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untanglingwebs
El Supremo
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State board declines to act on Flint's $20 million bond request over deficit concerns
Published: Tuesday, February 15, 2011, 12:01 PM Updated: Tuesday, February 15, 2011, 12:18 PM
By Kristin Longley | Flint Journal
LANSING, Michigan -- Concerns over the city of Flint's finances led a state board to delay acting on the city's request to borrow $20 million to cover its budget deficit.
The State Administration Board voted to remove the city's application for a $20 million bond from its meeting agenda this morning at the request of the state treasurer's office, said attorney Michael Gadola, who served as delegate for Gov. Rick Snyder, chairman of the board.
Gadola said the treasurer's office has some concerns about the city's "long-term structural operating deficit," or its inability to spend less than it takes in each year
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State officials will likely need to gather more information from the city's finance department and mayor's office before the item can be reconsidered, Gadola said.
"We will do some more due diligence with respect to this bond issuance," he said.
The city's request had been moved forward last week by a committee of the board. But Gadola said the treasurer's office requested that the item be pulled from the meeting agenda a few hours before the meeting started.
"If folks can be satisfied the city has a reasonable plan for servicing the debt, then the item could be brought back before the board," he said.
The $20 million bond is part of Flint Mayor Dayne Walling's budget plan for the city.
Without the bond, members of his administration have said the city would be left with a tight cash flow and possibly could have trouble making employee payroll or paying vendors.
Patrick Clawson, former state Senate candidate and Flint-area process server, spoke out against the bond issue at the meeting. He said he has serious concerns about the city's ability to pay off the bonds.
"I believe it's a dump of toxic waste on the public," he said of the potential bond debt. "This city cannot financially sustain this bond offering."
The city had scheduled a special Flint City Council meeting regarding the bond issue for Wednesday. It was not clear Tuesday morning if the meeting is still planned.
For more on this developing story, visit www.mlive.com/flint later this afternoon.
Next story
Wednesday City Council meeting to discuss $20M bond request canceled
nakita February 15, 2011 at 12:09PM
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Good, someone needs to be looking into the spending from the city officials. Rick Snyder is such a business man, he needs to bring someone into Flint and sit down with them all at city hall and make them account for every penny. All salaried workers need to be present.
mayen1985 February 15, 2011 at 12:26PM
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Good. The state should deny the bond request. The problems facing this country all go back to SPENDING to the point where it is unsustainable. The constant waste of spending when you cannot afford it has taken this country to the brink. Our country's debt already matches our GDP so I say to any and all municipalities, don't expect the taxpayer to constantly bail you out when you have no regard for answering to the taxpayers. If you don't have the money, don't borrow others money to spend when you know you cannot repay them. These cities should have been courting business instead of driving them out with their tax and reguluation policies.
thinkmore79 February 15, 2011 at 12:31PM
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Yes!
Rick February 15, 2011 at 12:51PM
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I'm also glad they said no, its about time. It would be just another reason for Mayor Dayne Walling to say, "We need to raise taxes or cut more wages again, so we can pay for the new bond." Thank you to Gov. Rick Snyder. Your next step should be is, look into the wasteful spending of the city officials.
Group W Bench February 15, 2011 at 12:53PM
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I think the COF's budget plan is to get another bailout that should last at least long enough for people to get reelected. After that, they'll just wing it with more PD/FD layoffs until they get the next bailout. Cut them off, dissolve the city and let the townships take control of their respective areas. The only thing left to do with this turd of a city is to bury it.
shanedr February 15, 2011 at 3:37PM
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I disagree, Townships are a redundancy the citizens can not afford.
Obviously the COF has been incapable of limiting its expenditures to revenues. Mainly because it waits until the revenues come in before placing limits on expenditures when it needs to be the other way around.
The residents of Flint (myself included) need to be held responsible for Flint's debt; as painful as that will be. Just like we were assessed for the Genesee Towers even though the problem was the result of the political and financial ploy of Don Williamson.
But that will not solve Flint's nor Genesee County's financial problems. Genesee County is almost in as bad a shape as Flint. The only realistic solution is go to a Metropolitan form of government. Merge Flint along with all the towns and townships of Genesee County into one government for all the county. Keep the tax rates as they are and use the tax savings to combine and restructure government, with the citizens of each being responsible only for their old government until the restructuring is complete. Then and only then began to modify the tax structure into a universal one without increasing the taxes on anyone.
The benefits of a Genesee Metropolitan government are many and the negatives few. All the police and fire department buildings would remain to provide public safety, while the leadership would be centralized. Local town and township offices would become satellite offices still providing contact with the citizens while the leadership would be reduced and centralized. Some of the leadership would become part of an expanded command structure but most would be eliminated through retirement and some lay-offs. The average government worker would be unaffected except a very few who would be re-located.
Most elected officials would be drastically reduced, yet those at the county level would be increased to provide adequate representation. There would need to be a central executive and the commissioners or the new citizen reprentatives would need to be increased. But that would still eliminate most of the leadership county wide. Most of all it would require one department head instead of the present one for every community. Some of the excess would fill in lower positions, possibly at equal or higher pay then at present, in the restructured departments.
The bottom line is costs per citizen would go down, the savings after restructuring would increase funds for services and no citizen would receive less services then they receive at present. Only the waste at the top in all the present local governments would be reduced.
Failure to do so will result in ever increasing taxation for the citizens of this county as costs continue to go up.
justicesearc February 15, 2011 at 1:08PM
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I am glad that the State has decided to take a better look at the city's finance. I bet Walling and group is shaking their heads - they were sure it was going to be approved after the last meeting where he got to meet with the committee prior to the public comment. Time to break all union contracts and negotiate them in a way that is similar to the pay and benefits of the people they are supposed to be serving. |
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Tue Feb 15, 2011 5:21 pm |
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untanglingwebs
El Supremo
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Flint City Councilman Joshua Freeman: Takeover by state possible
Published: Tuesday, February 15, 2011, 12:49 PM Updated: Tuesday, February 15, 2011, 3:57 PM
By Kris Turner | The Flint Journal
Joshua Freeman
FLINT, Michigan — If the city has no way to plug a gaping financial hole within its budget a state takeover is possible, City Councilman Joshua Freeman said.
By the end of this month or next month, the city will only have about $500,000 in cash on hand, Freeman said. That's not nearly enough money to meet the payroll expenses of $1.5 million to $2 million every two weeks, he added
"If nothing changes and we don’t improve our cash flow, we're not going to have enough money to operate," Freeman said.
One of the triggers for a state takeover is the inability to fund payroll expenses, he said.
The State Administration Board removed the city's application for a $20 million bond from its meeting agenda this morning. That move came at the request of the state treasurer's office.
That money was supposed to cover current budget problems as well as past debts. It was included in Mayor Dayne Walling's budget plan.
Harold Taco February 15, 2011 at 1:05PM
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Yes please, I'll take a state takeover.
Isn't that the only time Flint's had good leadership in the last few decades?
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ryaneashoo February 15, 2011 at 1:11PM
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Let us all pray that Rick comes in.
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vmilitant February 15, 2011 at 1:39PM
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with the new bill that's in the state legislature that would expand the role of the emergency financial manager people who are praying for a state takeover may live to regret it.
with the new bill the emergency financial manager can set aside existing union contracts (at all levels including public safety) and write a budget that cannot be changed for two years. residents will not have a say in what occurs in our city.
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DWCBOB February 15, 2011 at 2:04PM
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1. That bill is not yet a law. It still has to be passed by the legislature and be signed by the Governor. It may not go into effect before any takeover in Flint.
2. How would "not having a say" be any different than the situation today? Do you honestly think those in office care one whit for the ordinary citizens of Flint?
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jacobsmith February 15, 2011 at 2:06PM
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I fully back a sate takeover as it will distance Eason from further damaging the city.
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90220 February 15, 2011 at 2:16PM
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If bankruptcy occurs, those contracts may be voided anyway.
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shanedr February 15, 2011 at 2:43PM
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A state takeover should have occurred last year, instead of waiting until the city is on the brink of default. We needed a mayor who would make cuts starting from the top, with the biggest cuts at the top, instead we got Walling; a Rhodes Scholar who can't put aside his political agenda long enough to save Flint. God help us if we don't get rid of him.
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Bullseye February 15, 2011 at 3:01PM
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Please no loans we can not pay back!!!
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bphammer February 15, 2011 at 3:36PM
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A State takeover has been a clear possibility for many months..I now see no viable alternatives,and say the sooner the better.Flint is on the verge of not only financial collapse but anarchhy due to the drug gangs, armed robbers, and the packs of feral youth that roam the north and east sides.Its not going to be pretty.But then it hasn't been pretty for quite some time. |
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Tue Feb 15, 2011 5:34 pm |
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untanglingwebs
El Supremo
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Flint City Councilman Dale Weighill: Some on council willing to explore state takeover, municipal bankruptcy
Published: Tuesday, February 15, 2011, 1:02 PM Updated: Tuesday, February 15, 2011, 3:56 PM
By Kris Turner | The Flint Journal
Dale Weighill
FLINT, Michigan — If the city doesn't receive the $20 million from the state it needs to stay afloat, some members of the City Council would be open to a state takeover or municipal bankruptcy, Council Vice President Dale Weighill said.
The State Administration Board removed the city's application for a $20 million bond from its meeting agenda this morning. That move came at the request of the state treasurer's office.
The $20 million is crucial to the city's budget and was a part of Mayor Dayne Walling's budget plan. Without that money, city officials have speculated they won't be able to make the city's $1.5 to $2 million payroll every two weeks.
Weighill said the state has every right to be skeptical of the city because it lacks a concrete financial plan.
"My position for some time now is the city needs to get its structural deficit under control," he said. |
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Tue Feb 15, 2011 5:37 pm |
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untanglingwebs
El Supremo
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Expert: Chapter 9 filing for Flint would have to be last option on table
Published: Tuesday, February 15, 2011, 2:46 PM Updated: Tuesday, February 15, 2011, 3:55 PM
By Kris Turner | The Flint Journal
FLINT, Michigan — If Flint were taken over by the state, entering into municipal bankruptcy would be a last resort.
G. Allen Bass, a municipal capital expert, said state-appointed emergency financial managers are required to make every effort to settle a city's financial problems before turning to Chapter 9 bankruptcy as a solution.
The State Administration Board removed the city's application for a $20 million bond from its meeting agenda earlier today. That move came at the request of the state treasurer's office.
That $20 million is crucial to the city's budget and was a part of Mayor Dayne Walling's budget plan. Without those funds, city officials have speculated they won't be able to make the city's $1.5 to $2 million payroll every two weeks, in addition to other costs.
It also could be the trigger for another state takeover.
City Council Vice President Dale Weighill said municipal bankruptcy is one option the city could explore if it finds itself back under the state's authority.
For that to happen, an emergency financial manager would have to petition and win the approval of the Local Emergency Financial Assistance Loan Board, come up with a bankruptcy plan and then have it approved by an bankruptcy judge.
Bass said that's never happened in Michigan and it's a rarity across the country, not to mention extremely costly in legal fees.
It does, however, prevent creditors from collecting on the city's debts. It also gives power to the city to renegotiate its contracts.
It essentially spreads the city's financial pain around, he added.
"The hat, if you will, is passed along a larger circle," Bass said. |
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Tue Feb 15, 2011 5:41 pm |
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untanglingwebs
El Supremo
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Mayor Dayne Walling: State budget proposal a factor in Flint's $20 million bond delay
Published: Tuesday, February 15, 2011, 3:28 PM Updated: Tuesday, February 15, 2011, 3:29 PM
By Kristin Longley | Flint Journal
FLINT, Michigan -- The state budget proposal coming Thursday could contain cuts to state aid that would have significant financial implications for the city of Flint, Mayor Dayne Walling said today.
Walling said Gov. Rick Snyder's state budget plan was a main factor in why the State Administrative Board declined this morning to act on the city's request to issue $20 million in bonds to cover its deficit.
The state treasurer's office asked that the board delay action on the bond request, "primarily based on what he (the state treasurer) perceives as implications of the governor's proposed budget," Walling said.
Specifically, there were questions about Flint's budget projections that the city submitted with its bond application. The city included state aid in its revenue projections.
"The city's projected revenues in the submitted schedules may not have anticipated the full extent of the state revenue sharing cuts," Walling said.
Deep cuts to state aid could mean the city's projected deficit would grow. The treasurer's office did not say how large the cuts could be, he said.
The governor's office is expected to present the proposed budget on Thursday. Walling said his office is scheduled to meet with the treasurer's office again following the state budget announcement.
"Flint and municipalities across the state are going to find themselves in an entirely new financial reality, and it's not pretty," Walling said.
Without the bond, Walling said the city has a "major cash flow challenge" for the month of March, but said he does not believe a state takeover is imminent.
"I am confident that the state treasurer's office and the city of Flint will work together on at least a short term solution," he said. "The options are being explored."
Walling said the city is working on providing the treasurer's office with the additional information it has requested. |
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Tue Feb 15, 2011 5:44 pm |
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untanglingwebs
El Supremo
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By David Harris | Flint Journal
FLINT, Michigan — The head of the Flint Police sergeant's union said he isn't sure if his union members will be affected by the state decision to delay Flint's $20 million bond proposal.
Without the bond, the city has said the it would have cash flow issues and possibly could have trouble making employee payroll or paying vendors.
The Flint Police Department has been hit hard by layoffs with 66 officers receiving pink slips in 2010.
"If it does (affect us), we can't do anything about it," said Sgt. Rick Hetherington, head of the sergeant's union.
Keith Speer, president of the officer's union, said he had no official comment.
90220 February 15, 2011 at 4:16PM
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66 officers received pink slips in 2010.
don't forget about the 48 that are still laid off from 2008
Chingasos February 15, 2011 at 4:39PM
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Arm yourselves law abiding citizens as the criminals already have weapons.
yokeonu February 15, 2011 at 4:55PM
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I see the FJ is trying to get everyone's opinion on this issue. Seriously David Harris, what did you expect Sgt. Hetherington to say? Like he could do anything about it? I'm waiting for the janitor to be interviewed next.
RHetherington February 15, 2011 at 5:16PM
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What I actually said is that the bond hasn't been denied yet. I stated that we would wait and see what happens, and that there is not much we can do while the state reviews the application. C'mon David, your writing is terrible. Quit calling me for quotes if you're going to make up what I said anyways.
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Tue Feb 15, 2011 5:49 pm |
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untanglingwebs
El Supremo
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Municipal bankruptcy filings rare; elimination of some bond debt could cause economic ripple
Published: Tuesday, February 15, 2011, 5:30 PM
By Kris Turner | The Flint Journal
FLINT, Michigan — Municipal bankruptcy filings are extremely uncommon and even more unusual for a city in which people live and work, an expert said.
James Spiotto, a municipal bankruptcy expert at Chicago-based law firm Chapman and Cutler, said only 45 cities, towns, villages and counties have filed for Chapter 9 bankruptcy since 1980.
Today, city officials said a state takeover and bankruptcy filing were possibilities after the State Administration Board removed the city's application for a $20 million bond from its meeting agenda.
That $20 million is crucial to the city's budget and was a part of Mayor Dayne Walling's fiscal plan for Flint. Without those funds, city officials have speculated they won't be able to make the city's $1.5 to $2 million payroll every two weeks, in addition to other costs.
The inability to pay wages could trigger for another state takeover and the bankruptcy filing.
A Michigan municipality has never filed for bankruptcy.
If the filing happened, it could cost the city millions in legal fees and make borrowing money next to impossible in the future, experts said.
If a judge allowed the city to default on it's general obligation bonds, a catastrophic ripple effect could raise municipal bond rates across the state, said Joe Ohren, a professor of political science at Eastern Michigan University.
General obligation bonds are issued by a local government to fund its operations and are sold on that municipality's name and ability to generate tax revenue. Bonds have become an increasingly important source of money for towns as the state revenue sharing has dwindled in recent years. |
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Tue Feb 15, 2011 5:52 pm |
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untanglingwebs
El Supremo
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State lawmakers hearing testimony related to emergency financial managers
Published: Tuesday, February 15, 2011, 6:29 PM Updated: Tuesday, February 15, 2011, 6:29 PM
By Kristin Longley | Flint Journal
LANSING, Michigan -- Just hours after state officials declined to act on the city of Flint's request to bond $20 million, Michigan lawmakers were hearing testimony on a bill that would expand the powers of emergency financial managers.
Flint Mayor Dayne Walling said the State Administrative Board postponed action this morning on the city's bond request partly because of the potential fallout from the state budget proposal that Gov. Rick Snyder is expected to unveil Thursday.
Walling said the proposed state budget plan could have significant financial implications for Flint and other municipalities across the state, especially if it includes deep cuts to state aid.
Such a move could put more communities at risk for a state takeover. The legislation currently before lawmakers would expand the powers of a state-appointed emergency financial manager.
It also would allow the state to grant certain powers -- with conditions -- to the chief administrative officer of a city or township in a financial emergency.
Walling said the city will be keeping an eye on the legislation. He said he does not think a state takeover of Flint is imminent.
"This is a process with a lot of steps," he said. "We will continue to work with the state treasurer's office."
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Tue Feb 15, 2011 7:53 pm |
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untanglingwebs
El Supremo
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Ryan Eashoo
F L I N T O I D
From MLIVE.com
A wise friend posted this on Mlive.com. Pat Clawson. Pleasse Pass it along.
February 15, 2011 at 6:51PM
Let's hope the State Administrative Board does not approve Dayne Walling's proposed bond offering in any way. Citizens need to speak up now - the phone number to the Governor's office is (517) 335-7858. Call now - it's your right as a citizen.
Allowing the Walling Regime to tap the public securities markets for money would be a huge mistake. The Boy Mayor and his band of cronies have demonstrated repeatedly that they are utterly incompetent to run the City - except to run it into the ground. Giving them access to the bond market would be like giving junkies access to a huge stash of crack. Nothing good will come from it.
Flint needs the appointment of an Emergency Financial Manager who has the independence to straighten out the city government's fiscal mess, and who does not have to worry about kissing the behinds of the pooh-bahs on the City Council. We need someone who is not afraid to take names and kick tail, and someone with the unfettered authority to do it despite the protests of gutless politicians.
Even though Walling & Crew don't want to hear it, a Chapter 9 bankruptcy needs to be considered. Flint's economy has collapsed, and it can no longer sustain the top-heavy government structure that appears to be unwilling to reform itself. The citizens of Flint - and all of Genesee County - would be better off having control of the city's finances turned over to some steely-eyed restructuring experts working under the supervision of federal bankruptcy judge.
Of course, the politicians do not want to hear that because thry want to cling to whatever morsel of power they have. But some pretty tough surgery is required to remove the cancer that is eating alive the taxpayers of Flint. A municipal bankruptcy is certain to produce a smaller and less expensive government, and would remove our career politicians from being obstacles to desperately needed reforms.
Pat Clawson
patrickclawson@comcast.net
_________________
Flint Michigan Resident, Tax Payer, Flint Nutt - Local REALTOR - Activist. www.FlintTown.com
Wed Feb 16, 2011 1:35 am |
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Wed Feb 16, 2011 7:49 am |
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untanglingwebs
El Supremo
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Flint's financial future tied to state budget decisions
More state cuts would force Flint to cut public safety more
Cuts to revenue sharing could hurt Flint public safety
Autumn Perry
More: Bio, E-mail, News Team
FLINT (WJRT) -- (02/16/11)--We are learning more about how cuts at the state level could affect Flint's financial crisis.
The city of Flint is just weeks away from running out of money, and in less than 24 hours, we'll have a new picture of how dire the situation could become.
It's a waiting game at this point.
What happens Thursday after the governor rolls out his budget plan will determine how the city of Flint deals with its financial issues, and the outlook is not good.
There has been talk the city could lose approximately $8 million in state revenue sharing. If that happens, Mayor Dayne Walling ways there will be deep cuts across the board. Many of those cuts will happen in public safety, including police and fire.
Another factor in this crisis is the status of the stabilization bond. Tuesday, the state delayed Flint's request for the $20 million bond loan.
If the city does not get some sort of financial help from the state, city officials say they will not be able to make payroll by the end of March.
"We have to hear what the governor lays out, rework our numbers," Walling said. "I'm confident that the treasurer will work with us on a solution to our cash flow. It may not be a full $20 million authorization, but it will be enough to get us through."
The financial crisis comes after the police and fire departments have already withstood several budget cuts.
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Wed Feb 16, 2011 7:52 pm |
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