The President's Message: August 2008

These are Challenging Times

By Jim Kendall

The economy has taken its toll on the publishing business and the free paper industry is no exception. We have a great deal of talented leaders in this industry and in the long run, we know we will work through these challenging times.

Most of the free paper associations have felt the effect of the economic times. The classified network sales that fuel most associations are reported to be down. The Community Papers of Florida (CPF) revenue during the second quarter is down 18% from the previous year.

For many years CPF has been blessed with record revenues and has been a free paper association leader. This is the first year we have experienced a downward trend.

Why have clients cut back on advertising?

The CPF office has asked that question. Overwhelmingly, the response has been because of the economy.

We have initiated a new ad contest, and each month we will have specials that we hope will help get us back on track.

The good news is that because of record revenues over the past several years, this association remains in great financial shape. We have invested in mutual funds, CD's and savings accounts. Our net worth remains over $2 million dollars.

When the board of directors approved the 2008 budget, they planned for a tough year. We are on track for our budget, and the benefits we approved remain intact. We planned on spending $400,000 in rebate advertising. We spent $200,000 during the first half of the year, and we will spend an additional $200,000 during the final quarter of 2008. These funds are used to place advertising with members who participate in the classified network.

These advertising funds will be used to place ads that will urge the public to defeat Amendment Five in the November election. Amendment Five is designed to give homeowners a 25% reduction in their property taxes, but the amendment also does away with funding for schools and puts the service tax exemptions at risk. If passed, this amendment could place a sales tax on advertising. It could also eliminate the exemption the members of this association have on a manufacturing tax.

If you go back 15 years in Florida's history, the free papers were assessed a tax on manufacturing. It was an accounting nightmare for publishers, who had to keep track of all costs related to producing a publication, including ink, newsprint, labor, film, etc. Free papers were taxed on these costs. Paid newspapers were exempt from the tax.

CPF went to work and financially went in the hole to obtain the services of a lobbyist to seek an exemption on the manufacturers tax for free papers. We were successful. Obtaining this exemption cost this association over $220,000, but we still enjoy this exemption and certainly don't want to lose it because of Amendment Five.

The CPF office will put together a series of ads opposing Amendment Five and encourage members to publish these ads prior to the election in October - if needed. A lawsuit aimed at knocking Amendment Five off the November ballot has been filed, and will be heard in Tallahassee August 13. Opponents of the measure claim it is a "bait and switch" that promises Floridians lower property taxes but would lead to much higher sales taxes, elimination of some tax exemptions and major cuts in state services.

Crunch time for the CPF board of directors and committee members will be the planning session and board meeting scheduled in October. Depending on revenue trends, the board will have to face some tough decisions in the 2009 budget. Yes, our finances are in great shape and our goal will continue to be to keep this association in great financial shape. If cuts are necessary, we will live up to our responsibilities and do what is necessary.

The conference committee is looking at the possibility of going back to two conferences a year. Our revenue will have a lot to do with determining if this is feasible. There is no doubt that the CPF conferences are the number one benefit that we provide for our members. The conferences are also the most expensive item in the annual CPF budget.

Do we want to go back to the two-conference format? In this issue of the CPF newsletter is a survey. We are asking you to take a few minutes to let us know your recommendations. The board of directors will appreciate your input, as it will help us make a concrete decision at the October planning meeting.

We are facing tough economic times. Be confident, hang in there, and let this association know if we can be of service. We are here to serve the membership.

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