Wednesday, November 13, 2013

Doomsday: US Cities

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San Bernardino, CA: filed for bankruptcy earlier this year (2015); now has a $1 million must-pay bill it can't afford. Asking for help.
Officials in San Bernardino, which has been struggling to recover from bankruptcy over the last three years, are hopeful that added costs from its response to the deadliest terrorist attack on U.S. soil since 9/11 will not further erode the city's delicate finances.
The city has incurred up to $1 million in unforeseen expenses — from the added cost of deploying police officers on extended shifts to responding to ultimately unfounded reports of new threats.
Houston, TX: first time Houston is on the list? Pensions.

Baltimore, MD: the city records its 300th homicide victim, just months after calling in the Feds to help. 

Ferguson, MO: facing insolvency (predicted, see below, scroll down);  September 21, 2015
Ferguson could become insolvent by the 2017 fiscal year, the credit-rating company said. The rating cut reflects “severe and rapid deterioration of the city’s financial position, possible depletion of fund balances in the near term, and limited options for restoring fiscal stability,” Moody’s said.
Chicago: Emanuel set to call for highest property tax raise in history to pay for police/fire pensions; will start charging $10 - $12 for garbage pick-up; will add $1 or so for taxi rides. September 3, 2015. Update: specifics spelled out. September 21, 2015.

Chicago: public school system in trouble; 1,400 jobs cut; June 30, 2015. 

San Bernardino, CA: special report, Los Angeles Times, sad, sad story. It begins:  San Bernardino, once a sturdy, middle class "All-America City," is now bankrupt, the poorest city of its size in California, and a symbol of the nation's worst urban woes.
Of the 100 biggest cities in the U.S., San Bernardino, 60 miles east of Los Angeles, was ranked the second-poorest in the nation in the 2010 census, behind Detroit. Two years later it filed for bankruptcy. Last month the City Council approved a 77-page plan that it hopes will move the city toward solvency, in part by making residents pay higher taxes and fees while further cutting their services.
San Bernardino, CA: CalPERs wins; city loses; still hasn't filed final bankruptcy plan, May 12, 2015. 

Atlantic City, NJ: six notches deeper into junk territory, January 13, 2015.

Chicago, IL: Moody's drops Chicago's credit rating to "junk" status, May 12, 2015

Milwaukee, WI: violence spiraling out of control, May 7, 2015.

Stockton, CA: coming out of bankruptcy, March 17, 2015.

San Bernardino, CA: update on bankruptcy, March 17, 2015.

Ferguson, MO: unable to prove the white cop on black killing was racially motivated, Attorney General will bankrupt the city, threatening to dismantle the police department.

Chicago, IL: downgraded. Bonds just two steps above junk status. February 27, 2015.

Detroit, MI: entire power grid goes down. December 2, 2014. No explanation. 

Stockton, CA: a federal judge rules that public sector pensions are not protected when a city declares bankruptcy. October 1, 2014.

Atlantic City, NJ: Moody's cuts credit rating two steps to junk for Atlantic City -- July 24, 2014. First mentioned (in passing) back in December, 2013.

Long Beach, CA: Boeing to shut down C-17 plant three months early. About 2,000 workers support the C-17 program in California. First time Long Beach makes the Doomsday: Cities list.

NYC, NY: Municipal health care system budget deficit will more than triple to $1.4 billion in four years. February 25, 2014.

Chicago, IL: Chicago workers protest as pension crisis brews. After years of avoiding the issue, the city of Chicago is facing a massive spike in its annual bill for the pensions it promised current and retired workers. Next year, the city's required contribution will more than double to $1.07 billion. February 19, 2014.

Top ten cities with highest tax rates. USA Today is reporting: #1 (worst), Wilmington, DE; Detroit, MI; Louisville, KY; Portland, ME; Providence, RI; Columbus, OH; Baltimore, MD; Milwaukee, WI; Philadelphia, PA; #10, Bridgeport, CT. I find it interesting the cities in most financial trouble have highest tax rates. February 15, 2014.

Chicago, IL: one day closer to junk. Mayor Rahm Emanuel's administration is making preparations to issue up to $900 million in bonds this year to lower some of its borrowing costs, push other debt off into the future at an overall higher cost, cover legal settlements and pay for construction, building maintenance and equipment. February 3, 2014. 

New York City, NY: new mayor. Listen to the folks he picked to introduce him at the inauguration. This is why he limited attendance by reporters. January 1, 2014. 

Chicago, IL: day of reckoning. Long story in Financial Times
Morgan was one of about 50 elementary schools forced to close this year, collateral damage from the ballooning pension crises in Chicago and the state of Illinois. The budget gap in Chicago’s school district alone is $1bn, mainly because of pension liabilities, while the combined unfunded pension liabilities of the city and the school district runs to over $27bn.
Rahm Emanuel, Chicago’s Democratic mayor, has said the school closures – along with 3,000 job cuts in the school system – were necessary to close the yawning hole in the district budget. The episode has further soured the mayor’s relations with the teachers union, which held a seven-day strike last year. Karen Lewis, head of the union, called the school closures “racist” and “classist.”
Atlantic City, Las Vegas: could these two cities be the next Detroit? Casinos are closing in Atlantic City; real estate remains depressed in Las Vegas; and casinos are opening up across the United States (December 21, 2013).  
As of 2013, racinos are legal in ten states: Delaware, Louisiana, Maine, New Mexico, New York, Ohio, Oklahoma, Pennsylvania, Rhode Island, and West Virginia (racinos are "slot machines at old horse-racing and dog-racing tracks).

Tracks like Delaware Park and West Virginia's Mountaineer Park, once considered places where local degenerates bet on broken-down nags in claiming races, are now among the wealthiest tracks around, with the best races.
Detroit, MI: Detroit is eligible for bankruptcy -- judge

Detroit, MI: The Drudge Report links a story saying that "the Feds have started bailing out Detroit." In fact, it was a grant that the city applied for, competing with others; the money will go to the Detroit firefighters.  I think reading the entire story, and not just the DrudgeReport link will provide a better understanding of the issue. I have no problem with this. We probably spend this amount of money in Iraq and Afghanistan on a daily basis. Headlines like these tend to tarnish the "Drudge" image.

Desert Hot Springs, CA: the city votes to declare "a fiscal emergency" in one last big to avert bankruptcy, November 20, 2013. 

Desert Hot Springs, CA: A resort town in California warned on Tuesday that it will run out of money by March due to burdensome salary and pension costs and could join other U.S. cities that have recently filed for bankruptcy protection.
A bankruptcy filing by Desert Hot Springs, a city of 26,000 about 110 miles east of Los Angeles, would make it the third California city along with San Bernardino and Stockton to seek court protection from creditors.
San Bernardino and Detroit - the biggest U.S. city to seek Chapter 9 protection - are likely to set precedent on whether retirees or Wall Street bondholders suffer the most when a city goes broke.
The problems in Desert Hot Springs came to light last week when a new finance director reviewed the city's records and discovered a $3 million shortfall in its budget of $13.5 million. Amy Aguer, the interim director of finance, did not have details on how the shortfall occurred but said it was the result of higher-than-expected pension and salary costs, especially in the police department, and overly optimistic estimates of revenue. November 14, 2013.

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