Board said that its consumer confidence index edged lower in January to 37.7 from a revised 38.6 in December. That's a historic low for the widely watched barometer, as shoppers worry about their jobs and watch the value of their homes and retirement funds dwindle. It's also lower than expected. Economists surveyed by Thomson Reuters had expected a reading of 39. The levels in recent months have hit the lowest point since the index began in 1967.
A closely watched index shows home prices dropped by the sharpest annual rate on record in November. The Standard & Poor's/Case-Shiller 20-City Housing Index tumbled by a record 18.2 per cent from November 2007--the largest decline since its inception in 2000. The ten-city index dropped 19.1 per cent, tied with October for the biggest drop in its 21-year history. Both indices have recorded year-over-year declines for 23 straight months. Prices are at levels not seen since February 2004. Prices in the 20-city index have plummeted 25.1 per cent from their peak in July 2006. The ten-city index has fallen 26.6 per cent since its peak in June 2006. All 20 cities recorded year-over-year declines in November.
Port of Houston Authority Executive Director Tom Kornegay announced his retirement effective February 1st, after 37 years with the authority. He spent the last 17 years as the port's chief executive. Port commission Chairman Jim Edmonds has called a special meeting of the Port Commission on Friday to consider action following Kornegay's announcement. The PHA posted its ninth consecutive year of growth as a result of its 2008 operations. Last year was a record year for the handling of general cargo and containers.
President Barack Obama says he's had a "wonderful exchange of ideas" with House Republicans about the stimulus plan he wants Congress to approve. He met with GOP lawmakers on Capitol Hill shortly after House GOP leaders tried to rally opposition to the stimulus measure backed by the White House. After meeting with Republicans, and before heading to the Senate to meet with Republicans there, Obama said he's still optimistic about the ability to get the package done. He says he knows there won't be "100 per cent support," but that he's going to "continue to welcome good ideas" from Republicans. House Minority Leader John Boehner says Republicans look forward to continuing to work with Obama to improve the package. He and other Republican leaders say they believe Obama is ready to hear their ideas. House GOP Whip Eric Cantor says the bill contains a lot of spending that "has no place" in a stimulus measure that should be focused on job creation. Senate Republican Leader Mitch McConell says Democrats are to blame for problems Congress is having in passing an economic stimulus plan. Mcconnell says President Obama is having a problem with "his own party," because Democrats seem to favor spending over tax cuts as the top strategy for helping the economy recover from its woes. He appeared on NBC's Today Show.
A Senate committee has voted to extend a big tax cut for middle-income and wealthy taxpayers as part of the massive economic recovery bill working its way through Congress. The Senate Finance Committee accepted a bipartisan proposal to shield more than 20 million taxpayers from paying the alternative minimum tax for 2009. The proposal, which would cost about $70 billion, would inflate the Senate's overall economic recovery package to nearly $900 billion. Extending the tax cut is an annual ritual in Congress, but lawmakers usually wait until the fall to do it, as they did last year. Without the extension, families with incomes as low as $45,000 would be hit with a significant tax increase for 2009.
Most of the same bank executives who presided over their industry's meltdown are still on the job managing all that bailout money. An Associated Press analysis of regulatory and company documents shows nearly nine out of every ten of the most senior executives from 2006 are still on the job at banks that are getting federal bailout money. Even top executives whose banks made such risky loans they imperiled the economy have been largely spared any consequences. In the words of Jamie Court of the California-based group Consumer Watchdog, "when you deal with the same dogs, you're going to end up with the same fleas." In addition to who's in, the analysis reveals a stark contrast with who's out--more than 100,000 bank employees laid off as industry unemployment nearly tripled, bank stocks plummeted and credit dried up.
A measure aimed at fighting wage discrimination against women is poised to become the first law signed by President Barack Obama. Final passage is expected in the House. It's being called the Lilly Ledbetter law after the woman whose losing fight in the Supreme Court in 2007 prompted Congress to act. The high court ruled that Ledbetter was not entitled to collect 19 years' worth of damages because she didn't file her claim within 180 days of the first time she was paid less than male colleagues. She didn't find out about it until she neared retirement. The new law makes clear that every shortchanged paycheck represents a new violation. The measure has had the solid backing of Democrats, labor and women's rights groups, but had been opposed by the Bush White House and Senate Republicans.
The head of the Senate Banking Committee is asking regulators to report frequently to the panel on their progress to improve fraud detection after their failure to discover the multibillion-dollar pyramid scheme allegedly hatched by disgraced financier Bernard Madoff. At a hearing, Senator Christopher Dodd, the Connecticut Democrat who is the committee's chairman, closely questioned the enforcement director of the Securities and Exchange Commission and another SEC official as well as the interim chief executive of the Financial Industry Regulatory Authority, the securities industry's self-policing organization. "What's happened here?" Dodd asked. He said he wanted action "very quickly in this area." He asked the regulators to report every three months to the committee on improvements they were making.
Contracts for new building construction in the ten-county Houston metro area totaled $13 billion last year—down eight per cent from $14.2 billion in 2007, according to the Greater Houston Partnership. A report from McGraw Hill Construction says nonresidential contracts last year increased 28 per cent to $6.5 billion, but that growth was more than offset by a 29 per cent decline to $6.4 billion in residential contracts.
The Partnership also notes that initial claims for unemployment benefits in the 13-county Gulf Coast Workforce Development Area in December climbed to more than twice the year-earlier level. Claims increased over the year for all major industries.
The Greater Houston Partnership has won the top spot in the "best of" category for "Economic Development Marketing" in the 2008 American Marketing Association's Marketer of the Year Awards. The organization will accept the award for its "Opportunity Houston" program at the AMA Houston Marketer of the Year reception on March 2nd at the Alley Theatre. That program, chaired by Houston Astros owner Drayton McLane, Jr., is a five-year marketing program to generate leads for economic development groups in the ten-county region. The $40 million fundraising vehicle hopes to create 600,000 regional jobs, attract $60 billion in additional capital investment and increase foreign trade by $120 billion.
Venture capitalists invested about eight per cent less in 2008 than in the previous year, according to a report from PricewaterhouseCoopers and the National Venture Capital Association. They invested about $28.3 billion—the first yearly decline in total investments since 2003. During the fourth quarter, deals were down about 26 per cent from the same quarter a year earlier.
A new survey of major donors and foundations in Texas indicates 34 per cent still plan to donate as much money to charitable causes as last year. The study from Dini Partners of Houston surveyed 54 major philanthropists in Texas and two other states about the economy's impact on giving in 2009. The non-profit sector has been implementing staff reductions and hiring freezes to protect itself from the downturn. The report indicates most respondents will be motivated by existing relationships they enjoy with a particular institute for which the gift is being solicited.
Two Senators say the army hasn't acted fast enough to fix electrical problems in Iraq. They also said punishment should have been given a contractor they said allowed shoddy work to be done at U.S. facilities, leading to the electrocutions of U.S. troops. Democratic Senators Bob Casey from Pennsylvania and Byron Dorgan from North Dakota said that Houston-based contractor KBR should be punished for allowing improper grounding of electrical wires in facilities it was maintaining.
Despite the world's economic downturn, delegates at a conference on food security say more needs to be done to feed an estimated billion people going hungry. Meeting in Spain, the delegates backed the idea of better coordination to fight hunger--getting governments, international institutions, aid groups and even poor people to work together to fight hunger. The pledge came at the close of the two-day meeting organized by the United Nations and Spain, which also announced plans for new aid for agriculture and food security programs over the next five years.
The United Nations World Tourism Organization says global tourism could decline by up to two per cent in 2009 amid the financial crisis. The Madrid-based organization says Europe and the Americas will be the most affected. The UNWTO said the world's most advanced economies are seeing their first major contraction since World War II and the organization "expects 2009 international tourism to see up to a two per cent decline." The downturn follows four years of sustained growth, with a seven per cent rise a year on average between 2004 and 2007. Tourist arrivals worldwide during 2008 rose to 924 million — two percent higher than the previous year.
The pipeline industry forecasts major additions to worldwide pipeline capacity in the next five years. Analysts at Douglas-Westwood expects a five per cent increase in pipeline construction capital, as nations look to diversity in their gas supply. The focus for development will be concentrated in Asia, Eastern Europe and North America.
Developers of the proposed keystone XL Pipeline to move Canadian crude oil to Gulf Coast refineries want an increase in the limit on pressure within the line. The developers say the higher limit would optimize the flow of oil. Transcanada Keystone Pipeline of Calgary, Alberta, wants to draw on up to 80 per cent of the pipeline wall's strength — rather than the maximum 72 per cent specified in federal regulations. The U.S. Department of Transportation is accepting public comment until February 23rd. Keystone XL would start at Hardisty, Alberta, pass through Montana, continue through South Dakota and end near the Nebraska-Kansas border. Then it would connect to a pipeline set for construction in 2010 and end at Cushing, Oklahoma. A proposed pipeline from Cushing would go through Texas, to the Gulf Coast.
The International Labor Organization says as many as 2.4 million Latin Americans could lose their jobs this year due to the global economic crisis. The ILO's regional office in Peru's capital says that the global slowdown will reverse last year's gains in urban employment. Joblessness dropped from 8.1 per cent to 7.4 per cent in the region as a whole. The ILO says urban unemployment in Latin America will increase for the first time since 2003, to between 7.9 and 8.3 per cent.
Mexico's central bank says the amount of money migrants sent home fell 3.6 per cent in 2008 — the first drop on record. The slide is part of a global trend that is expected to worsen as more emigrants from developing countries lose jobs in the financial crisis battering the United States, Europe and Japan. The central bank said it's the first time remittances have fallen year-to-year since the bank starting tracking the money 13 years ago. It gave no forecast for 2009. But Mexico's largest bank, Banamex, has predicted that remittances could drop by at least 2.5 per cent in 2009. Experts blame the U.S. recession and a crackdown on illegal immigration.
The Harris County Commissioners Court recently accepted conveyance of an 81-acre park from within a Kickerillo and Mischer's V&W Partners master planed mixed-use development called The Village. The area will be part of a 148-acre nature park called the Kickerillo-Mischer Preserve. The park will have an education center, picnic areas, canoe docks and a system of trails connecting to surrounding neighborhoods.
Valero Energy says it lost $3.28 billion in the fourth quarter as it absorbed a huge one-time valuation charge and a slowing economy kept profit margins tight. The nation's largest independent oil refiner earned $567 million in the quarter a year ago. The latest results include a non-cash impairment charge of $4.1 billion to reflect the reduced value of its assets. San Antonio-based Valero says revenue dropped 35 per cent to $18.6 billion.