Non-profit agencies and county departments in Haywood County are still reeling from massive budget cuts announced by commissioners last week.

The county commissioners cut funding to all non-profits for the rest of the fiscal year, and called for county departments to scale back their budgets by 7 percent.

The cuts will affect everything from arts to recreation to schools. Leaders continued to call emergency meetings this week to grapple with the grim financial picture.

Some non-profit agencies were hit harder than others, like the Haywood County Arts Council. The group receives $15,000 per year from the county, an amount that will be cut by $11,250 in 2009.

“That’s a lot of money — it’s hard to make up that amount,” said Arts Council Director Kay Waldrop, who called an emergency meeting Monday (March 16) to discuss the cuts with her board of directors.

Waldrop said across-the-board cuts to the arts at federal, state and local levels are making it hard to cope.

“It’s the snowball effect,” Waldrop said. “Just one thing you can try to overcome pretty easily, but when your grants are cut, government funding is cut, donations are down and ticket sales are down — when all of those are cut, it’s a double whammy.”

Waldrop said her organization will battle to keep itself afloat.

“We’re fighting to keep the arts alive in our community,” she said.

Meanwhile, the Waynesville Recreation Center is doing its fair share of fighting. The Center receives $70,000 per year in county support, but won’t get any more for the rest of the year.

The county supplement has allowed county residents to pay the same amount as town residents for a recreation center membership despite not paying the taxes that town residents do to support the center.

Now, the recreation center must find some way to make up for the shortfall — and raising rates for county residents is one option on the table.

“We don’t have differential rates right now for the town and county, primarily because Haywood County was giving us money to supplement the difference,” said Rhett Langston, director of recreation for the Town of Waynesville. “We’ve got to come up with the money to supplement the difference some other way. We want to be very, very careful and be as fair as possible.”

Langston said the cut won’t affect programs or classes, but that the recreation center, “will definitely feel it.”

Other non-profits to feel the cut most include the Haywood County Agricultural Activities Center, the low-cost Good Samaritan Clinic, and Haywood Mountain Home.

Feeling the pinch

County departments are also reeling from the round of cuts. Some have struggled to trim their already slim budgets. A week after a county mandate to departments to cut 7 percent of their budget, across-the-board cuts only totaled 3.7 percent, Haywood County Manager David Cotton told commissioners at their Monday (March 16) meeting.

The county has tossed around various ideas to save money, including making employees take mandatory leave or cutting work weeks to 36 hours. The most drastic step will be unavoidable, Cotton said.

“We’re looking at layoffs. That’s where we’re going,” Cotton told commissioners.

Cotton said the county will take a look at the departments that have seen a slowdown in a need for their services as places to cut positions.

Robert Busko, director of the Haywood County Public Library system, said his employees have already volunteered unpaid time off and are bracing for more.

“I’m taking a week off without pay, and most supervisory staff are taking five days without pay,” Busko said. “Whenever you have to have employees take time off without pay, that’s one of the last resorts.”

The budget cuts mean the library system is holding off on developing its collection at a time when library use has increased with people seeking low-cost entertainment. The library constantly reviews it collection, ordering new materials on subjects that may be lacking and replacing out-of-date materials.

“We got a few materials ordered before we had to make the cut, but we’re ordering bestsellers only right now,” Busko said.

“A tremendous hit”

Meanwhile, the school system is figuring out how to cope with budget cuts. The school system has already slashed its budget by 3 percent to comply with a state mandate, and is bracing for additional state cuts that could total up to 9 percent — in addition to the county reductions.

“This last (county) one was totally unexpected,” said Mike Sorrells, chair of the school finance committee and member of the school board. “We are taking a tremendous hit.”

School superintendent Anne Garrett called the cuts, “serious — very serious.”

So far, the school system has been able to avoid layoffs. But various projects will have to be put on hold. One of them is a five-year project to get all student records put on microfilm, since some of the paper copies are old and deteriorating. Other cuts will mostly be supplies and materials to various programs, including vocational, special needs, the Gateway Program for at-risk students, and staff development for substitute teachers, who will not be attending conferences in the near future as a result of the cuts.

School officials expressed concern about the impact the latest cuts have had on the system’s general fund balance, or money not targeted for a specific purpose, which has been slashed in half.

The 2004 floods highlighted the importance of having a fund balance. When the school system was hit with unexpected costs, it had reserves to pull from to pay for upfront repairs before federal and state reimbursements came in.

“If we have some kind of crisis where a major piece of equipment goes down and we don’t have money in the fund balance,” that’s not a desirable situation, said Larry Smith, Chief Financial Officer for Haywood County Schools.

The county’s fund balance has dipped as well, and mandatory budget cuts are a necessary way to get the fund balance back to acceptable levels, said commissioners. Plus, cuts have been felt in private industry for some time, so it was only a matter of time before local governments were forced to follow suit.

“The private sector has been having to cut back for several months, and now the county has to cut back,” said Commissioner Kevin Ensley.

The Swain County School District has terminated a popular program that emphasized science and math education, offered students smaller classes and helped combat the system’s high dropout rate.

The three-year-old School of Applied Science, Math and Technology was axed last month, despite having two more years of grant funding left. It had 160 students out of 600 at the high school.

The SASMT got a five-year grant from the N.C. New Schools Foundation, which funds programs that offer an alternative approach to traditional high school curriculum.

While the program didn’t cost Swain schools anything thanks to the grant funding, that grant would run out in two more years and the school system would have to shoulder the cost of about $52,000 annually. Administrators felt it would be impossible for them to come up with the money, and opted to throw in the towel sooner rather than later.

“We studied our options for over six months before we made that decision,” said Regina Ash, head of instruction for the Swain County Schools system. “We studied options, we argued about it. This was not something we took lightly. It was not a first choice, but with the budget going the way it is going we felt this was the best option for us.”

The alternative style of learning offered by the SASMT proved popular. Few students left the program, and it boasted an extremely low dropout rate — only one pupil in three years. A review commissioned by the New Schools Foundation gave the SASMT high marks in October 2008, finding that, “achievement has been consistently above district averages in all core subjects.”

“You in essence are closing down a program that has proven to be very effective,” said Sam Houston, president and CEO of the North Carolina Science, Math and Technology Education Center.

While Houston said he cannot speak to the school’s situation, he questioned any decision to terminate the program before the grant ran out.

“It would be wise for them to continue for the next two years,” he said.

The SASMT principal, Jeff Payne, expressed disappointment in the program’s termination.

“We hate to see it going away,” Payne said. “We feel like we were successful, but it’s just one of those things that we hope to learn from the experience.”

The high school has pledged to incoporate the education principles from the special science and math program into all classrooms school wide.

The wrong equation?

The success of the SASMT lay partly in its small size, which helped cultivate an intimate learning environment.

The program operated like a school within a school, with students in the same building but segregated from the regular student body for most of their classes, enjoying smaller class size and a more intimate setting.

“It’s building the relationship on a deeper level, so that the teachers know the kids, their problems, and their families,” said Ash. “When kids and teachers know each other better, they both perform better. The depth of understanding helps the relationship on both ends.”

But with all their perks, small classes in an underfunded, rural school district like Swain’s present a host of challenges. Already in Swain, there aren’t enough teachers to go around. The SASMT was sharing teachers with Swain County High School, and with its multiple small classes was stretching teaching resources even further.

“As a small school, the quota of teachers is small and insufficient to cover even the core subjects for all students,” noted the New Schools review.

Limited teaching resources proved to be a fatal blow to the SASMT.

“We started splitting those groups up, and we didn’t have the teacher resources to do it the way they’re supposed to be done,” Payne said.

The school district would have had to hire additional positions as required by the SASMT, including a principal and guidance counselor — a move the system likely couldn’t afford when the time came.

“The problem is they require you to have a separate principal and a separate guidance counselor,” said Steve Claxton, community schools coordinator for the district. “We’re talking about very few students to do those things, and we didn’t see it being fiscally possible for us to continue to have two principals, and a guidance counselor just for (SASMT).”

Particularly, Claxton said, when the district is already facing the possibility of eliminating existing positions in its budget cutbacks.

“We’re looking at losing teachers. How are we going to come up with money to pay people that we don’t pay now?” he said.

But Houston says the benefits students reap from the program make the upfront cost worthwhile.

“You have a very small student population, so when you calculate the per pupil cost, it looks like they are terribly expensive,” Houston said. “But the truth is, the return on the investment is huge.”

While a lack of funding for new positions played a role in the termination of the SASMT, Payne believes small classes could be an inherently flawed approach at small, rural schools. That approach may have worked well in larger districts the New Schools Foundation first experimented with, but likely won’t play out the same way in smaller ones.

“They’ve tried to go to smaller schools, and that’s part of the problem — we’re already a small school to start with,” said Payne.

Even when the SASMT merge back into the rest of the student body, the student population of Swain High School will total about 600.

“I’d rather have a high school with 200, but when you start getting into those really large schools, then you’re looking at losing the relationship component,” Payne said. “Those are the schools that the new schools project will work better for.”

Ironically Payne believes that the small classes that made the SASMT work led to its downfall.

“It got worse and worse to be able to have those small classes, and in my opinion, the division of resources to different programs limited what people could actually do,” he said.

So while the New Schools Project may contain some beneficial ideas, some of them are impossible to apply at smaller schools, says Payne.

“It’s not the New Schools project’s fault that we don’t have the resources, but there’s only so much you can do with what you have.”

Math, science won’t disappear

Swain cut the SASMT at a time when an increasing importance is being placed on math, science and technological education. But the subjects weren’t a factor in the decision to end the program, said Claxton.

Instead, the additional cost the district would have to incur to continue the SASMT when its grant ran out was a deterrent.

“They’re expecting us to continue to run it, versus all the other programs already in place — things like athletics,” Claxton said.

But Payne says it’s more important than ever that students learn the subjects taught by the SASMT.

“Pick up any magazine, or go on-line, and look at what jobs are going to be needed in the next 20 years,” he said. “The world’s changing, and technology is a big part of it, and science and math are a part of that technology.”

Payne worries that those subjects won’t play as big of a role in the regular curriculum.

“It’s not going to be as big of a focus probably,” he said. “I think we had more emphasis, not just by giving them a couple more classes, but also by integrating those areas into their classes.”

Ash, though, assures that the school is making steps to incorporate those subjects into everyday classes, and make sure students know how to apply them in the outside world.

“Our teachers are embedding technology in their instruction, and when our kids are doing projects, they are using technology in presentations,” she said. “We’re making sure that the work they produce is more relevant and more connected with what they’ll be producing in the workplace.”

Plus, the district is emphasizing math and science education in the curriculum.

“We’ve been building our science and math program for a while, and trying to offer advanced courses for our students,” Ash said, like a yearlong Advanced Placement course that covers Physics and Pre-Calculus.

“We’ve learned a lot”

All in all, Swain County school officials say the SASMT was anything but a wash. In fact, the professional development it provided taught the district some valuable lessons and approaches it hopes to hold on to.

“We’ve learned a lot from it, and we’ll incorporate some of those things into the system next year,” Claxton said.

Payne tends to agree.

“A lot of the stuff we learned from this experience we’re going to keep,” he says. “Hopefully, students aren’t going to be missing much at all.”

Payne would like to see lasting change result from the SASMT concepts.

“I’m hopeful that we’ve learned a lot, and that we’re changing the culture of the whole high school and the way that teachers and students interact with one another,” he said.

The first Friday in February came with some bad news for the Swain County School District and systems around the state. Word came from Raleigh that school budgets would be cut by 7 percent in the upcoming fiscal year.

The Swain school system already trimmed costs by $75,000 in December when the state called on schools statewide to send back a small percent of their current budgets. Schools were bracing for more cutbacks , but didn’t know how much.

“In the beginning, they were saying between 2 and 7 percent, but realistically around 4 percent,” said Steve Claxton, community schools coordinator. “Now they’re saying no, it’s looking more drastic than we first projected.”

A worst case scenario could call for 7 percent budget cut, which would amount to $952,000. While the exact amount won’t be known for some time, administrators are bracing for some tough decisions.

“We’re going to take a pretty serious cut. That’s plain and simple,” said Claxton. “Everybody knows that. The revenues just aren’t there.”

Layoffs are now a very real possibility, and likely a necessity. Hopefully the school system can achieve a workforce reduction through attrition. For the past two years, between 15 and 17 teachers retired at the end of the school year. If the same scenario happened this year, the school could chose not to fill vacancies and naturally reduce the number of paid positions. But that won’t be the case.

“We don’t have those numbers this year, so it’s really concerning us,” said Claxton. “This year we’re looking at people if they even are qualified to retire.”

The school also loses a certain number of teachers every year who move to other counties. But if there aren’t enough teachers in that category, the school may have to broaden its scope, he said.

Talk of layoffs has caused a cloud to hang over the schools.

“It’s creating a real feeling of uneasiness,” said Claxton.

Western Carolina University Chancellor John Bardo in an interview with The Smoky Mountain News last week said that he is distancing himself from the budget cut process.

He said he is leaving it up to a “cadre of deans” and the provost to come up with areas that could be cut.

He also said, “My finance guy is going through and looking at everything.”

By having the deans and provost handle the budget cuts rather than himself, he said it is a step toward “decentralizing” the university, which he said needs to be done if WCU grows as much as he thinks it will in the next 15 to 20 years.

A lot of the decisions will be “done away from me,” Bardo said.

Bardo noted that some teachers could lose their jobs. “If we get a 5 to 7 percent cut, there will be layoffs,” Bardo said.

Minimizing the cost of athletic programs is a way the university can save money, Bardo said, adding that the band may not need to go on every sports trip.

To hold down costs, a new position to oversee development of Millennial Initiative projects has been eliminated because it is not considered “mission critical,” Bardo said.

Bardo said the university is trying to be judicious in deciding what is and is not critical. For instance, he said the position of chief diversity officer will remain.

Proposed budget cuts at Western Carolina University are beginning to affect students like Will Furse, who says he won’t graduate on time if summer classes are cut.

The senior construction management student knows he has little influence over the situation.

“There’s nothing that can be done,” he said. “That’s what sucks.”

If it were left up to Furse he said he would cut pay for executives, but doubts Chancellor John Bardo will see it that way.

Bardo has asked each department to come up with scenarios that trim their budgets by 3, 5 and 7 percent. Bardo is preparing the university for state budget cuts likely coming down the pipe, although no one knows yet exactly how much that could be. Bardo wants the scenarios back by March 1.

While Bardo has pledged to defer to the recommendations of deans, the cuts likely mean the loss of professors, which translates to fewer classes and larger class sizes for the courses that are left.

The scenarios will be presented to the university’s Strategic Planning Committee for feedback, said WCU Provost Dr. Kyle Carter in an interview with The Smoky Mountain News.

The university will remain in a holding pattern, however, until state budget cuts — and the federal stimulus package — shake out. Bardo said he will be making a trip to the legislature this week to learn more about the proposed budget cuts.

Until there is a firm number passed down from the state, the university is in “flux,” said Bardo. By coming up with different scenarios of what might happen, hopefully people won’t be surprised, Bardo said.

“We’re trying to be as straight as we can with folks,” he said.

Bardo in an interview with The Smoky Mountain News last week that “A campus is only as good as its faculty,” but layoffs will likely be unavoidable.

“Depending on the magnitude of the budget reduction we could see layoffs,” Carter said.

Some teachers on year-to-year contracts have already been told they might not have a job next year, Carter said.

“My English teacher told me last week she might lose her job,” said Vanessa Abney, a junior. “A lot of teachers are being let go. My friend told me his teacher in theater got fired.”

Losing teachers is hard on students, Abney said.

“Some of us get close to our professors,” she said.

The class schedule for fall 2009 has already been put together with the assumption that there would be fewer faculty and larger class sizes. The current plan calls for 7 to 10 percent fewer classes than this year, Carter said.

Some teachers on year-to-year contracts don’t have their names on the new schedule and they take that to mean they don’t have a job. But if the budget situation improves, WCU will go back and add classes and keep teachers on board, Carter said.

Student Pamela King said if teachers are laid off at the end of the year it will mean larger class sizes, which she would dislike. Even if class sizes increase, WCU will still have smaller classes than most other schools in the state, Carter said. Fifty percent of WCU’s classes are capped at 35 or less, he said.

Carter said the university is “doing all it can” to protect the quality of education. He said the cuts will not be across the board but targeted and that no final plans or decisions have been made, despite some professors being left off the fall class schedule.

There are 582 full-time faculty at WCU. Under a 7 percent budget cut, 31 of them could be laid off, Carter said. He would not identify specific departments that may be cut, saying he would prefer to tell the faculty before they read it in the newspaper.

WCU receives about $95.5 million from the state annually, Carter said. Carter said the stimulus bill may help the state with Medicaid costs, improving the state’s budget situation and lessening the blow of cuts. The hope is that there is a clear picture of the stimulus bill in about a month.

Among other unknowns: Carter wonders what effect the economy will have on students enrolling in college, saying some may hold back because they can’t afford the tuition of $4,400 for in state and about $13,600 for out of state.

The university has already enacted one round of cuts after the state pulled 6 percent of the budget, or $5.7 million. The university is dealing with that by cutting travel, postponing purchases and leaving vacancies open.

Nonetheless, a new dining hall and residence hall remain under construction on campus because those buildings are paid for by fees generated by housing and meals, not state money.

Drake Software CEO Phil Drake is taking the tough economic times with ease.

He believes he can get through the recession without closing any businesses or laying anyone of his employees off. With 500 employees, Drake is the second largest employer in Macon County.

“Overall our business is up, especially in software,” Drake said.

Drake pays out about $16 million in payroll and benefits annually.

“I really want Franklin and Western North Carolina to be a player when our kids grow up. I don’t want them to have to leave home to find a good job.”

Being responsible for so many employees’ livelihoods, Drake said he has some “trepidation.”

“There’s a huge responsibility in making payroll every Friday,” Drake said.

Other than his own businesses he also worries about the country.

“Our country has some dangerous times ahead,” he said. “Our country has got to stop spending more money than it has.”

Other than the software company, Drake has built a small business empire across Macon County: an Athlete’s Foot, Christian bookstore, a print shop, 9-hole golf course, a Microtel franchise, the Fun Factory, a marketing company, Internet service provider, a Christian radio station, construction company and a Verizon store.

And on July 3 he will open his 1,500-seat performing arts center in Macon County with the Oak Ridge Boys kicking it off. Charlie Daniels will also play at the center soon after, he said.

Out of all his businesses, his software company is the most profitable. Of his 500 employees, 300 of them work in the software side, he said.

“The software business is great,” Drake said. “I write tax software for accountants. That business is recession proof. People have to file income tax returns no matter what.”

Drake said his software business is up 14 percent this year. He said 30,000 accountants use his software, and his product does 10 million tax returns a year.

Business is up because, “We have a real good sales team and God has put me in a good place,” he said.

All of Drake’s other businesses are down, he said, adding that they started going south in September when gas hit $4 a gallon.

For instance, the Fun Factory isn’t on people’s priority list these days as they struggle to buy groceries and pay bills.

Drake may cut back on part-time high school workers at The Fun Factory.

Likewise, employees for his construction company have seen less work because of the slowdown, but there have been no permanent layoffs, Drake said.

“There have been weeks where there hasn’t been work to do,” Drake said.

Business will pick back up some when the weather improves, Drake said, noting that there is always a slowdown during the winter months when tourists aren’t here.

Tourism will be down this summer, he predicts, but he can’t foresee how much. Hopefully his performing arts center will draw people to the area, and people who would normally make long summer trips may stay in the region this year, he said.

By the summer of 2010 he thinks the local economy will rebound.

“I think we are very near the bottom,” Drake said of the national economy.

WNC not hit as hard

Western North Carolina hasn’t been hammered as hard by the recession as other parts of the country like Washington state, which has seen Microsoft lay off 5,000 workers, New York or Detroit, which is hurting from the automobile decline, Drake said.

Jobs in the area are not dependent on GM, Wall Street and other industries taking a big hit, Drake said.

“I don’t think the recession has hurt us too much. If we have a big impact it’s less tourism,” he said. “Most people still have a job, most people are still making the same amount they were making. Gas prices are down now.”

Seattle could be a tough job market now with 5,000 Microsoft employees looking for a job, he said.

“Those types of layoffs haven’t hit Western North Carolina,” Drake said.

Also, there hasn’t been as much subprime lending here compared to the rest of the country, he said.

Unlike Dade County, Fla., where the bottom dropped out of property values, this area has seen more modest declines between 3 to 5 percent, he said.

“We’re not seeing stuff drop through the floor,” Drake said. “There are not as many foreclosures.”

However, Drake acknowledges that North Carolina’s unemployment rate was 8.7 percent in December — the highest since 1993 — and that some small businesses are closing.

In fact, Drake, who’s been in business for 35 years, says it is still the worst he’s ever seen.

“It wasn’t this bad in the ‘70s during the oil embargo,” he said. “I remember having to line up at the gas station, and you could only buy $5 of gas or buy gas on even or odd days based on you tag number.”

A bad plan

Something has happened in the past 40 years to make the United States go from the greatest creditor nation in the world to now the largest debtor nation, Drake said.

“Part of it is that we are spending more money than we take in,” he said.

And he said the nation is about to do it again with the proposed stimulus plan.

“We’re about to spend $819 billion we don’t have,” Drake said.

Drake would prefer if the government took a laissez-faire approach.

“The best thing the government could do for the economy is stay out of it,” Drake said. “Doing nothing is better than what they’re doing.”

The government got the country into the current economic situation by encouraging banks to make sub-prime mortgages to unqualified buyers so low-income people could realize the American Dream, Drake asserted.

The Federal Reserve artificially lowered interest rates to entice people to buy homes they couldn’t afford, Drake added.

If anyone is to blame it may be whoever was on the Senate Finance Committee when Fannie Mae and Freddie Mac gave 0 percent down home loans, Drake said.

Drake calls the proposed stimulus plan before the Senate a “bad plan.”

“It ‘s bad for several reasons,” Drake said. “It’s not going to stimulate the economy. We’re just borrowing from our kids. We’re putting ourselves further in debt.” Moreover, the plan has lots of pork barrel spending.

“Some of it’s going to Planned Parenthood. It’s a bad bill.”

The bill has been compared to FDR’s New Deal in that it proposes to create jobs building roads and bridges across the nation.

“My grandfather did some WPA work laying rock along the roadsides,” Drake said. “I’m not saying it won’t help a few people.”

The economy will recover on its own if the government stays out of it, Drake said.

“Businesses have done well in America on their own for over 200 years,” Drake said. “That government is best that governs least. American people are ingenious and hard working and if left to their own devices will succeed.”

T&S Hardwoods General Manager Jack Swanner sat in his office with an ashtray full of cigarette butts next to him and an unopened bottle of merlot on his desk.

Laying beside him was a Wall Street Journal, and Swanner said the news was bad.

“It says the same thing they all say, the world is going to hell,” Swanner said of the newspaper. “I barely read them anymore.”

However, the headline that day was fairly optimistic: “Price Cuts Spur Home Sales.”

Swanner has hope, too, even though business is down 40 percent.

“This is not the end of the world or the United States,” Swanner said. “This is the worst recession we’ve been in in my lifetime. The system will fix itself. There will be people who make it. There will be prosperity, but there is going to be a lot of collateral damage and carnage.”

‘I don’t like not producing’

Through the window of Swanner’s Sylva office the sawmill yard is seen but there are no forklifts moving, no loading trucks filled with boards, no workers walking about like there would normally be — just stacks of wood sitting in what appears to be a ghost town.

The empty work yard is reminiscent of what is going on around the country with few people working and fewer products being produced.

“It is a ghost town,” said Swanner, a tall burly man who hates to see his beloved hardwood industry in the pits.

“I don’t like not producing, I don’t like not working,” said Swanner, as he walked around the sawmill yard.

In January Swanner made the tough decision to cut his 75 employees’ hours to 18 a week compared to their usual 40 or more. Now employees only work Monday and Tuesday — the rest of the week the plant is closed.

“Until sales increase, we can’t run more,” Swanner said. “It’s sad seeing the economy this way. The men are not getting the hours they need.”

The cutback hours will continue into February, Swanner said.

Businesses associated with the logging industry are hurting also. The sawmill once contracted with three trucking companies to haul lumber, but now there is only one.

“You’re literally looking at the death of an entire industry,” said Swanner as he leaned back in his office chair.

He noted that a sawmill in Canton that was in business for 70 years just closed.

“Numerous loggers are sitting at the house, and the people working for them are sitting at the house,” Swanner said.

The sawmill’s employees are not the type of people who enjoy not working.

“There’s not a man or woman out here that wants unemployment or welfare,” Swanner said.

Swanner also has a strong work ethic and despises greedy CEOs like a recent corporate bank president who allegedly spent $1.2 million remodeling an office and Bernie Madoff, who masterminded a scam that bilked millions from investors.

There is a mindset of greed in the United States and a certain class of people with no work ethic, he said. But for the most part he believes Americans are still hard workers.

‘Mad at the system’

Sawmill yard supervisor Sandy Johnson has worked at the sawmill for 37 years and has never seen the economy this bad.

Since 1946, the sawmill has been in steady operation. Some employees have grandfathers who worked at the plant.

But today, as Johnson walked around the yard he said the employees worry about making their home and car payments.

When the tough decision was made to cut workers’ hours, Swanner gathered each shift at a safety meeting and broke the news in person.

“They’re not mad at us, they’re mad at the system,” Swanner said. They know what’s going on in the economy and the world.”

The sawmill relies on global demand to survive, shipping hardwood to Egypt, Saudi Arabia, Spain, Italy and China.

Now the entire worldwide market is in the dump. In fact, he said the economy is probably worse in Europe than it is in the United States.

“Every market in the world is gone,” he said. “There is no international business being done.”

However, there was some good news last week. Three loads — white oak, maple and poplar — were just shipped to Israel.

Pointing out tall stacks of wood in the yard under canopies, Swanner said there usually isn’t so much inventory. Some of the boards are bundled with double straps of wire, meaning it will be shipped overseas, and the other boards only have a single strap to show that they stay in the United States.

Stimulus strategy

Prior to the economic downturn, Swanner’s company produced about 16 million to 17 million board feet a year, but now it’s down by half. Something needs to be done to stimulate the home building industry to help turn things around, he said.

The $819 billion stimulus bill passed by the House and under review by the Senate this week needs to create jobs, he said.

He disagrees with where some of the money would be spent, saying it won’t do the country any good. He noted that the bill plans to spend $135 million fighting sexually transmitted diseases and $50 million for the arts.

That money should go toward creating real jobs, Swanner said.

“We need to put someone to work fixing an electrical grid,” Swanner said.

Projects here at home like fixing an archaic sewer system in Waynesville might be a good idea, he said.

Politicians need to set aside partisan politics and work for the betterment of the country, he said. Issues like abortion and gay marriage need to take a back seat.

And laying blame for the country’s poor economy can wait, he said.

“I don’t care whose fault it is; we’re in a crisis,” he said, adding that he doesn’t care if the blame goes all the way back to Reagan.

Swanner thinks Obama will make a good president, but the challenge is taking a fragmented Congress and making them work together.

Congress, he said, has got to understand that they were sent there for the betterment of the country.

It is regrettable that the United States went away from being a manufacturing country to a “financial services” county, Swanner said. The country needs to get back to producing jobs like electricians, miners and plumbers, he said.

“We need to manufacture something and sell it,” he said. “We don’t need to lose that.”

One of the problems in this country is that math and science scores for American children have “plummeted,” he said, resulting in fewer engineers.

No matter what happens with the proposed $819 billion stimulus bill, there will still be a massive debt passed on to Swanner’s children and other generations, he said.

Swanner remembers the recession of 1982 and 1991, but the difference with this downturn, he said, is that it is bigger worldwide.

Jackson Paper employee Tim Coggins Jr. has something a lot of people don’t have these days — job security.

Jackson Paper has not laid off any of its 120 employees and doesn’t plan to.

“That makes me feel excellent,” said Coggins, whose father also works at the plant. “Being a young father that’s really important.”

The Sylva company pays out $9 million in wages and benefits annually.

The plant produces corrugated medium — the middle layer of a cardboard box that gives it stability.

Jackson Paper is avoiding layoffs by keeping production costs low by burning wood shavings for fuel rather than coal or oil, said Vice President and Chief Financial Officer Jeffrey L. Murphy.

With 55 competitors across the country, Jackson Paper has the seventh lowest production cost.

Still the company saw a 20 percent drop in business in November, but rather than curtailing production and laying off employees, it expanded its customer base.

Murphy is not too optimistic about the stimulus package.

“We hope it works, but we’re not keeping our fingers crossed that it will help Jackson Paper,” Murphy said.

Waynesville manufacturer Associated Packaging also has not laid off any of its 150 employees. The company makes plastic packaging for the frozen food industry, like the trays microwaveable dinners come in.

Plant Manager Gerald Jensen said business is down a little but not substantially.

Jensen also has problems with the stimulus package. “My personal opinion, I don’t think much of it,” he said. “I don’t think it’s promoting growth. I think there’s a lot of pork spending. Basically it’s growing the federal government.”

There is not enough money in the stimulus package to turn things around quickly, said Tektone Sound & Design Vice President of Marketing Johnny Mira-Knippel.

Tektone, a Franklin company that manufactures nurse call systems for hospitals and assisted-living facilities, employs about 70.

If the stimulus package benefits health care, Tektone could see an increase in business.

“We are cautiously optimistic,” said Mira-Knippel, whose company has offered early retirement to some employees and temporarily laid off workers.

But in order for the stimulus package to be more effective it would require trillions of dollars, not $819 billion, which will only “soften the blow,” Mira-Knippel said.

The state legislative session began in Raleigh this week with the big issue being the budget during tough economic times.

The current fiscal year budget of $21.35 billion is expected to have a shortfall of $2 billion, and Gov. Beverly Perdue has asked state agencies, colleges and universities to cut back on spending. For the first half of the fiscal year revenue is running $625 million below what was expected.

During the session the legislature also has to develop budgets for 2009-2010, which begins July 1, and 2010-2011.

The revenue picture is bleak as the recession is expected to continue into 2010. The state is collecting less in sales and income taxes as well as corporate and franchise taxes. Raising the sales tax and increasing the taxes on alcohol and gasoline could generate additional revenue, noted Rep. Phil Haire, D-Sylva.

According to the Associated Press, the state also has a $780 million rainy day fund that could possibly be tapped. Sen. Joe Sam Queen, D-Waynesville, said the legislature will have to determine what are priorities when developing the budget, and he said education and job creation are his.

Local legislators are also waiting to see what effect President Barack Obama’s proposed $825 billion stimulus plan will have on North Carolina.

“I’m hoping for solid revenue sharing from the federal side to get us through,” Queen said.

The state’s unemployment rate increased to 8.7 percent in December, the highest since June 1983 when the rate was 9 percent.

“Layoffs continue to hamper many job sectors throughout the state,” Employment Security Commission Chairman Moses Carey Jr. said in a news release.

The unemployment rate a year ago was 4.7 percent.

In December there were 396,846 people unemployed in North Carolina. The national unemployment rate was 7.2 percent in December.

The downward trend in employment in the state is expected to persist for most, if not all, of 2009, and maybe into 2010, according to a report from the Fiscal Research Division of the state Legislature.

The financially struggling WestCare Medical Center with hospitals in Sylva and Bryson City has eliminated 45 full-time positions, according to a statement from the hospital.

Some of the cuts were achieved through attrition, but others have been laid off.

WestCare has proposed cutting 90 full-time positions over the course of the year.

WestCare CEO Mark Leonard announced in October that a workforce reduction of 30 would occur by Jan. 15, but apparently the schedule has been accelerated.

The plan was designed to stem financial losses, which required a reduction in staff, emphasis on efficiency and focus on physician recruiting to provide patients more access to local healthcare, according to a hospital statement.

Because of national economic problems facing small rural hospitals, WestCare lost $3.2 million between June and August, according to WestCare.

Recruiting qualified physicians to the area is a major component of WestCare’s management plan. Since October, WestCare Health System has signed an ear, nose and throat specialist and has secured verbal commitments from four other physicians. Two internists, a radiologist and an orthopedic surgeon are planning to visit next month, according to the statement.