Image may be NSFW.
Clik here to view.
“Every city in the state is looking on with some concern,” said Dave Vossbrink, spokesman for the city of San Jose. “Governments of all kinds borrow money, usually to build infrastructure that lasts a long time. It’s like getting a mortgage to build roads, a sewage plant, whatever it might be. If the investment community perceives greater risk, you may not be able to borrow as much for public purposes.”
Source: businessinsider.com
Video: Municipal Bankruptcy: Unacceptable and Unpatriotic….for Bondholders
How American Cities deal With Bankruptcy
Like a majority of other bankrupt municipalities, San Bernardino’s public services account for the majority of its budget—73 percent of the general fund goes toward public safety. The city also claimed that the largest employers are local government agencies.
Source: businessinsider.com
ATWATER IS NEXT CALIFORNIA MUNICIPAL BANKRUPTCY
Even with all this pain and suffering, Atwater’s city tax revenue fell by only 20% since its peak in 2007. Atwater did reduce its bloated union payroll from 120 to 80 since 2008, but mostly through attrition and laying-off low paid younger workers. To keep the lights on the city depleted its cash reserves. But union wages have been allowed to continue to rise and the city agreed to pay all general employees’ portion of mandatory pension contribution and all but 2% mandatory pension contribution for highly paid police and firefighters. The city also continued to pick up most of the cost of health-care premiums that rose by 15% this year and are scheduled to rise 10% next year.
Source: chrissstreetandcompany.com
Thirty California Cities Face Credit Downgrades; More Bankruptcies Expected
Business writer Kathleen Pender of the San Francisco Chronicle makes it clear based on her interviewing Standard & Poor’s rating analysts that it is not anticipated that most, if any of these cities, which include the wealthy Silicon Valley municipalities of Los Gatos, Santa Clara and Sunnyvale, are in danger of going the way of Stockton, San Bernardino and Mammoth Lakes this year (and Vallejo in 2008). Nonetheless, Naomi Richman, a managing director with Moody’s, warned, “We do expect more instances of bankruptcies. We don’t think it will be a significant number of cities, especially for the ones we rate,” Richman said.
Source: planetizen.com
California Chapter 9: Next Up, City of Atwater?
(1) is a municipality; (2) is specifically authorized, in its capacity as a municipality or by name, to be a debtor under such chapter by State law, or by a governmental officer or organization empowered by State law to authorize such entity to be a debtor under such chapter; (3) is insolvent; (4) desires to effect a plan to adjust such debts; and (5)(A) has obtained the agreement of creditors holding at least a majority in amount of the claims of each class that such entity intends to impair under a plan in a case under such chapter; (B) has negotiated in good faith with creditors and has failed to obtain the agreement of creditors holding at least a majority in amount of the claims of each class that such entity intends to impair under a plan in a case under such chapter; (C) is unable to negotiate with creditors because such negotiation is impracticable; or (D) reasonably believes that a creditor may attempt to obtain a transfer that is avoidable under section 547 of this title.
Source: weil.com
California publishes a municipal bankruptcy guide
I think this is an excellent report, but I imagine it was intended for members of the California legislature as much as city officials coping with distressed finances. There are swarms of bankruptcy attorneys circling weak municipalities, willing and able to establish an hourly relationship and give advice. But California legislators have a lot of constituencies to placate, and every muni bankruptcy affects public unions and their retirees. Public unions have long been a powerful force in Sacramento. Bloomberg reported that public unions contributed $76 million to California politicians and ballot measures in 2010, the single largest interest group that year.
Source: reuters.com
Cascade of California Municipal Bankruptcy Has Begun
The purpose of IVN.us is to provide unfiltered political news and policy analysis across the political spectrum. Unlike traditional media outlets and elsewhere in the “blogosphere” where the diversity of viewpoints is often reduced into partisan circles, IVN actively encourages contributors and readers of differing political tendencies to engage in a constructive dialogue. The mission of IVN.us is to raise the level of civil discourse to a place where solutions are more persuasive than talking points, and participation is not conditioned on your party affiliation. To achieve these objectives, IVN has established four clear Etiquette Guidelines that all editors, contributors, and participants on the Network must respect:
Source: ivn.us
The Scary Future of Municipal Bankruptcy
Additionally, local governments are limited in the amount of revenue they can raise by notoriously strict property tax caps set by Proposition 13. The state’s capacity to raise money also is hindered by its stagnant political system, which sets up the dynamic in which the only answers to an economic shock or shortfall are to vigorously restrict services or sell them off. Too many elements of California’s budget are protected by legislative decree or political muscle to allow balanced decisions in times of distress.
Source: alternet.org
Fiscal Stress, Not Municipal Bankruptcy, Is the Issue
Although some in the media claim that municipal bankruptcy is becoming a trend, the data don’t support it. The trends that data show are that housing foreclosures, declining tax bases, and declining state pass-through revenues have negatively impacted the fiscal condition of some local governments. Local governments have also suffered from a lower rate of return on the investments that fund retiree pensions. Most local governments that face these fiscal stresses find they can manage their difficulties with conservative management and budgeting practices.
Source: icma.org
YORK’S POLICE UNION BULLETIN: FINAL EXAM
Today, I will be administering the final examination for Municipal Bankruptcy 101. There are ten questions. None of them are trick questions or a play on words. The correct answers are simple and straightforward and only require one word – Yes or No.. Remember, the correct answers are based on the facts as they are today, not what they should be. Next week, I will provide the correct answer for all ten questions, along with the explanations for the answers.
Source: blogspot.com