American States & Cities Broke.

[pangea]

Re: American States & Cities Broke- Pension math

When pensions fall 50%, hopefully the newly poverty-sticken pensioners will ask, "How did this happen? Who is to blame?" . . . and they will come to the correct answers and vote the government enablers out of office and put the Wall Street gamblers, etc., in jail.

As Obama said in a recent press conference:

"We were on the verge of a complete financial meltdown, and the reason was that Wall Street took extraordinary risks with other people's money. They were peddling loans that they knew could never be repaid. They were flipping those loans and leveraging those loans. Higher and higher mountains of debts were being built on loans that were fundamentally unsound . . . and all of us are now paying the price."

Hmmm. I wonder if like in the Bernie Madoff case, the folks who got out early with full funding will be hit up to return their proceeds so that future or even current recipients get "something". Clawbacks. When I say "getting out early" I mean those who received fully funded pension payouts, AND those who get $50M retirement packages from Oligarch firms.

Is this any different than Bernie? No. It's merely the way the general public perceives it.

Any way you slice it, name it, call it - we're out of money and it's going to get ugly when these debts have to be settled.

[MulaMan]

Re: American States & Cities Broke.

America is a 2 class nation - public employees and private employees.

This is become of Bush necons and Clinton neolibs - they sent the money out the back door - same with you local school board plus real estate developer governments - stop voting for school board memebers and real estate developers into local goverments - most politicians in America start out on the local school board!

At least a true liberal (Obama) or true repbulican (Ron Paul) sends the money out the front door, both are better then Bush and Clintons - which is where the current problems arose - The Reaganomics.

[MulaMan]

Re: American States & Cities Broke.

America is a 2 class nation - public employees and private employees.

This is because of Bush necons and Clinton neolibs - they sent the money out the back door - same with your local school board plus real estate developer run governments - stop voting school board members and real estate developers into local goverments - most politicians in America start out on the local school board!

At least a true liberal (Obama) or true repbulican (Ron Paul) sends the money out the front door, both are better then Bush and Clintons - which is where the current problems arose - The Reaganomics.

[Raz]

Re: American States & Cities Broke.

America is a 2 class nation - public employees and private employees.

This is because of Bush necons and Clinton neolibs - they sent the money out the back door - same with your local school board plus real estate developer run governments - stop voting school board members and real estate developers into local goverments - most politicians in America start out on the local school board!

At least a true liberal (Obama) or true repbulican (Ron Paul) sends the money out the front door, both are better then Bush and Clintons - which is where the current problems arose - The Reaganomics.

Ron Paul is a true Conservative.

Screw the Republicans. :mad:

[cjppjc]

Re: American States & Cities Broke.

Also, 200Kb/day = 73Mb/year, and at $60 per barrel = $4.4B.

How much of that is kept by North Dakotans, how much by the oil industry, and other out of state actors?

I am assuming that no more than 15% of that $7000 per capita stays in the state.

So if they can extract a budget surplus of $ 1.2 B on that with the low tax rate structure they have, Kudos to the brilliant legislators, budget analysts and the like who work for the state. I am sure that these supermen and superwomen would have been sought after by every other state in the US!

From the state budget, O&G revenues amounted to ~3% of the total revenues

Rajiv, thank you for all your comments on the apparent miracle that is North Dakota. I recall you mentioning their bank as a great contributor to the financial health of the state many times. I guess that fact along with a small budget for a small constituency, and the oil revenue is the key. Could you maybe take a guess as to why the state bank is a contributor.

[Rajiv]

Re: American States & Cities Broke.

There was a very good interview with Erik Hardmeyer (President of the Bank of North Dakota) in the Mother Jones mazine

How the Nation’s Only State-Owned Bank Became the Envy of Wall Street

The Bank of North Dakota is the only state-owned bank in America—what Republicans might call an idiosyncratic bastion of socialism. It also earned a record profit last year even as its private-sector corollaries lost billions. To be sure, it owes some of its unusual success to North Dakota’s well-insulated economy, which is heavy on agricultural staples and light on housing speculation. But that hasn’t stopped out-of-state politicos from beating a path to chilly Bismarck in search of advice. Could opening state-owned banks across America get us out of the financial crisis? It certainly might help, says Ellen Brown, author of the book, Web of Debt, who writes that the Bank of North Dakota, with its $4 billion under management, has avoided the credit freeze by “creating its own credit, leading the nation in establishing state economic sovereignty.” Mother Jones spoke with the Bank of North Dakota’s president, Eric Hardmeyer.
.
.
.
.
MJ: What makes your bank unique today?

EH: Our funding model, our deposit model is really what is unique as the engine that drives that bank. And that is we are the depository for all state tax collections and fees. And so we have a captive deposit base, we pay a competitive rate to the state treasurer. And I would bet that that would be one of the most difficult things to wrestle away from the private sector—those opportunities to bid on public funds. But that’s only one portion of it. We take those funds and then, really what separates us is that we plow those deposits back into the state of North Dakota in the form of loans. We invest back into the state in economic development type of activities. We grow our state through that mechanism.

[cjppjc]

Re: American States & Cities Broke.

There was a very good interview with Erik Hardmeyer (President of the Bank of North Dakota) in the Mother Jones mazine

How the Nation’s Only State-Owned Bank Became the Envy of Wall Street

Is it really just that simple? The bank has the lowest student loan default rate, and they pay a dividend to the state. Good to see that not all bankers are banksters. Rickett would still observe that all their money is loaned into existance as well.


EH: It all gets down the management and management philosophy. We’re a fairly conservative lot up here in the upper Midwest and we didn’t do any subprime lending and we have the ability to get into the derivatives markets and put on swaps and callers and caps and credit default swaps and just chose not to do it, really chose a Warren Buffett mentality—if we don’t understand it, we’re not going to jump into it. And so we’ve avoided all those pitfalls. That’s not to say that we’re completely immune to everything, certainly we’ve bought some mortgage-backed securities and we’re working through some of those issues, but nothing that would cause us to be concerned.



EH: It just reinforced what we do, and that is you stick to what you understand, you do it well, you know your customers. We’ve never been a bank that tries to hit home runs. That’s not what we’re all about. We have a specific mission which is more important. Most corporations and banks, their top priority is to maximize shareholder return. And that is a nice byproduct for us because we do have a nice return—an NROA [return on net operating assets] of 2, a ROE [return on equity] of 25, 26 percent. But really where we take the most satisfaction is making sure we meet the needs of the state and finance those types of things that make our state go forward.

[GRG55]

Re: American States & Cities Broke.

Here's where the imprudent get a helping hand. Wonder if North Dakota will receive any "aid"...:rolleyes:

Obama to Consider ‘Options’ as Republicans Seize on Jobs Losses

Oct. 3 (Bloomberg) -- President Barack Obama said he is exploring “any and all additional options” to bolster the economy as Republicans seized on a report showing accelerating job losses to criticize the administration’s polices.

Obama yesterday called the report “a sobering reminder that progress comes in fits and starts and that we’re going to need to grind out this recovery step by step.”...

...Speaking at the White House after returning from a trip to Copenhagen for what turned out to be a failed bid to bring the 2016 Olympics to Chicago, Obama said he and his advisers would look at “options and measures that we might take to promote job creation.”

Those options don’t include a second stimulus package, according to an administration official, who spoke on condition of anonymity. Rather, Obama is considering tax cuts, investments in infrastructure and additional aid to states and safety-net programs...

Now contrast this to what the Administration is saying outside the country:

Geithner Says Recovery Signs Are ‘Stronger’ Than Expected

Oct. 3 (Bloomberg) -- Treasury Secretary Timothy Geithner said signs of economic recovery are “stronger” and have appeared “sooner” than expected, while reiterating it’s not yet time to roll back stimulus programs.

Financial conditions have improved “dramatically,” particularly in the U.S., where the housing market has stabilized, Geithner said in a statement issued in Istanbul today...

..“Exit will not be like flipping a switch,” he said. “Instead, as conditions stabilize and growth strengthens, we will unwind the extraordinary policy measures we’ve taken, phasing them out carefully to avoid a damaging cliff.”

Geithner didn’t mention currencies in his prepared remarks. In his recent public comments, he has reiterated that the U.S. doesn’t intend for the dollar’s role in the global economy to diminish.

[jk]

Re: American States & Cities Broke.

Here's where the imprudent get a helping hand. Wonder if North Dakota will receive any "aid"...:rolleyes:

Obama to Consider ‘Options’ as Republicans Seize on Jobs Losses

Oct. 3 (Bloomberg) -- President Barack Obama said he is exploring “any and all additional options” to bolster the economy as Republicans seized on a report showing accelerating job losses to criticize the administration’s polices.

Obama yesterday called the report “a sobering reminder that progress comes in fits and starts and that we’re going to need to grind out this recovery step by step.”...

...Speaking at the White House after returning from a trip to Copenhagen for what turned out to be a failed bid to bring the 2016 Olympics to Chicago, Obama said he and his advisers would look at “options and measures that we might take to promote job creation.”

Those options don’t include a second stimulus package, according to an administration official, who spoke on condition of anonymity. Rather, Obama is considering tax cuts, investments in infrastructure and additional aid to states and safety-net programs...

Now contrast this to what the Administration is saying outside the country:

Geithner Says Recovery Signs Are ‘Stronger’ Than Expected

Oct. 3 (Bloomberg) -- Treasury Secretary Timothy Geithner said signs of economic recovery are “stronger” and have appeared “sooner” than expected, while reiterating it’s not yet time to roll back stimulus programs.

Financial conditions have improved “dramatically,” particularly in the U.S., where the housing market has stabilized, Geithner said in a statement issued in Istanbul today...

..“Exit will not be like flipping a switch,” he said. “Instead, as conditions stabilize and growth strengthens, we will unwind the extraordinary policy measures we’ve taken, phasing them out carefully to avoid a damaging cliff.”

Geithner didn’t mention currencies in his prepared remarks. In his recent public comments, he has reiterated that the U.S. doesn’t intend for the dollar’s role in the global economy to diminish.

no contradiction here. obama is talking about working people, who can't find jobs. geithner is talking about "financial conditions," i.e. bankers, who think the recovery is going along just fine. a 2 tier economy needs 2 sets of spokesmen.

[pangea]

Re: American States & Cities Broke.

Don't forget California:



http://www.guardian.co.uk/world/2009...ing-state-debt

Will California become America's first failed state?

Los Angeles, 2009: California may be the eighth largest economy in the world, but its state staff are being paid in IOUs, unemployment is at its highest in 70 years, and teachers are on hunger strike. So what has gone so catastrophically wrong?

• 
• • Paul Harris
  • The Observer, Sunday 4 October 2009
  • Article history
  
  

Patients without medical insurance wait for treatment in the Forum, a music arena in Inglewood, Los Angeles. The 1,500 free places were filled by 4am. Photograph: John Moore/Getty Images

California has a special place in the American psyche. It is the Golden State: a playground of the rich and famous with perfect weather. It symbolises a lifestyle of sunshine, swimming pools and the Hollywood dream factory.
But the state that was once held up as the epitome of the boundless opportunities of America has collapsed. From its politics to its economy to its environment and way of life, California is like a patient on life support. At the start of summer the state government was so deeply in debt that it began to issue IOUs instead of wages. Its unemployment rate has soared to more than 12%, the highest figure in 70 years. Desperate to pay off a crippling budget deficit, California is slashing spending in education and healthcare, laying off vast numbers of workers and forcing others to take unpaid leave. In a state made up of sprawling suburbs the collapse of the housing bubble has impoverished millions and kicked tens of thousands of families out of their homes. Its political system is locked in paralysis and the two-term rule of former movie star Arnold Schwarzenegger is seen as a disaster – his approval ratings having sunk to levels that would make George W Bush blush. The crisis is so deep that Professor Kenneth Starr, who has written an acclaimed history of the state, recently declared: "California is on the verge of becoming the first failed state in America."
Outside the Forum in Inglewood, near downtown Los Angeles, California has already failed. The scene is reminiscent of the fallout from Hurricane Katrina, as crowds of impoverished citizens stand or lie aimlessly on the hot tarmac of the centre's car park. It is 10am, and most have already been here for hours. They have come for free healthcare: a travelling medical and dental clinic has set up shop in the Forum (which usually hosts rock concerts) and thousands of the poor, the uninsured and the down-on-their-luck have driven for miles to be here.
The queue began forming at 1am. By 4am, the 1,500 spaces were already full and people were being turned away. On the floor of the Forum, root-canal surgeries are taking place. People are ferried in on cushions, hauled out of decrepit cars. Sitting propped up against a lamp post, waiting for her number to be called, is Debbie Tuua, 33. It is her birthday, but she has taken a day off work to bring her elderly parents to the Forum, and they have driven through the night to get here. They wait in a car as the heat of the day begins to rise. "It is awful for them, but what choice do we have?" Tuua says. "I have no other way to get care to them."
Yet California is currently cutting healthcare, slashing the "Healthy Families" programme that helped an estimated one million of its poorest children. Los Angeles now has a poverty rate of 20%. Other cities across the state, such as Fresno and Modesto, have jobless rates that rival Detroit's. In order to pass its state budget, California's government has had to agree to a deal that cuts billions of dollars from education and sacks 60,000 state employees. Some teachers have launched a hunger strike in protest. California's education system has become so poor so quickly that it is now effectively failing its future workforce. The percentage of 19-year-olds at college in the state dropped from 43% to 30% between 1996 and 2004, one of the highest falls ever recorded for any developed world economy. California's schools are ranked 47th out of 50 in the nation. Its government-issued bonds have been ranked just above "junk".
Some of the state's leading intellectuals believe this collapse is a disaster that will harm Californians for years to come. "It will take a while for this self-destructive behaviour to do its worst damage," says Robert Hass, a professor at Berkeley and a former US poet laureate, whose work has often been suffused with the imagery of the Californian way of life.
Now, incredibly, California, which has been a natural target for immigration throughout its history, is losing people. Between 2004 and 2008, half a million residents upped sticks and headed elsewhere. By 2010, California could lose a congressman because its population will have fallen so much – an astonishing prospect for a state that is currently the biggest single political entity in America. Neighbouring Nevada has launched a mocking campaign to entice businesses away, portraying Californian politicians as monkeys, and with a tag-line jingle that runs: "Kiss your assets goodbye!" You know you have a problem when Nevada – famed for nothing more than Las Vegas, casinos and desert – is laughing at you.
This matters, too. Much has been made globally of the problems of Ireland and Iceland. Yet California dwarfs both. It is the eighth largest economy in the world, with a population of 37 million. If it was an independent country it would be in the G8. And if it were a company, it would likely be declared bankrupt. That prospect might surprise many, but it does not come as news to Tuua, as she glances nervously into the warming sky, hoping her parents will not have to wait in the car through the heat of the day just to see a doctor. "It is so depressing. They both worked hard all their lives in this state and this is where they have ended up. It should not have to be this way," she says.
It is impossible not to be impressed by the physical presence of Arnold Schwarzenegger when he walks into a room. He may appear slightly smaller than you imagine, but he's just as powerful. This is, after all, the man who, before he was California's governor, was the Terminator and Conan the Barbarian.
But even Schwarzenegger is humbled by the scale of the crisis. At a press conference in Sacramento to announce the final passing of a state budget, which would include billions of dollars of cuts, the governor speaks in uncharacteristically pensive terms. "It is clear that we do not know yet what the future holds. We are still in troubled waters," he says quietly. He looks subdued, despite his sharp grey suit and bright pink tie.
Later, during a grilling by reporters, Schwarzenegger is asked an unusual question. As a gaggle of journalists begins to shout, one man's voice quickly silences the others. "Do you ever feel like you're watching the end of the California dream?" asks the reporter. It is clearly a personal matter for Schwarzenegger. After all, his life story has embodied it. He arrived virtually penniless from Austria, barely speaking English. He ended up a movie star, rich beyond his dreams, and finally governor, hanging Conan's prop sword in his office. Schwarzenegger answers thoughtfully and at length. He hails his own experience and ends with a passionate rallying call in his still thickly accented voice.
"There is people that sometimes suggest that the American dream, or the Californian dream, is evaporating. I think it's absolutely wrong. I think the Californian dream is as strong as ever," he says, mangling the grammar but not the sentiment.
Looking back, it is easy to see where Schwarzenegger's optimism sprung from. California has always been a special place, with its own idea of what could be achieved in life. There is no such thing as a British dream. Even within America, there is no Kansas dream or New Jersey dream. But for California the concept is natural. It has always been a place apart. It is of the American West, the destination point in a nation whose history has been marked by restless pioneers. It is the home of Hollywood, the nation's very own fantasy land. Getting on a bus or a train or a plane and heading out for California has been a regular trope in hundreds of books, movies, plays, and in the popular imagination. It has been writ large in the national psyche as free from the racial divisions of the American South and the traditions and reserve of New England. It was America's own America.
Michael Pollan, author of The Omnivore's Dilemma and now an adopted Californian, remembers arriving here from his native New England. "In New England you would have to know people for 10 years before they let you in their home," he says. "Here, when I took my son to his first play date, the mother invited me to a hot tub."
Michael Levine is a Hollywood mover and shaker, shaping PR for a stable of A-list clients that once included Michael Jackson. Levine arrived in California 32 years ago. "The concept of the Californian dream was a certain quality of life," he says. "It was experimentalism and creativity. California was a utopia."
Levine arrived at the end of the state's golden age, at a time when the dream seemed to have been transformed into reality. The 1950s and 60s had been boom-time in the American economy; jobs had been plentiful and development rapid. Unburdened by environmental concerns, Californian developers built vast suburbs beneath perpetually blue skies. Entire cities sprang from the desert, and orchards were paved over into playgrounds and shopping malls.
"They came here, they educated their kids, they had a pool and a house. That was the opportunity for a pretty broad section of society," says Joel Kotkin, an urbanist at Chapman University, in Orange County. This was what attracted immigrants in their millions, flocking to industries – especially defence and aviation – that seemed to promise jobs for life. But the newcomers were mistaken. Levine, among millions of others, does not think California is a utopia now. "California is going to take decades to fix," he says.
So where did it all wrong?
Few places embody the collapse of California as graphically as thecity of Riverside. Dubbed "The Inland Empire", it is an area in the southern part of the state where the desert has been conquered by mile upon mile of housing developments, strip malls and four-lane freeways. The tidal wave of foreclosures and repossessions that burst the state's vastly inflated property bubble first washed ashore here. "We've been hit hard by foreclosures. You can see it everywhere," says political scientist Shaun Bowler, who has lived in California for 20 years after moving here from his native England. The impact of the crisis ranges from boarded-up homes to abandoned swimming pools that have become a breeding ground for mosquitoes. Bowler's sister, visiting from England, was recently taken to hospital suffering from an infected insect bite from such a pool. "You could say she was a victim of the foreclosure crisis, too," he jokes.
But it is no laughing matter. One in four American mortgages that are "under water", meaning they are worth more than the home itself, are in California. In the Central Valley town of Merced, house prices have crashed by 70%. Two Democrat politicians have asked for their districts to be declared disaster zones, because of the poor economic conditions caused by foreclosures. In one city near Riverside, a squatter's camp of newly homeless labourers sleeping in their vehicles has grown up in a supermarket car park – the local government has provided toilets and a mobile shower. In the Los Angeles suburb of Pacoima, one in nine homeowners are now in default on their mortgage, and the local priest, the Rev John Lasseigne, has garnered national headlines – swapping saving souls to saving houses, by negotiating directly with banks on behalf of his parishioners.
For some campaigners and advocates against suburban sprawl and car culture, it has been a bitter triumph. "Let the gloating begin!" says James Kunstler, author of The Long Emergency, a warning about the high cost of the suburban lifestyle. Others see the end of the housing boom as a man-made disaster akin to a mass hysteria, but with no redemption in sight. "If California was an experiment then it was an experiment of mass irresponsibility – and that has failed," says Michael Levine.
Nowhere is the economic cost of California's crisis writ larger than in the Central Valley town of Mendota, smack in the heart of a dusty landscape of flat, endless fields of fruit and vegetables. The town, which boldly terms itself "the cantaloup capital of the world", now has an unemployment rate of 38%. That is expected to rise above 50% as the harvest ends and labourers are laid off. City officials hold food giveaways every two weeks. More than 40% of the town's people live below the poverty level. Shops have shut, restaurants have closed, drugs and alcohol abuse have become a problem.
Standing behind the counter of his DVD and grocery store, former Mendota mayor Joseph Riofrio tells me it breaks his heart to watch the town sink into the mire. His father had built the store in the 1950s and constructed a solid middle-class life around it, to raise his family. Now Riofrio has stopped selling booze in a one-man bid to curb the social problems breaking out all around him.
"It is so bad, but it has now got to the point where we are getting used to it being like this," he says. Riofrio knows his father's achievements could not be replicated today. The state that once promised opportunities for working men and their families now promises only desperation. "He could not do what he did again. That chance does not exist now," Riofrio says.
Outside, in a shop that Riofrio's grandfather built, groups of unemployed men play pool for 25 cents a game. Near every one of the town's liquor stores others lie slumped on the pavements, drinking their sorrows away. Mendota is fighting for survival against heavy odds. The town of 7,000 souls has seen 2,000 people leave in the past two years. But amid the crisis there are a few sparks of hope for the future. California has long been an incubator of fresh ideas, many of which spread across the country. If America emerges from its crisis a greener, more economically and politically responsible nation, it is likely that renewal will have begun here. The clues to California's salvation – and perhaps even the country as a whole – are starting to emerge.
Take Anthony "Van" Jones, a man now in the vanguard of the movement to build a future green economy, creating millions of jobs, solving environmental problems and reducing climate change at a stroke. It is a beguiling vision and one that Jones conceived in the northern Californian city of Oakland. He began political life as an anti-poverty campaigner, but gradually combined that with environmentalism, believing that greening the economy could also revitalise it and lift up the poor. He founded Green for All as an advocacy group and published a best-selling book, The Green Collar Economy. Then Obama came to power and Jones got the call from the White House. In just a few years, his ideas had spread from the streets of Oakland to White House policy papers. Jones was later ousted from his role, but his ideas remain. Green jobs are at the forefront of Obama's ideas on both the economy and the environment.
Jones believes California will once more change itself, and then change the nation. "California remains a beacon of hope… This is a new time for a new direction to grow a new society and a new economy," Jones has said.
It is already happening. California may have sprawling development and awful smog, but it leads the way in environmental issues. Arnold Schwarzenegger was seen as a leading light, taking the state far ahead of the federal government on eco-issues. The number of solar panels in the state has risen from 500 a decade ago to more than 50,000 now. California generates twice as much energy from solar power as all the other US states combined. Its own government is starting to turn on the reckless sprawl that has marked the state's development.
California's attorney-general, Jerry Brown, recently sued one county government for not paying enough attention to global warming when it came to urban planning. Even those, like Kotkin, who are sceptical about the end of suburbia, think California will develop a new model for modern living: comfortable, yes, but more modest and eco-friendly. Kotkin, who is writing an eagerly anticipated book about what America will look like in 2050, thinks much of it will still resemble the bedrock of the Californian dream: sturdy, wholesome suburbs for all – just done more responsibly. "We will still live in suburbs. You work with the society you have got. The question is how we make them more sustainable," he says.
Even the way America eats is being changed in California. Every freeway may be lined with fast-food outlets, but California is also the state of Alice Waters, the guru of the slow-food movement, who inspired Michelle Obama to plant a vegetable garden in the White House. She thinks the state is changing its values. "The crisis is bringing us back to our senses. We had adopted a fast and easy way of living, but we are moving away from that now," she says.
There is hope in politics, too. There is a growing movement to call for a constitutional convention that could redraw the way the state is governed. It could change how the state passes budgets and make the political system more open, recreating the lost middle ground. Recently, the powerful mayor of Los Angeles, Antonio Villaraigosa, signed on to the idea. Gerrymandering, too, is set to take a hit. Next year Schwarzenegger will take steps to redraw some districts to make them more competitive, breaking the stranglehold of party politics. He wants district boundaries to be drawn up by impartial judges, not politicians. In previous times that would have been the equivalent of a turkey voting for Christmas. But now the bold move is seen for what it is: a necessary step to change things. And there is no denying that innovation is something that California does well.
Even in the most deprived corners of the state there is a sense that things can still turn around. California has always been able to reinvent itself, and some of its most hardcore critics still like the idea of it having a "dream".
"I believe in California. It pains me at the moment to see it where it is, but I still believe in it," said Michael Levine.
Perhaps more surprisingly, a fellow believer is to be found in Mendota in the shape of Joseph Riofrio. His shop operates as a sort of informal meeting place for the town. People drop in to chat, to get advice, or to buy a cold soft drink to relieve the unrelenting heat outside. The people are poor, many of them out of work, often hiring a bunch of DVDs as a cheap way of passing the time. But Riofrio sees them as a community, one that he grew up in. He is proud of his town and determined to stick it out. "This is a good place to live," he says. "I want to be here when it turns around." He is talking of the stricken town outside. But he could be describing the whole state.★

[pangea]

Re: American States & Cities Broke.

NY's Governor was on CNBC this morning. He reminded everyone that tax receipts are down 36% yoy 2009 vs. 2008. He also said that NY was running about a $22B deficit.

Couple that with this article about exploding pension costs and ask yourself, how is the state even still solvent? How are they covering these shortfalls? Who's buying the bonds? What are they rated?

New York and California, beyond solvent and showing absolutely no signs of significant recovery.

What mathematics are these states using to populate their financial statements?

Here's the most important quote:

“Where is this money going to come from?”

July 8, 2009
Pension Costs for Local Governments May Triple

By DANNY HAKIM
ALBANY — Local governments in New York State face an unprecedented increase in pension costs that will force them to triple their contributions to the state pension system over the next six years, according to an analysis prepared by the comptroller’s office.

By 2015, pension costs borne by local governments upstate, on Long Island and in New York City’s suburbs will exceed $8 billion a year, compared with $2.6 billion last year, under the analysis, which was circulated to legislative and county leaders and obtained by The New York Times this month.
The analysis predicts that counties will have to contribute an amount equal to nearly one-third of their civilian payrolls to the state pension system and more than 40 percent of their payrolls for police and fire departments.
County leaders fear that the soaring contributions will put heavy pressure on their budgets as they struggle to keep up with retirement promises made in times of prosperity.

And there is no clear strategy to mitigate the damage, as Gov. David A. Paterson and Comptroller Thomas P. DiNapoli have clashed over plans to provide even modest pension relief.

“It’s alarming, eye-popping and unthinkable,” said Stephen J. Acquario, executive director of the New York State Association of Counties. “To manage that liability in the face of this deep decline in government revenues is going to be a challenge,” he said. “Where is this money going to come from?”

A less sharp rate of increase has been forecast for New York City, which has its own pension system, but only because it is more poorly funded than the state pension fund and already requires steeper contributions. Still, Mayor Michael R. Bloomberg suggested in January that the city could face a 50 percent increase in contributions over the next six years, potentially rising to about $9 billion from $6 billion.

Much depends, of course, on how the financial markets perform: The state’s pension fund was $109.9 billion at the end of March and $153.9 billion a year earlier. It lost $44 billion in the fiscal year that ended on March 31. The loss represents 26.3 percent when considering the sharp downturn in the stock market, but does not reflect the contributions and payouts into and out of the pension system last year.

Mr. DiNapoli’s office cautioned that the figures it circulated represented only one possible chain of events, and depend in part on a healthy stock market recovery in the first half of the next decade.

The analysis envisions a market rebound similar to the one after the crash of 1987, with a return of 1.5 percent in the current fiscal year, annual returns in excess of 13 percent in the next two years and more than 10 percent in the succeeding three years.

According to the analysis, pension contribution rates for civilian employees in local governments will soar to 30.3 percent by 2015, from 7.4 percent of payroll this year. Contributions to police and fire department retirement plans are expected to increase to 41.1 percent in 2015 from 15.1 percent this year.

“It is staggering,” said Peter Baynes, executive director of the New York Conference of Mayors. “The only way they’re going to deal with it is through property taxes and reductions in the work force.”
If there is any silver lining, the trends appear to have somewhat curbed Albany’s appetite for extending pension enhancements to public employees to placate labor unions, which wield enormous clout and lobbying dollars in the capital.

“I’m alarmed,” said Assemblyman Peter J. Abbate Jr., a Brooklyn Democrat and the chairman of the Assembly’s Governmental Employees Committee, who is one of the capital’s more reliable union allies.

“Bluntly,” he said, “I’ve spoken to a lot of the union leaders and their lobbyists and said I don’t want to see bills that will cost the counties and the state millions of dollars.”

The governor and Mr. DiNapoli have wrestled over strategies to address the pension burdens. Mr. DiNapoli has proposed allowing local governments to amortize their payments: They would essentially borrow from the state to ease their payments now, and make interest payments later.
Mr. DiNapoli said his plan would “clearly mitigate the impact of rising rates on the state, local governments and taxpayers.”

But the governor, as well as local officials, have criticized it. Mr. Paterson said in May that increased pension contributions would have “a devastating impact on already overburdened local property tax payers,” adding, “the comptroller’s proposal does nothing to mitigate these additional burdens.”
Mr. Acquario agreed, saying the idea of borrowing from the state was “like buying groceries on a credit card.”

The governor has proposed limiting the pensions offered to new state workers, an idea embraced by many fiscal watchdogs. But he was working on revisions to the bill and failed to present it to the Assembly before the end of its legislative session last month, which halted action on the measure.

Pension woes are only one financial burden facing New York. This year, the governor and state lawmakers relied on federal stimulus payments and a two-year tax increase on the wealthy to balance the budget in the short term, but left large deficits in the succeeding years. Wall Street, the state’s main financial engine, has been severely weakened, and tax revenues across the board have fallen sharply and even more steeply than anticipated. Then there is the stalemate in the State Senate, which has paralyzed capital business.

For all states, sustaining traditional pensions could be difficult. “We’ve promised more than we can deliver,” said Zvi Bodie, a pension expert and a professor of finance at the Boston University School of Management. “Going forward, we’re going to have to promise less.”

This article has been revised to reflect the following correction:
Correction: July 10, 2009
An article on Wednesday about a prediction by the http://topics.nytimes.com/top/classi...|||travel:::Go to the New York Travel Guide.:::http://travel.nytimes.com/travel/guides/north-america/united-states/new-york/overview.html" style="">New York State comptroller’s office that pension costs for local governments will triple by 2015 misidentified the committee headed by Assemblyman Peter J. Abbate Jr., a Brooklyn Democrat who said he was alarmed by the rising costs. He is chairman of the Assembly Governmental Employees Committee, not the Labor Committee.

[cjppjc]

Re: American States & Cities Broke.

This part is real scary.


Mr. DiNapoli’s office cautioned that the figures it circulated represented only one possible chain of events, and depend in part on a healthy stock market recovery in the first half of the next decade.

The analysis envisions a market rebound similar to the one after the crash of 1987, with a return of 1.5 percent in the current fiscal year, annual returns in excess of 13 percent in the next two years and more than 10 percent in the succeeding three years.



What if these returns don't happen. Or worse the returns are not even close?

[pangea]

Re: American States & Cities Broke.

Bloomberg news picked up on the major points of Patterson's time on CNBC today. Much like Massachusetts, they raised taxes and still came up short.

“What we want to do is bring the legislature back as soon as possible and make the tough decisions,” Paterson said.

I can't wait to see this battle go down. Will it be 36% less teachers, firefighters or police officers?

Or will it be 36% less pensions, salaries and benefits for all of the above?

Or perhaps 36% more taxes?

That's of course if the unemployment rate stopped in it's tracks today and reversed.

Instead, it's getting worse. More homes are foreclosing, more people not paying their taxes, more people finally being chewed up and spit out broke.

Just how will these great states like California, Massachusetts and New York make ends meet?

Something has to give.

New York Income Tax Revenue Falls 36% in Year, Paterson Says
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By Jerry Hart


Oct. 5 (Bloomberg) -- New York State’s income tax revenue has dropped 36 percent from the same period in 2008, Governor David Paterson said, “frustrating” his attempt to close a projected $2.1 billion budget deficit.
“We added personal income tax, which we thought would make the falloff 10 percent to 15 percent,” Paterson, a Democrat, said on CNBC today, referring to $5.2 billion in new or increased taxes. “This is what is so frustrating. It’s still 36 percent, meaning our revenues fell more in 2009 than they did in 2008.”


Wall Street companies lost $42.6 billion last year and year-end bonuses to workers fell 44 percent to $18.4 billion. Income tax receipts were down 24 percent as of Aug. 31, according to the state comptroller’s office. Paterson’s estimate includes data since then.


Besides boosting taxes for the fiscal year that began April 1, lawmakers made $5.1 billion in spending cuts. The plan also includes $6.2 billion in federal stimulus money and $1.1 billion in one-time revenue, according to the Assembly.


The budget will still be $2.1 billion in deficit because spending plans exceed revenue projections, the state Division of Budget said July 30. The report predicted deficits of $4.62 billion in 2011, $13.3 billion in 2012 and $18.2 billion in 2013.


Paterson, 55, said New York needs to diversify so that it’s not as dependent on taxes from Wall Street firms, which account for more than 20 percent of the state’s tax revenue.



“We are Ground Zero for the economic recession,” said Paterson. “What we’re recognizing now is what everybody recognizes in their own portfolio: you can’t overinvest in one area because, if it fails, you’ll have a debacle.”
New York is depleting its options for balancing the budget, Paterson said.

“What we want to do is bring the legislature back as soon as possible and make the tough decisions,” Paterson said.


To contact the reporter on this story: Jerry Hart in Miami at jhart@bloomberg.net.
Last Updated: October 5, 2009 11:18 EDT

[pangea]

Re: American States & Cities Broke.

Tyler Durden (Zero Hedge) also covered the story today - I add this because the reader comments usually tend to be above grade.

http://www.zerohedge.com/article/new...ext-california

As well as Daily Reckoning:

http://dailyreckoning.com/new-yorks-...ng-tax-crisis/

[pangea]

Re: American States & Cities Broke.

And Vermont.


http://www.rutlandherald.com/article...050342/0/RSS10

Speaker warns of pension shortfalls


By STEPHANIE M. PETERS STAFF WRITER - Published: October 5, 2009

The state financial picture illuminated by David Coates was grim.

The bottom line of what Coates, a retired partner from international accounting firm KPMG's Burlington office and member of the Vermont Business Roundtable, told the audience gathered at College of St. Joseph Tuesday night was that the state's unfunded obligations to debt service, education funding, retirement plans and other post-employment benefits place it on an unsustainable path.

For instance, the state currently is facing down a combined unfunded liability of $466 million for its state employee and teacher pensions. Its responsibility for other post-employment benefits — namely health-care plans — for the same group of workers is even worse: As of June 30, that figure approached $1.6 billion.

State employees, teachers and 434 of the 534 municipal pension plans in the state are all defined benefit pensions, in which what an employee will receive is guaranteed and determined by a formula. Most private employers have done away with these plans, which got Detroit automakers in trouble, Coates said.

To support these retirement plans, the state's actuary has determined that, as of June 30, 2008, annual contributions to the state employee plan would have to be $23 million, while the teacher's pension would require $25 million. In the next five years, those requirements will rise dramatically, Coates said. The state employee pension will require an annual contribution of $40.1 million, while the contribution to the teacher's fund will increase to $52.4 million.

"We're on an unsustainable path," Coates said. "My concern is that we don't sit here and pass and leave these problems to the future Vermonters."

Still, by the end of his presentation, Coates stood before not a sullen audience, but an enthused one.

Led by the remarks from Coates himself — a Democrat who has served as an economic adviser to four governors and is currently a member of the seven-person pension commission — the question-and-answer portion of the presentation focused largely on the need for a grassroots effort to spread the word about the state of Vermont's finances.

"Keep the numbers out there and keep fighting because at the end of the day, someone is going to pay attention or there are going to be different legislators," Coates said.

State Auditor Tom Salmon, Department of Public Service Commissioner Dave O'Brien and Rutland County Republican Sen. Hull Maynard were also in attendance and echoed Coates' comments.

"If you can inspire this kind of change in grassroots, we're going to hammer away on the other end to get this state to wake up," Salmon told the audience. "This is a ticking time bomb."

Coates did acknowledge, however, that he thinks the Douglas administration and the Legislature have taken some "good steps" toward dealing with the problem. The pension commission, which also includes members of the House and Senate and the state treasurer, has put "everything on the table" as it tries to determine how to right the problem of the pensions' unfunded liabilities.

Other Rutland County legislators present included Democratic Sen. Bill Carris and Reps. Margaret Andrews, a Rutland City Democrat, Robert Helm, the Fair Haven Republican and Megan Smith, the Mendon Democrat. Rutland City Treasurer Wendy Wilton also was on hand.

This wasn't the first time Coates has made his presentation.

Coates and other members of the Vermont Business Roundtable have shared their findings with Speaker of the House Shap Smith, as well as several house committees, according to Lisa Ventriss, president of the organization. The response has been mixed, but the group continues to meet with members of the Legislature, Ventriss said.

On Wednesday, the state's Legislative Joint Fiscal Office released its own brief on the state's financial situation. The report maps out how Vermont's revenues have declined in 2009 to below 2005 levels, in large part because of the recession.

The report also highlights a list of measures that have been taken to balance the fiscal year 2009 and 2010 budgets and points out that the situation will only get worse when it comes time to develop the FY 2012 budget. But, like Coates' presentation, it doesn't offer solutions.

stephanie.peters@rutlandherald.com