Arizona's Own Espresso Pundit

Red Bull Update

Sean Noble has has remodeled his Noble Thinking Blog.  I thought you might be interested in this note from him.

Today we launch a new and improved www.noblethinking.com to join the millions of blogs already in existence.

I will still have daily commentary about stuff that I am thinking, and the Thought of the Day portion has been updated so that each quote is an individual post.  There is also a Contact section so you can tell me how much you love it, or how off base I am.  And, you can always comment on posts.   Longer pieces will posted periodically in the Deep Thinking portion of the blog.

At Least My Dad still gets a Senior Discount...

Growing up in Tucson, my family always subscribed to the Citizen, so naturally I always assumed that newspapers came in the afternoon.  Afternoon dailies are truly an anachronism.  While the population of Tucson has risen dramatically since I was a kid, Citizen has seen its circulation dwindle to around 17,000.  I recently asked my dad why he still subscribes and said that every week they run a really good golf coupon.  I guess he'll be disappointed come March.

Gannett Co. Inc. will close the Tucson Citizen if it does not find a buyer by March 21.

Robert J. Dickey, president of Gannett U.S. Community Publishing, made the announcement in a meeting with employees Friday. He said employees will be offered a severance package if the paper closes.

 

"The Tucson Citizen has been part of Gannett since 1976, and we deeply regret having to take this step," Dickey said. "But dramatic changes in our industry combined with the difficult economy - particularly in this region - mean it is no longer viable for our partnership with Lee Enterprises Incorporated to produce two daily newspapers in Tucson."

Dude, I'm Like Totally in a Glass House.

The Arizona Guardian Team spelled "Napolitano" wrong in this morning's headline.   I don't know about other bloggers, but I find spelling errors the most difficult to catch.  Most Blogging software doesn't check the headlines, and "Napolitano" is always flagged, so you always have to check it manually anyway.  So to my former MSM friends who are now dealing with a pure electronic environment and no copy editor back ups, I will say "welcome to the neighborhood."

(My nightmare is leaving the "L" out of "Republic."  I've made that mistake several times, but I caught it before anyone else noticed.  I'm nervous about it because some people might think it was intentional, but that would be, you know, really tacky.)

Cutting Off the Dog's Tail an Inch at a Time

I haven't been covering the day-to-day details of the mainstream media's collapse.  I originally spent quite a bit of time on the subject because I was the only one talking about it.  The newspaper management, bankers and Wall Street analysts were all claiming that the business model was still sound and the content was simply migrating to the web. 

Meanwhile I was pointing out that the web couldn't generate sufficient revenue to support the current cost structure and that reverse economies of scale meant that major papers weren't going to simply get smaller, they were going to reach a tipping point and then collapse. Now that my theory has prevailed, it seems like piling on to cover daily details. 

Gannett Blog has stepped in to cover the day-to-day machinations and for the last couple weeks, editor Jim Hopkins has been reporting that Gannett was going to send workers home for one week without pay.  Gannett has now confirmed this and the story has made it to the New York Times and Drudge.  People have been asking if I've seen it, so I thought I would link to it.

The Gannett Company, the nation’s largest newspaper publisher, said on Wednesday that it would force thousands of its employees to take a week off without pay in an effort to avoid layoffs.

Frankly, a furlough is a terrible idea; it devastates morale, humiliates employees by making them feel like they are pawns in a huge game and makes management look desperate.  It would be much better to lay off one person in 50 than to force everyone to take a week off without pay.  Couple this with the outrageous salaries that management is earning while driving the paper into the ground and you have a work force that has no loyalty to the company and is desperate to leave.  Soon, the only ones who remain are the ones who haven't been able to figure out where else to go.  This mirror immage of survival of the fittest--which I call remainder of the lamest--leads to a severly diluted employee gene pool. 

I understand what management is trying to do--spread the pain and delay the inevitable, however, Gannett is essentially cutting off the dog's tail an inch at a time.  There will have to be an ongoing series of cost-cutting moves as the paper constantly tries to align its cost structure with its falling revenue. 

Management is looking for a stable model--a size and configuration in which the cost structure generates enough revenue to support itself and still turn a profit.  In the very short run they may find it, but that's because they can operate at a loss but cover their variable costs and contribute to their fixed costs.  Airlines for example have done this for years, and it's why GM can lose a few thousand dollars on each car and still survive--in the short run.  

But in the long run, all costs are variable and Gannett will have to sign new contracts and invest in new equipment and presses.  Management will understand that these new commitments won't be covered by existing revenue and will either refuse to make the investment, or will be unable to get the financing.

At that point, the long wind down process will accelerate.  Meanwhile, you can read Gannett Blog and every few months, you will learn about the latest cost-cutting effort.  Eventually, those announcements will make it to the New York Times and Drudge--forcing them to ultimately be covered by Gannett itself. 

But you won't be reading about the day-to-day machinations in Espresso Pundit.  I've moved on.

One More Example of Mismanagement as she heads out the door.

Every Summer and every Fall during the Napolitano Administration, DOA Director Bill Bell--and Betsey Bayless before him--send out a reminder to agency heads to make sure they adhere to the 320 hour cap on annual leave.

Here's an example from last from last August.

In consideration of the costs associated with excessive annual leave upon an employee's separation, I encourage all agency management to monitor annual leave balances of both covered and uncovered employees. 

In December, I pointed out  that Governor Napolitano ignored this directive for her own staff and has left Governor Brewer with an $870,000 liability.   At the time I wrote that article*I was missing a key piece of information.  I had the list of CURRENT employees, but I didn't have access to the list of high-profile employees who had already left the Napolitano Administration.  My Freedom of Information Request has been answered and I thought you might be interested in some of the key names.  The first column of numbers is the employee's accumulated annual leave time at severance and the second column is the total amount they were paid when the left. 

BURKE, DENNIS K.                           611.44                            $41,315
CUNNINGHAM, GEORGE R.              536.62                            $32,372
HAENER, MICHAEL R.                     723.36                            $41,766
NELSON, TIMOTHY A.                     442.80                            $26,712
RENFRO, DARCY R.                         416.16                            $18,645

*The post subsequently appeared in the Tribune and Star. 

(Ironically, Howie wrote the story for the Tribune and Star but on Horizon, he said that the Republic was the original source. Host Ted Simmons interrupted and said the story originated "from a blogger.")

From Bingo To Bankruptcy?

I'm in Vegas at a Southwest Regional Transmission meeting and while I think discussions of loop flow studies are pretty exciting, you can understand that I occasionally lose focus. 

Naturally, when my mind drifts, my thoughts shift to gaming.  Economists claim that gaming is recession proof, but like so many economic rules that have been rewritten in the last few months, this on is obsolete. 

My four-star hotel was $65; the cab line that usually takes me half an hour was non-existent, even the traffic seems lighter. 

This only confirms something that's been on my mind for quite a while now.  The picture above is the new luxury hotel and casino going up just east Scottsdale.  I intentionally waited until is was raining to take the picture.

You may have caught this article covering the ceremonial placement of the final steel beam at Casino Arizona. 

A two-year, $400 million project to bring a resort casino to Salt River has punctuated the community's horizon with a 15-story steel skeleton that will become a 497-room hotel tower.

For the last year or so I've watched the progress on the this project and had only one thought...what a disaster.

Indian Gaming used to be incredibly efficient.  I mean there's something about putting 400 slot machines in a tent in the middle of one of the largest American cities that just screams gold mine.  

But while Indian Gaming is by no means a fad, it seems to be following the normal product life cycle  and as the number of casinos reaches a saturation point and the novelty of having slot machines in your back yard wears off, the industry has reached a maturity phase and may even be tipping to decline. 

Add to that natural cycle the economic turmoil currently gripping the country and then factor in one more thing.  There seems to be a "back to the basics" humility that comes from so many people taking such an economic drubbing.  Just like gym memberships soar every January as people realized they indulged too much over the holidays, it seems like people are realizing that over the last couple decades, they have lived beyond their means and they have decided to be happy with a slower lifestyle.  That new attitude isn't very compatible with a trip to Casino Arizona. 

Now I'm sure that a fancy banker has a power point presentation that shows what a success the project is going to be and I've been assured that the banquet hall is already booked for the first two years.  And there's nothing more opaque than the financial numbers behind Indian Gaming; none of us know how much money they really earn, or what the proformas for the hotel look like, but frankly the project doesn't make sense to me. 

Indian Gaming has a competitive advantage because it has low transaction costs--locals don't have to travel far to play the games, so the fact that the gaming is not as good as Vegas (no craps, six deck shoes, continuous shuffle) isn't a huge problem.  No one travels to Phoenix to gamble on the reservation.  If they have to fly in, they go to Vegas. 

So what does the resort add?  Headaches.

Running a luxury resort is a very difficult and highly competitive business and this sentence from the article doesn't inspire confidence.

The unbranded hotel will be operated by Casino Arizona, the tribe's own gaming enterprise.

Nothing against the Tribe, but it takes a highly specialized expertize plus national economies of scale to run a successful resort hotel.  The City of Phoenix has built a new hotel, but they don't run it.  The hotel bears a Sheraton brand and is run by Sheraton's staff which allows it to tap into a vast array of national--and indeed international--resources. 

Maybe I'm wrong.  Maybe the combination of location, gaming monopoly, and luxury amenities--like the proximity to Talking Stick Golf course--will give the new Casino Arizona a competitive advantage when compared to some of the aging Scottsdale resorts and they will be the ones that are in financial trouble. 

Maybe.  But I remember the buzz when folks announced the construction of the Scottsdale Galleria.  Nothing would be able to compete with its chic design and million gallon aquarium.  The newly-remodeled Fashion Square was doomed and Scottsdale would never be the same. 

Well, the investors were never the same.  

Maybe those bankers flew in from New York with their fancy power point display and sold the tribe a bill of goods.  It wouldn't be the first time that's happened.   

 

At Least They Spelled My Name Ri....Dang.

I must have touched a nerve with my post approving of Senate President Bob Burns' decision to close the Senate Press room.  You can read the whole post here, but the key point is that I said the room should be closed because it's obsolete; it's impossible to distinguish between those who should have access and those who shouldn't and finally that the reporters had abused the privilege by treating the press room with the hygiene one would normally associate with a fraternity in a John Belushi movie.

I received quite a few comments, plus a few remarks from reporters.  Interestingly, no one has really debated my three premises.  Clearly cell phones and Wi Fi have eliminated the need for reporters based at the capitol to have land lines and Desk top computers with dedicated connections to their press rooms. 

For the second point, if Burns is going to give the Guardian reporters a press pass, why not Sonoran Alliance?  What's the difference between my opinion pieces and EJ Montini or Bob Robb?  How are you going to distinguish Shane Wikfors from Sonoran Alliance with Dennis Welch from the Arizona Guardian?

As for the mess, one of the Republic Reporters came to me at the State of the State Address and said they were cleaning the room up.  Cool.  That would be great if they kept it clean for a while.

Today's Yellow Sheet proclaimed that they were tired of me picking on newspapers and that I'm certainly not a journalist.  The funny part of the post is the ending.

"Enough already,  Craig Patterson."

Dude, it's "Greg."  So much for the mainstream media being more accurate than the blogosphere. 

(Ok, yes I know they did it on purpose just to get under my skin...)

That was fast...

Now that Republicans have control the Governor's office and have increased their majorities in the House and Senate, the word of the week is "Bipartisanship."  In fact, the Arizona Republic used what's left of the Viewpoints section to proclaim that Arizona has a history of "Bipartisanship."

Indeed, I attended the Arizona Chamber of Commerce lunch last week and both the Republican and  Democratic leaders made earnest and seemingly sincere attempts to claim that they would like to work with the other party to solve the state's massive problems.  Naturally the Democratic leaders worked hard to appear the most earnest and sincere, but even Bob Burns--the grizzled veteran who has been the favorite punching bag of the media and Democratic Party for over 22 years--sounded a bipartisan theme.

Chad Campbell's speech was especially good and I remember looking around the room at the Republican freshmen and saying to myself..."wow, I wonder if they will actually fall for this." 

Fortunately, the Democrats couldn't even get through the lunch without resorting to their viciously partisan ways.  While Burns was telling the 500 people in the room how he hoped to work with the Democrats to solve the budget crisis, he called the budget a "Tar Baby."  Now we all know that "Tar Baby" is from the Uncle Remus books and certainly didn't originally have any racial connections.  Some have argued that the term is now offensive, but can't really explain why.  But does anyone argue that Burns was aware of that, or did he slip up by using a term that was once OK, and has recently become controversial? 

Democrats immediately contacted the press to chastise Burns for using a racially loaded term.  The incident made Sunday's Republic Insider and the Business Journal had it here. 

Talk about irony.  A week before the Session even starts, Democrats and Republicans are trying to reach out to each other and Bob Burns gives a speech inviting the Democrats' input into the budget process and they immediately nail him for mistakenly using a term that they find offensive.  Dude, that's awesome.

Here's the Democratic reaction. 

“It’s an embarrassment to Arizona that the president of our Senate would use such an ugly term, one that is so universally recognized as derogatory and hurtful,” said Emily DeRose, communications director for the Arizona Democratic Party.

Ouch.

Of course vicious partisan attacks are nothing new.  Last year I railed against the official Democratic Party Website "CrazySpace Arizona." 

My point back then was that this site was immature and unprofessional (and frankly creepy) and that if the Democrats wanted to talk about working together in a bipartisan manner they would take it down. 

  

Thank goodness they rejected my advice. 

The Crazy website has become a huge asset to Republicans.  First, it shows the Democrats' true colors.  For all Chad Campbell's talk about working together, Republicans can look at the Crazy site and understand that the Democrats want to put a big red X on their face too.  Bob Burns already knows this.  But I doubt my friend Kirk Adams understands yet.  So here's a suggestion to Kirk and any other Legislator who was lulled by the Chamber lunch and the Republic Viewpoints section.  Make Crazy AZ your home page.  Make sure you see it every time you log on and when a reasonable Democrat, say, Campbell, Lujan or Cheuvront comes by your office, remember that the Democrats are flying their true colors so you are on notice...next year they will be putting red Xs on pictures of members of your caucus.

The second reason that it's wonderful that the Democrats ignored my call to take down the site is the best of all.  The mentality behind the CrazySpace site was the cause of the Democrats legislative debacle last fall. 

Think about it.  The Crazy site says nasty things about a bunch of Republicans and then puts an X over the face of the ones who are no longer with us. That's exactly what they tried to do in the last election.  Democrats had the best national environment since Watergate, plus they had millions of dollars for independent expenditures.  Yet instead of using the money to present the vision of the Democratic party and tell the voters why it was important to elect Democrats, the party adopted the Crazy strategy.  They targeted a dozen or so Republicans and hit them with scores of over the top vicious cookie cutter hit pieces. 

The strategy was a disaster.  Not only did the Democrats not manage to take out any of the Republicans, but they also neglected to defend their incumbents and three of them were defeated. So at the end of the day, the Dems squandered $4 million, wasted a once-in-a-generation opportunity and showed the entire state that there is nothing "bipartisan" about their behavior. After the dust settled, Republicans gained two seats in the House and one in the Senate, worse yet, liberal Republicans Pete Hershberger, Jennifer Burns and Tom O'Halleran are gone and have been replaced by Conservatives. 

Finally, the CrazySpace site shows how badly the Democratic party is fooling itself.  Robert Blendu and Karen Johnson have big Xs over their pictures, but Blendu was defeated in a primary by the Democrats' worst nightmare--an Hispanic Republican who is much more Conservative than Blendu.  

And Johnson?  She actually was bipartisan in her later years--her friendship with Democrat Ken Cheuvront being the most famous example--and it's not like she was defeated, she retired--only to be replaced by Russell Pearce.  Take the X off her face.  The Democrats are much better off with Johnson than Pearce. 

So keep the site up.  Fly your true colors; follow your failed scorched earth strategy and fool yourself that you made progress in the legislative races. 

And the next time Bob Burns stands up in front of 500 people and says he wants to work with the Democrats...see if he makes any mistakes...and if he does nail him.  Unleash Emily to tell all the papers what an embarrassing troglodyte racists ultra conservative Neocon jerk he is.

Of course, I don't think Bob's going to be giving any more speeches about working together.  He's too smart for that. 

Let Them sit in the Friggin Gallery Like Everyone Else

There's a mini kerfuffle brewing over Senate President Bob Burns' decision not to renew the lease on the Senate Press Room.  The controversy has been compounded because the lack of credentials means that some reporters don't get special privileges--which, naturally causes them to whine bitterly.  Aside from the Guardian folks, the only one who seems to care is Tedski over at R Cubed.

I have one thing to add to the conversation....Thank goodness someone had the guts to finally close down the garbage sty that is the Senate Press Room.

I'm sure the comment section will be loaded with logically challenged screeds that equate closing the press room with shutting down a newspaper, so let me make a few points.

First, the press room is obsolete.  When I was in the legislature, there were no cell phones, laptop computers or Internet.  If you worked at the capitol, you needed an office at the capitol.  The legislature made special accommodations for the media by providing them a room, phones and a system that linked their computers with the press rooms downtown. 

Obviously, now that everyone has a cell phone and the entire capitol complex is covered by free Wi Fi, there's no reason that the reporters can't work from the lobby and the gallery like all of the agency directors, lobbyists and constituents. 

Second, how do you define a journalist?  The folks from the Guardian produce a product that's exclusively on line---just like Espresso Pundit.  In fact, when I started Espresso Pundit, I asked the Senate Operations Director if I could have a desk in the press room.   We both laughed and he gave me a wink and said "I'll check the policy." 

If he had given me a desk in the press room, the Mainstream guys would have gone crazy and now that those same Mainstream guys no longer have an actual print edition, they are demanding that Bob Burns give them credentials.  Frankly, if Burns acquiesces, I'm going to demand credentials as well.  It will be good to have access to the House and Senate floor again.

Which, of course brings up another point.  The press guys don't just want access to the press room, they want special access to the secure areas of the building--including the House and Senate floor.  When I was Chief of staff of the Senate, I had limited access to the Senate floor and--despite being a former member--no access to the House Floor.

The fact that you can no longer define a journalist brings up other issues.  For example, for years I have requested that I be allowed as a guest on Horizon's Journalists' Roundtable.  Management of  Channel 8 has steadfastly refused.  If the on line reporters at the "Arizona Guardian" are invited to the Journalists' Roundtable just because they once worked for the Tribune, I'm going to blow a gasket.  (And file a complaint with the FCC, but that's a different issue.)

Finally, Bob Burns should shut the press room because the journalists have abused the privilege so badly that they don't deserve to have the space. 

The press room is a pig sty.  Whatever happened to basic professionalism?  The room is filled with trash; the floor is stacked with piles of old papers, every desk is a mess, and the walls are covered with bumper stickers, old cartoons and juvenile drawings.  (When I worked at the Senate, I went to the Press Room to talk to a reporter and I noticed that he had a picture of Senate President Brenda Burns on the wall by his desk.  It was her official press packet file photo and I don't remember the official caption, but I think it was something like "Community Shot" What I do remember is that he had crossed out the letters until it read "Cum Shot.").

The reporters seem to take some sort of special pleasure in their Animal House behavior, crappy dress and poor manners so the room is an eyesore and an embarrassment.  And since it's also obsolete and frankly doesn't smell good.  Close it.

Shovel out the room, repair the damage to the walls and then fix the paint and carpet.  Convert it back into decent space and then tell the reporters to sit in the Gallery like the rest of us.  And make sure they keep their feet off the seats, there are kids watching.

The Real Janet

KPNX viewers got a glimpse of the real Janet Napolitano during a meeting of the State Loan Commission.  The Governor refuses to acknowledge the state's fiscal crisis.  Meanwhile, Treasurer Dean Martin is trying to figure out how the state is going to make payroll. 

The public, the media and most legislators have no clue how bad the the budget is.  We are like someone who has been unemployed for a few years, actually increased our lifestyle by spending down our 401k and refinancing our house.  Now we still have an extravagant lifestyle and all the reserves are gone.  Napolitano's level of fiscal mismanagement amounts to malfeasance. 

We are going to do the unthinkable.  We will be releasing thousands of non-violent prisioners who have less than a year left on their prison terms. School funding will be cut, AHCCCS reimbursements will be cut, the tax equalization rate will be allowed to rise.  Double counting out-of-state college students will stop.   All day Kindergarten is gone.  The Science foundation is gone.  The Commerce and Tourism departments?  Gone.  We are going to sweep the remaining funds, refuse to fund the state's pension system, reduce the state contribution to employee health care benefits and then we are going to see large layoffs and a even then we will run out of cash and struggle to make payroll.  

The only way we can legally borrow to fill the gap is if we pay the money back within the same fiscal year.  That's not an option, because we can't grow out of this within a fiscal year.  Increasing long term debt to cover operating expenses is clearly unconstitutional.  No one is going to finance the debt knowing that Clint Bollick is standing there with a law suit. 

Almost exactly a year ago, I wrote a post called "The Road to Bankruptcy" and said that this was the path we were on. 

Now we have Janet on camera, ticked off and claiming that Dean Martin is pulling a publicity stunt.  

It was nearly a year ago that she called him "Chicken Little."  Yet, even he didn't see the extend of the economic devastation that has affected the state. 

(I'm having trouble ebedding the video, so you can check it out here.)