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Author    Post   untanglingwebs El Supremo 04/22/2011 Rolling Stone Poster Child Jefferson County Edges Closer to Bankruptcy After Court Invalidates New Taxes Jefferson County, Alabama's troubles began with over $3 billion in sewer debt that was so tragically-structured that it became a feature article in Rolling Stone magazine, which called county "a perfect metaphor for the peculiar alchemy of oligarchical capitalism." If you haven't read the article, you must: it is one of the most raucous and alarming stories ever written about public finance or infrastructure. (http://www.rollingstone.com/politics/news/looting-main-street-20100331) The magazine concluded that Goldman Sachs, JP Morgan and other banks facilitated -- through deception and even bribery -- the conversion of a one-time $250 million sewer project into a debacle so costly that the county had to furlough or laid off nearly 1,000 workers and slash services to the bone. The county had hoped to sustain itself (barely) with new business and occupational taxes that the Alabama Supreme Court recently concluded were beyond the county's powers. That was only the latest setback for a jurisdiction that was already at the point of collapse. Revenues are now expected fall short of expenses sometime within the next two months. A recent Standard & Poors report concluded that, "In addition to a potential bankruptcy filing to address the sewer system debt, there is also the potential for a bankruptcy filing related to the county's general operations ." The county's general obligation warrants are currently rated B by S&P, while Moody's rates it "Caa1. Even limited obligation school warrants are rated only B3, while sewer warrants are at Caa3. Jefferson County's total debt load is so now enormous relative to its population and economic base that taxpayers purses and county services are not likely to recover for many years. In the words of Rolling Stone, "The destruction of Jefferson County reveals the basic battle plan of these modern barbarians, the way that banks like JP Morgan and Goldman Sachs have systematically set out to pillage towns and cities from Pittsburgh to Athens. These guys aren't number-crunching whizzes making smart investments; what they do is find suckers in some municipal-finance department, corner them in complex lose-lose deals and flay them alive. In a complete subversion of free-market principles, they take no risk, score deals based on political influence rather than competition, keep consumers in the dark — and walk away with big money. "It's not high finance," says Taylor, the former bond regulator. "It's low finance." And even if the regulators manage to catch up with them billions of dollars later, the banks just pay a small fine and move on to the next scam. This isn't capitalism. It's nomadic thievery." The City Survival Project believes that dynamic capitalism, free markets and entrepreneurial innovation can be made consistent with social justice and shared prosperity, but Rolling Stone has a point: a public finance game rigged by ambitious bankers is still cheating, and cheaters should be punished, not the citizens that they and their municipal co-conspirators deceived. Steve Stecker, Editor Mon May 21, 2012 6:10 am  untanglingwebs El Supremo BUSINESS INSIDER 16 US Cities Facing Bankruptcy If They Don't Make Deep Cuts In 2011 Gus Lubin and Leah Goldman|Dec. 26, 2010, 11:52 AM|644,349|127 2011 will be the year of the municipal default. At least that's what analysts like Meredith Whitney predict, as do bond investors that have been fleeing the muni market. There are many reasons to be worried. First, the expiration of Build America Bonds will make it harder for cities to raise funds. Second, city revenues are crashing and keep getting worse. Property taxes haven't reflected the total damage from the housing crash. High joblessness is cutting into city revenues, while increasing costs for services. The next default could be a major city like Detroit, or it could be one of hundreds of small cities that are on the brink. Did we leave off your ailing city? Let us know in the comments. San Diego, Calif. Mayor Jerry Sanders wikimedia commons Deficit through June 2012 : $73 million Budget in FY2011:$2.85 billion Annualized gap: 1.7% The city's official have tried curbing the deficit by increasing sales taxes, but residents of the city strongly oppose this and have voted it down. San Diego already cut over $200 million over the past two years, so these cuts won't come easy. New York City Mayor Michael Bloomberg Deficit through June 2012: $2 billion Budget in FY2010: $63.1 billion Annualized gap: 2.1% Estimates of the NYC deficit range from $3.6 billion according to Comptroller John Liu to around $2 billion according to the Independent Budget Office. Everyone agrees that the deficit will be worse if New York state cuts aid as part of its own deficit reduction plan. Mayor Bloomberg has already started to address the FY2012 deficit, calling for layoffs in all city agencies, closing 20 fire departments at night, and reducing services for seniors, libraries and cultural centers. San Jose, Calif. Mayor Chuck Reed Deficit through June 2012: $90 million Budget in FY2010: $2.7 billion Annualized gap: 2.2% After an audit of the San Jose police department, city officials found it to have too many high paid supervisors, costing the city too much money. The answer to this is converting some of those upper ranked officers to patrol positions. This could reduce the city's debt by $33 million. Last year's deficit was $116 million, leading to brutal cuts including nearly 900 layoffs. Cincinnati, Ohio Mayor Mark Mallory ap Deficit through December 2012: $60 million Biennial budget FY2009/2010:$2.5 billion Annualized gap: 2.4% Helping the budget in Cincinnati depends largely on changes in the police and fire departments. The city can either get $20 million in concessions from the two unions, lay off 216 firefighters, or outsource the police force to Hamilton County. Honolulu, Hawaii Mayor Peter Carlisle and his wife Judy Couresy of PeterCarlisle.com Deficit through June 2012: $100 million Budget in FY2011:$1.8 billion Annualized gap: 3.7% Mayor Peter Carlisle said police officers and fire fighters will be asked to make concessions in the upcoming budget and he will also end furloughs of two days per month for public workers. This will require the 2,900 officers to give back their 6% pay raises they have received in each of the past four years. Last year Honolulu raised some property taxes to fill a huge $140 million deficit. San Francisco, Calif. ap Deficit through June 2012: $380 million Budget in FY2011: $6.55 billion Annualized gap: 3.9% Mayor Gavin Newsom says this year's deficit is completely manageable. Last year's deficit approached $500 million and the city did not need to lay off any police or firemen. While Newsom's term is coming to an end, he says he and his colleagues will leave detailed options for the incoming mayor. Last year's cuts were even larger, eliminating a $438 million deficit. The city is down to the bone. Los Angeles, Calif. Mayor Antonio Villaraigosa Deficit through June 2012: $438 million Budget in FY2011: $6.7 billion Annualized gap: 4.4% The Los Angeles City Administration Office plans to cut 225 civilian positions in the LAPD, reduce firefighting staffing, and eliminate a dozen positions in the City Attorney's Office and General Service Department. The deficit will only get worse unless an effort to privatize parking garages is approved. If not, the city will require more layoffs, furloughs, and curtailed hiring. Last year's deficit was even larger, totalling nearly $700,000. Washington, D.C. Mayor Adrian Fenty Deficit through September 2012: $688 million Budget in FY2011: $8.89 billion Annualized gap: 4.4% Council member Tommy Wells proposed tax rate increases which were voted down, but Wells says he will continue to push his proposal. Wells' proposal seems reasonable as residents making $100,000 a year would only pay $63 more in taxes per year. This is a small price to pay that would benefit the city immensely. Newark, N.J. Deficit through December 2011: $30.5 million Budget in FY2010: $677 million Annualized gap: 4.5% Newark's deficit was $83 million before Mayor Cory Booker initiated a plan to sell city-owned buildings, raise property taxes to 16 percent and decimate the police force. Nontheless, Moody's cut Newark's rating to A3 citing its $30.5 million remaining deficit. Detroit, Mich. Mayor Dave Bing Deficit through June 2011: $85 million Budget in FY2011: $3.1 billion Annualized gap: 5.5% Detroit's city government has cut costs with layoffs and by leaving currently vacant positions open. Mayor Bing's emergency fiscal plan includes demolishing houses and cutting police and trash services to 20% of the city. Last year the city council pushed through severe cuts to fill an over $700 million deficit. Reading, Penn Mayor Tom McMahon wikimedia commons Deficit through December 2011: $7.5 million Budget in FY2010:$120 million Annualized gap: 6.3% One of Pennsylvania's several distressed municipalities, which receive state aid, Reading has been running an operating deficit for years. In September the city council said their deficit was bigger than expected, soaring to $7.5 million for the current year, which means they will have to borrow around $17 million from the state to pay off total debts. Joliet, Ill. Mayor Arthur Schultz Courtesy of Joliet.com Deficit through December 2011: $21 million Budget in FY2010: $274 million Annualized gap: 7.7% Last year, the city increased property tax by over 12 percent and hiked water and sewer rates by 45 percent over three years to help with the deficit. The city council also cut police and public sector jobs. Camden, N.J. Mayor Dana Redd AP Images Deficit through December 2011: $26.5 million Budget in FY2010:$178 million Annualized gap: 15% Despite holding title of second most dangerous city in America, Camden recently received approval to lay off half of its police force. Hamtramck, Mich. Mayor Karen Majewski City of Hamtramck Deficit through June 2012: $4.7 million Budget in FY2011: $18 million Annualized gap: 17% City manager Bill Cooper was denied permission to declare bankruptcy. He says the city is owed millions of dollars in tax dollars from Detroit from a shared facility. The state offered the city a loan to stave off bankruptcy. Cooper says he has already cut almost everything possible, going so far as to lay off the city's five crossing guards. Hamtramck might avoid bankruptcy, but also-broke Michigan can't afford many of these deals. That's why Gov. Rick Snyder predicts "hundreds of jurisdictions" going bankrupt in the next four years. Central Falls, R.I. State-appointed receiver Mark Pfeiffer Deficit through June 2012: $7 million Budget in FY2011:$21 million Annualized gap: 22% Central Falls has been put in state receivership due to critical budget problems. State-appointed receiver Mark Pfeiffer thinks the best solution is for Central Falls to be annexed by its neighboring city, Pawtucket. Paterson, N.J. Mayor Jeff Jones Deficit through December 2011: $54 million Budget for FY2010:$225 million Annualized gap: 24% As a "last resort," Paterson is considering laying off 30 percent of its police force, said councilman Steve Olimpio. This will put 150 police officers out of work. BONUS: Chicago, Ill. Mayor Richard Daly Deficit through December 2011: $654 millionClosed Budget in FY2010: $6.8 billion Annualized gap: 9.6% Mayor Richard Daley has balanced the budget, but absolutely ruined Chicago finances from here on. His FY2011 plan uses up nearly the entire revenue from a long-term lease of the local parking system and airport, which he passed in 2008. The multi-billion lease deal was supposed to last for decades, but it only lasted two years. The best hope for the future is building a city-owned casino. Typically cities can get aid from the states, but that will be hard in 2011... Mon May 21, 2012 6:32 am  untanglingwebs El Supremo 16 US Cities Facing Bankruptcy If They Don't Make Deep Cuts In ... www.businessinsider.com/americas-most-bankrupt-cities-2010-12 Dec 26, 2010 ... Will Meredith Whitney's gloomy predictions come true? 7 U.S. Cities on the Verge of Bankruptcy www.wealthwire.com/news/economy/2045 Oct 17, 2011 ... The time has come when citizens and companies aren’t the only ones being forced to file for bankruptcy, as these seven cities are on the ... In California, City Teeters on Brink of Bankruptcy - The New ... www.nytimes.com/2012/03/01/us/stockton-calif-moves-closer-to-bankruptcy.html?pag... Feb 29, 2012 ... Stockton's City Council decided to begin mediation in a last-ditch effort to avoid having the city become the nation's largest to declare ... Stockton Bankruptcy: City Would Be Largest In American History ... www.huffingtonpost.com/2012/02/23/stockton-bankruptcy-biggest-in-american-h... Feb 23, 2012 ... The Central Valley city of Stockton of may become the next California municipality to follow in the steps of Vallejo and Orange County and file ... The Simple Math That Can Save Cities From Bankruptcy - Jobs ... www.theatlanticcities.com/jobs-and-economy/2012/03/simple-math-can-save-cit... Mar 30, 2012 ... Forget raising taxes or cutting services. If cities understood the economics of land use better, they might not need to do either. Desperate U.S. Cities, Counties File for Bankruptcy - ABC News abcnews.go.com/Business/desperate-us-cities-counties-file-bankruptcy/story?id=14... Sep 8, 2011 ... Vallejo, Calif., knows what it's like to go through desperate times—a distinction it shares with similarly-blighted towns and counties around the ... Cash-Strapped Cities File For Bankruptcy : NPR www.npr.org/2011/10/20/141557122/cash-strapped-cities-file-for-bankruptcy Oct 20, 2011 ... Pennsylvania's capital, Harrisburg, has filed for Chapter 9 municipal bankruptcy. The filing is being contested in court. It's the sixth city to file for ... Bankruptcy jitters in Stockton. Will other cities fail? - ... www.csmonitor.com/Business/Latest-News-Wires/2012/0319/Bankruptcy-jitters-i... Mar 19, 2012 ... Bankruptcy of Stockton, Calif., looms large as city enters talks with creditors. But most other troubled California municipalities are taking drastic ... We Built This City on Debt 'n' Entitlements: Stockton Faces ... www.pbs.org/newshour/bb/business/jan-june12/stockton_03-16.html Mar 16, 2012 ... JEFFREY BROWN: And we turn to a major city in California once riding high in the boom years, now on the verge of bankruptcy, and joining ... Mon May 21, 2012 6:34 am    Display posts from previous:   All Posts1 Day7 Days2 Weeks1 Month3 Months6 Months1 Year Oldest FirstNewest First

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