Global Research, December 29, 2010
The Business Insider
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.
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.
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.
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.
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.
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.
www.globalresearch.ca
and a possible solution from Dr Claude Anderson
http://video.google.com/videoplay?do...3412380787591#
(Completely in audio, as well)
The Business Insider
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.
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.
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.
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.
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.
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.
www.globalresearch.ca
and a possible solution from Dr Claude Anderson
http://video.google.com/videoplay?do...3412380787591#
(Completely in audio, as well)