RSS Feed
July 10th, 2012 
FAKE NEWS for the Zionist agenda Sean Mulvey, the newly appointed finance director for the town of East Greenbush, N.Y., is trying to solve a riddle.
Though property tax revenues in this Albany suburb have yet to recover from the worst housing collapse since the Great Depression, fixed expenses like long-term contracts, debt interest and pension costs are squeezing the town’s budget.
To make matters tougher, New York state recently enacted a law limiting tax increases by local governments and school districts to no more than 2 percent or the rate of inflation, whichever is less.
“Our reserve funds have been helping to take of care of some of the problem, but they’re starting to come to the point where we are looking to refresh them — if possible,” said Mulvey. “If there’s a pot of gold around here, I’d love to have someone show it to me.”
So would many of the roughly 20,000 cities and towns still struggling to balance their budgets more than five years after the housing collapse began eroding property tax revenues, the main source of funding for most local governments.
Last week, Stockton, Calif., became the largest city to file for bankruptcy in U.S. history, after years of fiscal mismanagement and the housing collapse left it unable to pay its workers, pensioners and bondholders. The filing followed three months of failed negotiations with creditors aimed at heading off the bankruptcy by the city of 300,000 people.
Stockton’s fiscal implosion follows the $4.2 billion bankruptcy filing by Alabama’s Jefferson County, home to the state’s biggest city of Birmingham, in March.
Despite recent signs of a bottom in the housing market, the outlook for local government finances “remains negative for the fourth straight year in 2012,” according to Moody’s Investors service, which rates the creditworthiness of cities and towns hoping to borrow money in the bond market.
As local government finance departments closed out their books in 2011, they projected continued declines in revenues this year, forcing additional spending cuts, according to a survey by the National League of Cities. Though towns and cities continue to rely on reserves set aside in better times, those funds fell for the third year in a row.
Those spending cuts are getting harder to make after four years of shrinking payrolls, service cutbacks, and deferred maintenance and investment in new infrastructure, according to the NLC. But amid a weak job market and the lingering impact of the recession, demand for safety net services like local food banks, has “increased significantly,” according to about a third of the cities that responded to the NLC survey.
One solution to the budget squeeze has been a contraction in local government payrolls, typically the biggest single line item in a town or city’s budget. Some 40 percent have cut workers, according the NLC. Nationwide, local government payrolls have shrunk by nearly 4 percent, or more than half a million workers, since peaking in the summer of 2008.
Those payroll savings have been offset by rising pension and health care costs for retirees, along with continued contributions for current workers. Pension obligations have risen faster than inflation mainly for two reasons: retirees are living longer and low interest rates have sharply cut the returns on pension funds that are used to pay benefits.
Even as cities and towns struggle to balance this year’s books, pension costs are expected to continue to put pressure on future budgets, as will the declines in property tax revenues. Because of a lag of several years in changes in property tax assessments, the post-2006 plunge in house prices will continue to hammer local budgets for at least the next few years.
The recent sharp cuts in federal and state aid also will take their toll. Following the expiration of tens of billions of dollars in federal stimulus spending in 2009 and 2010, state finance officials have balanced their budgets in part with cuts in aid to local governments, according to a recent report from Fitch Ratings.
While that helped states absorb the loss of federal stimulus dollars, it left local governments struggling to find ways to pay for services, including education, that are still mandated by the state.
“If you look at a typical city, they may get very little or no state funding,” said Amy Laskey, a Fitch researcher who co-authored the report.
Some budget shortfalls are strictly the result of the local government’s own making.
Pennsylvania’s sixth largest city may be on the brink of bankruptcy, with Ed Rendell, former Pennsylvania governor and NBC News political analyst, weighs in.
Since the recession of 2007, a handful of cities and towns have landed on the fiscal rocks after borrowing to fund business development projects that went bust. Though some of those failures can be chalked up to simple mismanagement, others have become victims of a national recovery that has been one of the weakest on record.
“The economy has been so weak we’ve seen more failures than we would have in a better economy,” said Laskey.
In such tough times, a few cities have resorted to unconventional sources of new revenue.
Cash-strapped Scranton, Pa., came up with a creative new way to cover police overtime and other costs associated with a recent campaign stop by Vice President Joe Biden, who visited his boyhood home last week. With the city struggling to avert financial collapse, Mayor Chris Doherty announced public employee salaries would be cut to the federal minimum wage of $7.25 an hour.
Asked how the city would cover the cost of Biden’s visit, Doherty told the Scranton Times Tribune: “We’re going to bill the (Obama/Biden) campaign.”
Posted in 
Tags: 
