Posted tagged ‘stupid ideas’

State budget woes takes aim at coin-op devices in Oklahoma

June 8, 2010

Stinger Newsfeed 822

While I have been out of the news loop I am normally accustomed to for the past couple of weeks, one thing I have still heard of is the continued troubles around the world involving debt and states/countries having spent an awful lot of money they never had in the first place. Some may blame it on the lousy economy as a reason for shortfalls but I don’t buy it when I read about the many and usually absurd pet projects a state can spend money on. This leads us to Oklahoma, whose budget woes has lead them to a new target for gouging – coin-operated machines. The way it works is in licensing the machines in the state so they can be operated legally. Many places do this – sometimes it’s a state, sometimes it’s a city. Where I live it is city based, which actually led me to pick where I wanted to do business as going to a city where they charge a yearly fee per machine means that it is more expensive to do business there. Even if the city which does this might lead to better sales for certain demographic reasons, higher costs also means much higher risk for new start-ups.

Getting back to Oklahoma, they require decals on every coin-op machine on a location which needs to be renewed yearly. Under the new law, new decals would go up in price by 300% and using the business in the story as an example, Cactus Jack’s, their costs on licensing alone would go up from $17,500 a year to $52,500. Obviously the lawmakers look at that and think that it’s an easy cash cow as though the increase they are passing will not result in either a business dramatically reducing the number of machines they have on location or in shutting down altogether (which then leads to decreased revenues in the area where they were sought for in the first place). If you think of a route operation (where the business owner places machines in a small area in a grocery store, mall, etc) they have to not only cover costs of the product which needs to be restocked often, they have to cover some rent on the space used, electricity, and maintainence, they also will have higher costs on this end, which will force the price to be raised, which can easily lead to lower sales. Where many landlords already require a certain amount to be made to maintain the machines in a location, the new law already has many small business owners looking at closing up shop.

Watch the video on the linked page to get the full rundown. One part that really gets me is where the journalist asked the senator who came up with this law why a 300% increase and he had no answer (i.e. it probably just sounded like a good number, why bother actually doing any research or taking any thought into the negative effects here?).

Via KFOR News


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