Mister, we could use a man like Gerald Ford, again!
Posted on 03/07/2012 10:00:02 AM PST by doug from upland
16 Cities Likely to Declare Bankruptcy Posted @ 1/12/2011 5:30 AM By Money Tree Posted in [Budget & Spending] | 2 Comments
Will 2011 be the year of municipal default?
Here is a list of 16 cities likely to face bankruptcy, as reported by Business Insider.
San Diego, Ca.
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, NY
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, Ca.
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, Oh.
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 neighboring city, Hamilton.
Honolulu, Hi.
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, Ca.
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, Ca.
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.
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, NJ
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, Mi
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, Pa
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, Il
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, NJ
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, Mi
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, RI
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.
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, Il
Deficit through December 2011: $654 million Closed
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.
After a city declares bankruptcy, it will usually cut pensions for retired city employees, more layoffs, etc.
The most serious problem for a bankrupted city is that it is hard to attract new investments and people would be scared to go to that city. Tourism will be greatly impacted because of the bad image.
While there have been US cities going bankrupt, there is no U. S. state which has declared bankruptcy. However, according to a recent report by the New York Post, California Governor Arnold Schwarzenegger came to Washington earlier last year to get seven billion dollars for his state government, which resorted to paying off vendors with scrip and delaying state income-tax refunds. Illinois seems to be in even worse shape. A recent credit rating showed Illinois weaker than Iceland and only slightly stronger than Iraq.
Can we expect the bond market to quit financing California and Illinois long before the federal government. It may already be happening.
Individual investors have been selling off state and local municipal bonds.
How long will it be before cities and other states on the verge of bankruptcy come to Washington with their hands out asking for a bailout? California and Illinois, facing 25 billion dollars and 15 billion dollars deficits, are the most likely. But what about Chicago?
The Obama administration may be sympathetic. It's channeled stimulus money to states and TARP money to General Motors and Chrysler in large part to bail out its labor-union allies, the report said.
But the Republican House isn't likely to share that view, and it 's hard to see how tapped-out state governments can get 60 votes in a 53-47 Democratic Senate, according to the paper.
Law professor David Skeel, writing in The Weekly Standard, suggests that the US Congress pass a law allowing states to go bankrupt.
Hey, these cities must not have heard.
We are in a roaring recovery!
Mister, we could use a man like Gerald Ford, again!
“The public employee pension plan is nothing short of a Ponzi scheme. But no one will be arrested.”
Corrected
Since the ‘reforms’ enacted in the early 80’s, almost all employee pension plans are nothing short of a Ponzi scheme. But no one will be arrested.
And if you look at all these states and cities it is very likely that their budgets are currently much larger than they were 10 years ago, particularly on a per capita bases, yet they are now “cut to the bone” when somehow they managed before...
Nice to see Paterson, Newark, and Camden NJ on the list. Socialist toilets brimming withour permanent underclass...Hey Newark, how did that Prudential Arena work out for you? Really had to build another one while there was nothing wrong with the Meadowlands (which despite Essex County’s objections, is still open for business); not a lot of hockey fans showing up to watch the Devils downtown?
It’s all about buying votes.
Don’t forget Birmingham, Alabama
San Fran has the same annual budget as Chicago with a fraction of the population. Speaks volumes.
This piece is over a year old and none of the listed cities declared bankruptcy in 2011.
Why post it now?
Within a short time of building the “Newark Bears” stadium, the residents were complaining about the type of jobs it brought; they didn’t want to sell popcorn, etc.
I understood their point, but at the same time they shouldn’t be biting the hand that feeds; without similar government infusions of cash, Newark would look like Mogadishu (and some of the outer edges do).
Construction jobs like these stadium boondoggles make me sick: The roads and bridges are rotting away (here at least), it would be a better use of money to fix those before stadiums.
Newark is that bad? I had a connecting flight through there ~8-10 years ago, so I didn't get to explore the area. Apparently, I didn't miss much. The mayor, Corey Booker is supposed to be good. Any thoughts on that?
It’s because of pension and benefit costs skyrocketing over the past decade - I suspect that if you compared expenditures of what you would consider to be important government services like emergency services and infrastructure, money going there is actually lower then in years past, and the bulk of the money is going to meet retired employees pension demands instead.
Turn the page to Chapter 9?
Booker is a step up from his predecessor, a thug named Sharpe James who went to prison after ruling Newarks for years. The government took decades to prosecute him, when he was living far beyond any legitimate lifestyle (when asked how he bought a yatch and shore house, his response to the reporter was, “There’s nothing wrong with a black man in America owning a boat or a house”). However, Booker is the same in holding out his hand to the county, state, and federal governments for more money (by which I mean OUR money); he is a leftist who thought he could change things, but old patterns persist. The construction money would certainly be better spent improving the roads & bridges in the area.
Newark is a little better than Detroit because there is still a vibrant downtown (some big companies, along with the schools abd hospitals), but you can’t stay when the sun goes down - it is a “9 to 5” vibrant, then all of the working people flee from the downtown. Crime is under- or unreported, though they couldn’t hide the fact that their murder rate had gone up a couple of years ago (buses and billboards screamed “STOP THE KILLING”, much to Booker’s chagrin; he was elected in part to reduce the crime).
Newark is rapidly becoming more Hispanic (like most of NJ’s cities), and that is where there hope lies; there is no assumed right to other people’s money, and the people in general are harder working (the Hispanic areas of the city are faring better than the “other” areas, with lots of businesses). It may take a few more years, but Booker may end up being the last black mayor of Newark.
In Ohio we voted down the proposition that may have saved these 216 firefighters in Cincinati. It’s good to know we have money for that street car, bilingual signs downtown and city worker benefits for same sex partners.
These are the first dominoes.
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