Scranton PA drops pay to $7.25/hr

[Pauls' Revere]

http://news.yahoo.com/blogs/lookout/scranton-minimum-wage-city-police-firemen-140229063.html

Last week, Doherty abruptly cut pay for all 398 city employees to $7.25 per hour, saying it was the only way to keep Scranton solvent.

According to the paper, Scranton—which faces a $16.8 million budget deficit—had $133,000 in cash on hand as of Monday, but owed $3.4 million in various vendor bills, including health insurance.

Roger Leonard, a city employee, told NPR he typically gets a $900 check for two weeks of work. On Friday, it was $340.


Bring it on!

[angelatc]

Shaking out the malinvestment will be painful though.

I'm guessing this guy won't be reelected, which is sad.

[oyarde]

Shaking out the malinvestment will be painful though.

I'm guessing this guy won't be reelected, which is sad. What else are they going to do ?

[AuH20]

What else are they going to do ?

Good point. No way are they getting any affordable financing from external sources with a hole like that.

[oyarde]

Good point. No way are they getting any affordable financing from external sources with a hole like that. Yep , may as well ride it out and get the pain out of the way.Truth hurts , but must be done.

[Weston White]

http://www.defendindependence.us/global_cloud/images/DS_scream.jpg

[Pauls' Revere]

we'll find out just how loyal these workers are. My guess is every single one of them immediately went online and applied elsewhere.

[Austrian Econ Disciple]

My question is...how the fuck do you have a 17 million deficit when you are employing only 398 folks. Instead of reflection that you can't just borrow to prosperity, these people will probably just vote someone in who will spend even more and then when the entire town is left in ruins, they'll move on to the next town for their Government junket's. Parasites killing their hosts, one after another. Welcome to the tyranny of Boobus Americanus.

[phill4paul]

Perhaps the Unions could help out their members? Oh, never mind, those dues went into politicians pockets.

http://www.foxnews.com/politics/2012/07/10/political-spending-by-unions-far-exceeds-direct-donations/

[oyarde]

Perhaps the Unions could help out their members? Oh, never mind, those dues went into politicians pockets.

http://www.foxnews.com/politics/2012/07/10/political-spending-by-unions-far-exceeds-direct-donations/ Good point , that is where much of it goes.

[Nirvikalpa]

LOL Scranton. Went to undergrad in the surrounding area... poor, poor Scranton. I loved the "city," too bad most of the manufacturing moved elsewhere... the city is basically a dead zone now. Not even family restuarants or coffee shops (besides the ones next to the U of Scranton) can make it.

Wonder if part of the deficit is the new medical school that's in scranton (commonwealth medical college).

[Rothbardian Girl]

I wonder if the mayor also took the same slash in pay. This is just sad on all counts. I am sure we will see the same scenario playing out all over the country.

[tod evans]

I wonder if the mayor also took the same slash in pay. This is just sad on all counts. I am sure we will see the same scenario playing out all over the country.

Article says he did.

You're right there's bound to be more of this, Detroit isn't the only "government heavy" city around.

[oyarde]

Rumor I heard was the Mayor was working for the same.I also heard it was this or 29 percent increase in city tax and 78 percent increase in property tax , guy has six kids , he is probably nuttier than a fruit cake , Scranton , itself is a city with things there is no tax structure to support......

[brandon]

I wonder why he chose across the board pay cuts instead of furloughs.

[Keith and stuff]

Article says he did.

You're right there's bound to be more of this, Detroit isn't the only "government heavy" city around.

Absolutely. Heck, the capitol of PA, Harrisburg, is pretty much a goner.

[oyarde]

Absolutely. Heck, the capitol of PA, Harrisburg, is pretty much a goner. Yep , and Stocton Calif , Illinois should be up next ...

[tod evans]

I wonder why he chose across the board pay cuts instead of furloughs.

Raman's better than nothing?

[The Goat]

I wonder why he chose across the board pay cuts instead of furloughs.

Because he believes in social justice. every one must equally share the misery.

/sarcasm

[donnay]

This is going to be a domino effect...they will have to get on their knees to the feds, and the feds will make them squirm and become desperate. The carrot and stick approach. It will ultimately be that bailouts will happened with major strings attached. After all, our government just prints money out of thin air.

[shane77m]

http://www.defendindependence.us/global_cloud/images/DS_scream.jpg

+rep

[Weston White]

OK, I have to do (at least) one more (cause I got's to get my gettin' on):



http://www.youtube.com/watch?v=cuD29QmiMTw

Oh, and what the hey:



http://www.youtube.com/watch?v=KgZzPZcAMiM&feature=related


http://www.youtube.com/watch?v=kysRQP0ca7s

[Zippyjuan]

My question is...how the fuck do you have a 17 million deficit when you are employing only 398 folks. Instead of reflection that you can't just borrow to prosperity, these people will probably just vote someone in who will spend even more and then when the entire town is left in ruins, they'll move on to the next town for their Government junket's. Parasites killing their hosts, one after another. Welcome to the tyranny of Boobus Americanus.
Salaries are not the only expenses they have.

http://thetimes-tribune.com/polopoly_fs/1.1233140.1321414905!/image/1261605908.jpg_gen/derivatives/landscape_700/1261605908.jpg

http://thetimes-tribune.com/doherty-s-2012-scranton-budget-raises-real-estate-taxes-29-percent-lays-off-29-firefighters-1.1232738

[kathy88]

How can you justify a 29% increase in taxes? EVER?

[tod evans]

How can you justify a 29% increase in taxes? EVER?

They've overspent/borrowed and financed until there's nothing left..........Just like the federal government.

[alucard13mmfmj]

how much does the mayor and city council make?

[fisharmor]

Couple weeks ago on FB a libtard friend of mine tried using photos of Scranton coal workers from 1910 as some kind of indicator that corporations are evil.
I told him he didn't know WTF he was talking about because he's obviously never been to Scranton today!

Everyone's drunk and homeless, and the kids all ride around on their welfare-check-subsidized ATVs through all the neighborhoods.

It's a typical northeast city: a place that is littered with reminders that it used to be a place to be, and now very clearly isn't.

[kylejack]

how much does the mayor and city council make?
All city employees were reduced to minimum wage, including the mayor.

This is illegal, though. They have a contract with these employees and they are now in breach of the contract. They're opening themselves to massive liability, and they are now defying a judge's order to return the pay to the contracted rate.

[AuH20]

All city employees were reduced to minimum wage, including the mayor.

This is illegal, though. They have a contract with these employees and they are now in breach of the contract. They're opening themselves to massive liability, and they are now defying a judge's order to return the pay to the contracted rate.

The alternative is terminations which was what the mayor was trying to avoid. Also apparently, this strife all stems from building a humongous parking garage the city couldn't afford.

[kylejack]

The alternative is terminations which was what the mayor was trying to avoid. Also apparently, this strife all stems from building a humongous parking garage the city couldn't afford.
It's unfortunate that dumb decisions were made in the past, but contract law is pretty firm in this country. Maybe the employees would have been willing to work with the city if they had offered some more reasonable pay cuts and a bit of furlough for some employees, but minimum wage is really a slap in the face. I sure as hell wouldn't run into burning buildings for $7 an hour.

[Keith and stuff]

It's unfortunate that dumb decisions were made in the past, but contract law is pretty firm in this country. Maybe the employees would have been willing to work with the city if they had offered some more reasonable pay cuts and a bit of furlough for some employees, but minimum wage is really a slap in the face. I sure as hell wouldn't run into burning buildings for $7 an hour.

What about the volunteer firefighters that do it for free or for almost nothing? Most of the fire departments in the US are volunteer, right? I know it is like that in NH, at least.

[kylejack]

What about the volunteer firefighters that do it for free or for almost nothing? Most of the fire departments in the US are volunteer, right? I know it is like that in NH, at least.
Well, I guess we'll see how popular that is in a city such as Scranton. Don't most volunteer firefighters have other jobs, though? Seems to me that employed firefighters are supposed to be available and on-call 24/7.

[tod evans]

All city employees were reduced to minimum wage, including the mayor.

This is illegal, though. They have a contract with these employees and they are now in breach of the contract. They're opening themselves to massive liability, and they are now defying a judge's order to return the pay to the contracted rate.

What's their options to raise money?

If the tit's dry it's dry.

[Keith and stuff]

Well, I guess we'll see how popular that is in a city such as Scranton. Don't most volunteer firefighters have other jobs, though? Seems to me that employed firefighters are supposed to be available and on-call 24/7.

I thought a lot of professional firefighters worked on 4 days off 3 days or something. I don't see the need for government firefighters. Towns with under 100,000 people should do fine with volunteer or contracted (private) firefighters. I can see how a city like Philly may be so large as to need private fire fighters but Scranton is a dying city with no money. It doesn't need them and cannot afford them, anyway.

As for firefighters having other jobs, absolutely. Any firefighter should feel free to have a 2nd (or even first job, depending how often they volunteer).

[Austrian Econ Disciple]

Salaries are not the only expenses they have.

http://thetimes-tribune.com/polopoly_fs/1.1233140.1321414905!/image/1261605908.jpg_gen/derivatives/landscape_700/1261605908.jpg

http://thetimes-tribune.com/doherty-s-2012-scranton-budget-raises-real-estate-taxes-29-percent-lays-off-29-firefighters-1.1232738

No shit. Perhaps 'read between the lines' is unfamiliar to you? :p

[musicmax]

The alternative is terminations which was what the mayor was trying to avoid. Also apparently, this strife all stems from building a humongous parking garage the city couldn't afford.

The alternative is bankruptcy court where a judge tears up the union contracts anyway. Nice to see the mayor show some stones and not hide behind a judge's robe.

[LibForestPaul]

I wonder why he chose across the board pay cuts instead of furloughs.
Push the state/federal bailout envelope?

[Seraphim]

More governments should do this. If government policy is to distort the price of labor (minimum wage laws) then all public workers should be subject to minimum wage.

[kylejack]

The alternative is bankruptcy court where a judge tears up the union contracts anyway. Nice to see the mayor show some stones and not hide behind a judge's robe.
It isn't brave to breach a contract, it's unprincipled. It isn't smart to lower the rate for police and fire to essentially nothing and force them to go find work elsewhere. We'll see how 'smart' the mayor is when the tax base continues to be destroyed when companies can't rely on police and fire protection.

[Kluge]

Read this yesterday, it made me happy. :)

[angelatc]

It isn't brave to breach a contract, it's unprincipled. It isn't smart to lower the rate for police and fire to essentially nothing and force them to go find work elsewhere. We'll see how 'smart' the mayor is when the tax base continues to be destroyed when companies can't rely on police and fire protection.

Where should he get the money to pay them? There is no money.

[Kluge]

You'd think that Dunder-Mifflin would be keeping the city afloat. Guess not.

[kylejack]

Where should he get the money to pay them? There is no money.
"Son, your mouth's writing checks that your body can't cash."
-Top Gun

People shouldn't make promises that they can't keep. As to where to cut money, it should come from anything that isn't obligatory spending. The city can't simply say that it is no longer going to pay on, for example, a web design contract with a fixed term...it owes the money. Breaching a contract is far more expensive than just paying the contracted rate, because the wronged party is often entitled to punitive damages on top of what you already owe them.

If it's absolutely impossible to meet previously-agreed-to obligations, then it is time to declare bankruptcy. Payroll gets paid out before unsecured creditors in a bankruptcy.

[musicmax]

It isn't brave to breach a contract, it's unprincipled. It isn't smart to lower the rate for police and fire to essentially nothing and force them to go find work elsewhere. We'll see how 'smart' the mayor is when the tax base continues to be destroyed when companies can't rely on police and fire protection.

From the article:

"Scranton—which faces a $16.8 million budget deficit—had $133,000 in cash on hand as of Monday, but owed $3.4 million in various vendor bills, including health insurance."

Now, short of a skittle-shitting unicorn, how the fuck are you supposed to pay the cops? The mayor's first responsibility is to the taxpayers, not to union goons. You own a company and want it protected? Buy a goddamn Mossberg and don't go crying to the government to take care of your pansy ass.

[musicmax]

Payroll gets paid out before unsecured creditors in a bankruptcy.

You funny. You think contract law is still enforced and that bankruptcy courts respect subordination.

[musicmax]

You'd think that Dunder-Mifflin would be keeping the city afloat. Guess not.

I know that's a joke, but the reality is it's more likely that a city is paying a company "incentives" to relocate or remain in town rather than the company paying taxes.

[kylejack]

The mayor's first responsibility is to the taxpayers
Then he shouldn't have breached a contract that will end up costing them more than the payroll in punitive damages and lawyer fees.

"John Jay has made his ruling, now let him enforce it!" only works when you're the President.

[Kluge]

I know that's a joke, but the reality is it's more likely that a city is paying a company "incentives" to relocate or remain in town rather than the company paying taxes.

Too little, too late, it seems.

[Kluge]

Then he shouldn't have breached a contract that will end up costing them more than the payroll in punitive damages and lawyer fees.

Drastic times call for drastic measures.

Gov't employees shouldn't get cushy benefits and pay-scales relative to the free market and public that they serve.

[angelatc]

Then he shouldn't have breached a contract that will end up costing them more than the payroll in punitive damages and lawyer fees.

"John Jay has made his ruling, now let him enforce it!" only works when you're the President.

How much do bounced checks cost?

[kylejack]

How much do bounced checks cost?
Even issuing municipal bonds would have been better than a massive ruling against them. Looks like a big part of this debt problem is that they got slapped for $32 million by the state's supreme court.

[angelatc]

Even issuing municipal bonds would have been better than a massive ruling against them. Looks like a big part of this debt problem is that they got slapped for $32 million by the state's supreme court.

Do you have any idea how long it takes to put a muni deal together?

[LibForestPaul]

Is the mayor even "authorized" for such an action...what of the city comptroller? "Who" 's fiduciary duty are the contracts?

[kylejack]

Do you have any idea how long it takes to put a muni deal together?
The supreme court ruling came down back in October. This is something that should have been done at that time, not three quarters of a year later.

Again, word is bond, and contracts are enforceable. The only way out of a firm contract is 1) pay the penalties specified in the contract 2) take your chances with the courts 3) declare bankruptcy.

3 is the least expensive option, and payroll would get paid out before unsecured creditors. Ideal.

[angelatc]

The supreme court ruling came down back in October. This is something that should have been done at that time, not three quarters of a year later.

Again, word is bond, and contracts are enforceable. The only way out of a firm contract is 1) pay the penalties specified in the contract 2) take your chances with the courts 3) declare bankruptcy.

3 is the least expensive option, and payroll would get paid out before unsecured creditors. Ideal.

Yep. I don't understand the aversion to bankruptcy. He seems to be fighting with the unions, and that would seem to be a useful trump card.

It seems that Scranton already has some bond problems. http://www.nytimes.com/2012/06/26/business/surprised-taxpayers-are-paying-for-bonds-they-did-not-vote-on.html?_r=1&pagewanted=all


(http://www.nytimes.com/2012/06/26/business/surprised-taxpayers-are-paying-for-bonds-they-did-not-vote-on.html?_r=1&pagewanted=all)
Scranton, a faded former coal center, touched off a full-blown debt crisis this month, losing access to the capital markets when its City Council refused to honor a taxpayer guarantee for a parking authority’s bonds. Looks like the mayor isn't the only person to blame here.

[showpan]

Funny how 3 of the 5 town counsel members voted down a freeze on their own wages. This is a good example of what happens when a town overspends and massive amounts of people no longer have jobs that support themselves and their local businesses. It's the real trickle down effect and it's being played out all across the country.

[musicmax]

Then he shouldn't have breached a contract that will end up costing them more than the payroll in punitive damages and lawyer fees.

ONE MORE TIME:

"Scranton—which faces a $16.8 million budget deficit—had $133,000 in cash on hand as of Monday, but owed $3.4 million in various vendor bills, including health insurance."

Now, identify the source of the funding for the "punitive damages and lawyer fees."

Identify that source right here: ______________________________________

[oyarde]

From the article:

"Scranton—which faces a $16.8 million budget deficit—had $133,000 in cash on hand as of Monday, but owed $3.4 million in various vendor bills, including health insurance."

Now, short of a skittle-shitting unicorn, how the fuck are you supposed to pay the cops? The mayor's first responsibility is to the taxpayers, not to union goons. You own a company and want it protected? Buy a goddamn Mossberg and don't go crying to the government to take care of your pansy ass. Now , I want a Skittle Shitting Unicorn , and I do not even like Unicorns , or Skittles ....

[oyarde]

I may just put Scranton on e bay ;)

[kylejack]

ONE MORE TIME:

"Scranton—which faces a $16.8 million budget deficit—had $133,000 in cash on hand as of Monday, but owed $3.4 million in various vendor bills, including health insurance."

Now, identify the source of the funding for the "punitive damages and lawyer fees."

Identify that source right here: ______________________________________
If Scranton has no money to pay its legal obligations, Scranton needs to file bankruptcy immediately. Spending money on minimum wage is a waste of money if it will later have to pay punitive damages and legal fees, and then file bankruptcy anyway.

If Scranton is insolvent, it is time to admit it and deal with the consequences, not cheat contracts (which just makes matters worse).

In particular, the mayor has said things like: The dump won't let us continue to dump our trash if we don't pay them. FINE! Dump the trash on the mayor's lawn until such time that the budget issue is cleared. Anything that is not a contractual obligation can be delayed for now to meet the city's budget.

[angelatc]

If Scranton has no money to pay its legal obligations, Scranton needs to file bankruptcy immediately. Spending money on minimum wage is a waste of money if it will later have to pay punitive damages and legal fees, and then file bankruptcy anyway.

If Scranton is insolvent, it is time to admit it and deal with the consequences, not cheat contracts (which just makes matters worse).

In particular, the mayor has said things like: The dump won't let us continue to dump our trash if we don't pay them. FINE! Dump the trash on the mayor's lawn until such time that the budget issue is cleared. Anything that is not a contractual obligation can be delayed for now to meet the city's budget.

I'm pretty sure that would be a code violation, therefore generating fines that the mayor would have to be reimbursed for.

ETA - The mayor is a Democrat?

[kylejack]

I'm pretty sure that would be a code violation, therefore generating fines that the mayor would have to be reimbursed for.

I chuckled at first before realizing it could be true, but at any rate, it is better for the council to loosen the code than for firefighters to be paid minimum wage.

[pahs1994]

I'm pretty sure that would be a code violation, therefore generating fines that the mayor would have to be reimbursed for.

ETA - The mayor is a Democrat?

Yes he is a democrat. democrats have had unchecked control of this area for a while.

[showpan]

I doubt that it makes much difference of what wing of the UniParty they label themselves. The republicans in my town are doing the same thing. When I stood up and asked them how many teachers they were going to fire and how much our taxes were going to be raised for a $3 million repaving project, they told me it was a bond that was already approved. Then I asked them how much did they pay their handpicked "committee" that came up with the bond and the improvements. They tried not to answer but I insisted and it cost us $125,000. The next meeting was to discuss raising taxes to cover the cost overruns of that repaving project. This is coming from a town who never lowered property taxes after the bubble popped...lol

SINCE MAYOR DOHERTY HAS TAKEN OFFICE THERE HAS BEEN ALMOST $300 MILLION
INVESTED IN THE CITY OF SCRANTON!

MAJOR CONSTRUCTION PROJECTS $115 MILLION

• Southern Union Headquarters ($16,000,000)
• Aventis Pasteur ($8,000,000)
• Marquee Theaters ($2,300,000)
• Hilton Parking Garage ($11,500,000)
• Medallion Parkway ($8,000,000)
• New Police Headquarters ($3,500,000)
• New DPW Headquarters ($3,500,000)
• Riverfront Sports ($4,000,000)
• Bryn Mawr Commons ($2,500,000)
• Steamtown Mall Renovations ($1,000,000)
• Icebox ($25,000,000)
• Scranton Enterprise Center ($7,000,000)
• 410-412 Spruce Street ($1,000,000)
• Casey Laundry ($1,200,000)
• Walgreen’s ($3,000,000)
• Davis Street Commercial Development ($2,500,000)
• Electric City Square ($15,000,000)

INFRASTRUCTURE IMPROVEMENTS $68 MILLION

• 2003-2004 Capital Budget Paving Program. ($2,000,000)
• K-Road Paving ($500,000)
• West Lackawanna Avenue Bridge ($1,600,000)
• East Market Street Bridge ($2,800,000)
• Rockwell Avenue Bridge ($1,000,000)
• East Mountain Road Betterment Project ($2,700,000)
• Meadow Avenue Flood Protection Project ($2,600,000)
• Lackawanna River Levee ($55,000,000)
• Stafford Meadowbrook Maintenance Project ($120,000)
• Roaring Brook Maintenance Project ($100,000)
• Merrifield Pumping Station Rehabilitation ($10,000)
• South Side Pumping Station ($15,000)

DOWNTOWN REVITALIZATION $26.8 MILLION

• Lackawanna Ave Historical Redevelopment ($20,000,000)
• Lackawanna Avenue Bridge ($2,500,000)
• Central Business District Signalization Project ($3,500,000)
• Streetscape Improvements (523,000)
• Façade Grants ($125,000)
• Electric City Sign ($180,000)

NAY AUG PARK $1.9 MILLION

• Pool liners ($165,412)
• Hanlon’s Grove Amphitheater ($300,000)
• Rose Garden Fence ($20,000)
• Wildlife Center ($50,000)
• Heating
• Fence painting
• Steelwork
• Concession Stand ($4,776)
• Park-wide electric service ($70,000)
• Davis Trail ($707,391)
• Restoration of trail
• Installation of safety rails
• Construction of observation decks
• Construction of Roaring Brook Bridge
• Arthur Avenue Curbs and Sidewalks ($200,000)
• Playground ($300,000)
• Comfort Station ($18,000)

NEIGHBORHOOD PARK REHABILITATION $2.25 MILLION

• Weston Park ($130,000)
• Weston Field ($1,325,000)
• Crowley Park ($80,000)
• Lackawanna Little League ($200,000)
• Jackson St. Playground ($68,000)
• Dorothy St. Playground ($240,000)

MISC. PROPOSED PROJECTS $ .44 MILLION

• Lindy Creek Maintenance Project ($90,000)
• Leach Creek Basin Maintenance Project ($100,000)
• OECD Paving Program ($250,000)

TOTAL $214.4 MILLION

http://www.scrantonpa.gov/development.html

[tod evans]

And Berdu follows suit;

http://www.latimes.com/news/local/la-me-0711-san-bernardino-20120711,0,5646419.story

San Bernardino seeks bankruptcy protection.
San Bernardino, facing the possibility of missing payroll, becomes California's third city in weeks to authorize a bankruptcy filing.

[angelatc]

I chuckled at first before realizing it could be true, but at any rate, it is better for the council to loosen the code than for firefighters to be paid minimum wage.

If he didn't pay their insurance bill, the union was threatening to sue him over that. I don't see a win here.

[kathy88]

It would be interesting to see how many of those contracts in that list above were granted to his buddies and not the lowest bidders?

Although it makes me particularly uneasy to swallow the fact that all bridges in the US were built by the lowest bidder :) :) :)

[oyarde]

I'm pretty sure that would be a code violation, therefore generating fines that the mayor would have to be reimbursed for.

ETA - The mayor is a Democrat? Yes , he is and has been Mayor 10 years , I think.

[jbauer]

Sounds like a good deal to me. Union sues bankrupt city, city doesn't pay. Whats the difference? A contract is a contract is a contract unless the check doesn't cash. Then its nothing. This is just the begining of these things.


Then he shouldn't have breached a contract that will end up costing them more than the payroll in punitive damages and lawyer fees.

"John Jay has made his ruling, now let him enforce it!" only works when you're the President.

[kylejack]

Sounds like a good deal to me. Union sues bankrupt city, city doesn't pay. Whats the difference? A contract is a contract is a contract unless the check doesn't cash. Then its nothing. This is just the begining of these things.
Which is why, instead of wasting money on minimum wage, they should simply file bankruptcy. Then payroll gets paid before unsecured credit.

[gwax23]

Walgreens 3,000,000??????

Why are they building a Walgreens? And why does it cost 3 Million??? Ridiculous

[showpan]

If you really want a good read into just how corrupt our system is, and it starts with towns just like Scranton, then read a few pages of this meeting:

http://www.scrantonpa.gov/council_agendas/2012/01-19-2012%20Minutes.PDF

and if you think that was bad, the state goobernants are even worse....

and when you realize that after the states, it's the FED's turn......we are completely and utterly fucked.

[AuH20]

Must read:

http://www.nytimes.com/2012/06/26/business/surprised-taxpayers-are-paying-for-bonds-they-did-not-vote-on.html?pagewanted=all


With many cities now preoccupied with other crushing costs — pension obligations, retiree health care, accumulated unpaid bills — a sudden call to honor a long-forgotten bond guarantee can be a bolt from the blue, precipitating a crisis. The obligations mostly lurk in the dark. State laws requiring voter pre-approval of bonds don’t generally apply to guarantees. Local governments typically don’t include them in their own financial statements or set aside reserves to honor them.

“These are debts that do not show up clearly, no matter how closely you look at the balance sheets,” said Carmen M. Reinhart, an economist at the Peterson Institute for International Economics who has written extensively about government debt. They “come out of the woodwork in bad times.”

In a number of communities, especially in New Jersey, Michigan and Washington State, local officials have recently scrambled to work out fiscal emergencies caused by guarantees and similar promises. Hoboken dodged a bullet last year, for instance, when a buyer was found for a bankrupt hospital whose debt the city had guaranteed. Buena Vista, Va., narrowly missed a creditor foreclosure of its city hall and police building, after a park authority failed to repay the bonds for a golf course.

In other places, bond guarantees have been time bombs, causing problems too severe to be solved in a workout. Stockton may be headed for Chapter 9 bankruptcy this week after pledging taxpayer money to backstop authorities’ debts for a hockey arena and other showcase buildings. Scranton, a faded former coal center, touched off a full-blown debt crisis this month, losing access to the capital markets when its City Council refused to honor a taxpayer guarantee for a parking authority’s bonds.

Residents of Pennsylvania’s capital, Harrisburg, recently learned from a forensic audit that their city’s fiscal woes could be traced to a guarantee issued in 1998, for the bonds of a trash incinerator project. Every few years after that, the authority running the project issued more bonds, and the city guaranteed those as well.

The audit showed that the authority had been selling new bonds for the cash to pay its older bonds — saving unwitting residents from having to honor their guarantees for a time, but blowing up their debt from the incinerator to an impossible $310 million. That’s more than three times what residents owe on the city’s own bonds.

[oyarde]

Well , I saw an 800 yr old Italian Tuscanny village , maybe 25 miles from Florence , about twenty acres , about twenty cottages up , by a religious order , who now owns it , for around 3.1 million . Whole thing vacant . Sales tax in Spain goes to 21 percent , Unemployment in Iran , Spain equivilent .... I dunno , guess I would take the village in Italy over Scranton , Stockton , San Bernadino ,Illinois , Saudi , North Korea, Iran or Spain etc .... decisions, decisions ...

[Barrex]

police 28%
fire 27%
of the spending?????
wtf?

you got cop and fireman at every corner?

Will cities collapsessesess start before Tampa?

[phill4paul]

It's becoming epidemic. http://www.latimes.com/news/local/la-me-san-bernardino-bankruptcy-20120712,0,2433019.story


The Bay Area city of Vallejo began the current trend in May 2008, filing for Chapter 9 bankruptcy protection because, city leaders said, salaries and benefits for its public safety workers were eating up too much of the general fund.


Last month, Stockton became the largest city in the state to seek bankruptcy protection after it was unable to come to agreement with its employee unions and creditors on a plan to close a $26-million gap in its general fund


San Bernardino couldn't close a $45.8-million budget shortfall and would be unable make its payroll this summer.

[tod evans]

It's becoming epidemic. http://www.latimes.com/news/local/la-me-san-bernardino-bankruptcy-20120712,0,2433019.story

Too much government.......

[phill4paul]

Too much government.......

Only a matter of time before the federal government steps in to provide the policing functions of the local governments.

http://www.infowars.com/pentagon-takes-over-civilian-duties-and-sprays-mosquitos-in-florida/

[phill4paul]

///

[tod evans]

Only a matter of time before the federal government steps in to provide the policing functions of the local governments.

http://www.infowars.com/pentagon-takes-over-civilian-duties-and-sprays-mosquitos-in-florida/

And this is where things go awry.......It's the feds that need to be de-funded FIRST.

At least with local government Joe Blow has some say.