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San Bernardino Files Chapter 9 Bankruptcy Petition; Pension and Medical Liabilities Impossible to Meet; Major Wave of Municipal Bankruptcies Has Begun

Fearing action by creditors, San Bernardino, California, Files Chapter 9 Bankruptcy Petition

San Bernardino, California, after disclosing a $46 million shortfall in the city’s budget, filed for municipal bankruptcy.

San Bernardino listed assets and debt of more than $1 billion in a filing yesterday with the U.S. Bankruptcy Court in Riverside, California. It’s the third California city to seek court protection from creditors since June 28.

City officials sped up the timing of the filing because they were concerned that some creditors may take legal action against the city, Mayor Patrick J. Morris said yesterday in a phone interview. Under Chapter 9, all court cases and other legal actions against the city will be halted until the bankruptcy case is over.

One of the main problems is the high cost of the city’s union contracts, particularly for police and fire service, City Councilman Fred Shorett said in a phone interview.

Under the city charter, which is like a constitution for municipal governments, city officials must use a specific formula for determining wages and other benefits paid to its police and fire employees, Shorett said. That formula requires the city to set compensation by comparing employee pay in San Bernardino, which has one of the highest home foreclosure rates in California, with cities in the state that are about the same size and have much more money to spend, Shorett said.

“We are set up for failure,” he said.

The city has about $55.9 million in bond debt tied to the general fund. The city also has unfunded liabilities of $296 million, including $195 million related to pensions and $61 million related to medical benefits for retired city workers.

Major Wave of Municipal Bankruptcies Has Begun

A major wave of municipal bankruptcy filings is now underway. Scores of other cities nationwide will eventually do the only thing that makes sense: file for bankruptcy to escape pension promises and union salaries that cannot possibly be met.

In California, Oakland and Los Angeles are among the walking dead.

Unions would be wise to negotiate with cities in advance of bankruptcy filings to protect the most benefits for the most workers. However, the odds of that happening are close to zero.
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Spanje Valencia , Catalonia idem. Dus zo groot zijn de verschillen nog niet eens.

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Zombified Cities Roundup: Detroit Becomes Dumping Ground for the Dead; Financial Urgency in Miami; Oakland Pension Time Bomb; How Pensions Crashed Stockton and San Bernardino

Space does not permit a complete discussion of zombified cities. Such a list would be in the many hundreds. Rather this post is about four cities in recent news that are among the walking dead. One is even a dumping ground for the dead.

Fourth Financial Urgency in Miami in Four years

The Huffington Post reports Miami Declares Financial Urgency For Fourth Year In A Row

Miami City Manager Johnny Martinez declared a state of financial urgency Friday for the fourth year in a row.

The move gives the city commission authority to restructure its existing contracts with police, general employee, and fire unions.

City commissioners agreed to not hike taxes in a budget meeting Thursday night, but instead will look to close a budget gap of tens of millions through union concessions. The $485 million budget must be balanced by September.

"The unions are not cooperating with the process," Mayor Tomas Regalado told the Miami Herald. "We need to have a balanced budget."

Martinez said in a statement that the city will be contacting union representatives to start up two weeks of negotiations. The declaration of urgency has likely incensed police and fire officials; according to Reuters, the latter group argued before city officials Thursday night that their pay has been cut 35 percent in the last 3 years already.

Detroit Becomes Dumping Ground for the Dead

The Associated Press writes Vacant Detroit Becomes Dumping Ground for the Dead.

From the street, the two decomposing bodies were nearly invisible, concealed in an overgrown lot alongside worn-out car tires and a moldy sofa. The teenagers had been shot, stripped to their underwear and left on a deserted block.

They were just the latest victims of foul play whose remains went undiscovered for days after being hidden deep inside Detroit's vast urban wilderness - a crumbling wasteland rarely visited by outsiders and infrequently patrolled by police.

Abandoned and neglected parts of the city are quickly becoming dumping grounds for the dead - at least a dozen bodies in 12 months' time. And authorities acknowledge there's little they can do.

The bodies have been purposely hidden or discarded in alleys, fields, vacant houses, abandoned garages and even a canal. Seven of the victims are believed to have been slain outside Detroit and then dumped within the city.

"Detroit is a dumping ground for a lot of stuff," said Margaret Dewar, professor of urban and regional planning at the University of Michigan. "There is no one to watch. There is no capacity to enforce laws about dumping. There is a perception you can dump and no one will report it."

How Pensions Crashed Stockton, San Bernardino

Bloomberg reports Police Chief’s $204,000 Pension Shows How Cities Crashed

Stockton, California, Police Chief Tom Morris was supposed to bring stability to law enforcement when he was appointed to the job four years ago.

He lasted eight months and left the now-bankrupt city at age 52 with an annual pension that pays more than $204,000 -- the third of four chiefs who stayed in the position for less than three years and retired with an average of 92 percent of their final salaries.

San Bernardino, a city of 209,000 about 60 miles (100 kilometers) east of Los Angeles, is typical of the phenomenon. Its city council voted July 18 to approve an emergency bankruptcy filing, about six years after the panel unanimously lowered the retirement age for public-safety workers to 50 from 55.

The council acted in August 2006 even though Aon Plc, the city’s risk-management consultant, had warned it that such a change would add millions of dollars to San Bernardino’s long- term pension costs. In the fiscal year that ended in June, pensions consumed 13 percent of the city’s general fund, up from 9 percent in fiscal 2007.

“I knew it was going to be costly in the long run,” San Bernardino City Councilwoman Wendy McCammack said of the lower retirement age. “However, this city is one of the toughest to police. In order to attract and retain the kind of officers that it takes to police a city like this, that was a benefit that we had to negotiate.”

Notice the complete ineptitude of San Bernardino City Councilwoman Wendy McCammack. She was willing to bankrupt San Bernardino by making untenable pension promises to "attract and retain" police officers. Did it work?

Pension Time Bomb Explodes in Oakland

The San Francisco Chronicle reports Oakland's financial time bomb: pensions

It was 1976 when the city of Oakland realized it had a major problem on its hands: A pension created 25 years earlier to benefit police officers, firefighters and their widows was proving too costly to afford.

So the city closed the plan to new employees and later passed a parcel tax to pay for the pension. Yet today, that pension remains the source of one of Oakland's biggest headaches.

It's a generous plan that awards its retirees and widows - who now number 1,086 - raises to match up to two-thirds of the pay of the current-day workforce. But the city's costs ballooned because it never adequately contributed to the pension fund, relied on borrowing for years to give itself holidays from pension payments and watched investments go south. The result of the borrowing is that the pension, known as the Police and Fire Retirement System, has cost Oakland taxpayers hundreds of millions of dollars more than it should have. In 2010, City Auditor Courtney Ruby found Oakland spent $250 million more on the pension than it would have if the city had simply paid into the pension - and that was just for one of its bond deals.

Last month, the majority of the Oakland City Council, at the urging of Mayor Jean Quan's administration, voted to borrow money once again to cover the pension bill - $210 million in new pension bonds that will cost another $105 million in interest over the next 14 years. But the loan will allow the city to avoid paying for the pension from its general fund for four years. If the city hadn't borrowed the money, it would have been forced to take $38.5 million from its roughly $400 million general fund to pay for the pension this year. Such a move would have required deep cuts to city services, which already have taken a hit due to the slumping economy, state budget cuts and redevelopment shutdown.

Wipe out parks, libraries

"If we had to pay this money this year and the next couple of years, the cuts would imperil our Police Department as well as completely wipe out our libraries and parks," said Councilwoman Pat Kernighan. "In a few years, we're going to be in a better position to make the payments."

Complete Idiocy by Councilwoman Pat Kernighan

As stupid as the decision was by San Bernardino City Councilwoman (and it was incredibly stupid), the position of Oakland Councilwoman Pat Kernighan is much worse. Kernighan learned nothing from Stockton, San Bernardino, Miami, or Detroit.

Nor did Kernighan even learn anything from prior history in Oakland. Borrowing has already wrecked Oakland and this complete dunce wants to do more of it.

The only solution that has a chance is for Oakland to declare bankruptcy. Instead Kernighan voted to kick the can down the road one more time.

Oakland Headed for Bankruptcy

Oakland will not be in a better position in a few years. I confidently predict bankruptcy.

Bankruptcy is the only method cities can use to correct absurd pension promises made to police, fire, and teachers' unions.

Advice to Unions

My beef is not with those lowest on the totem pole and their small $15,000 pensions.
Instead, I propose those with the largest pensions should take the bulk of the hit.

Police Chief Tom Morris lasted 8 months and will now receive a $204,000 annual pension. Morris deserves nothing, zero.

My advice to unions is to negotiate with cities in advance of bankruptcy or some judge will come along and do something like slash pensions across the board by 50% as happened in Rhode Island.

Across the board compromises give those like Morris far more than they deserve at the expense of hundreds of workers getting pensions barely enough to live on.

quote:

Op maandag 6 augustus 2012 14:15 schreef LXIV het volgende:
Het geld klotst letterlijk tegen de plinten omhoog in Californie. Als er ergens miljarden en miljarden te halen zijn is het daar wel, met zijn uiterst succesvolle computer, film en toerismeindustrie. Plus alle spinoff die ervan profiteert. Alleen het OR in Californie is al meer waard dan de hele NL-se huizenbubble.

Je moet natuurlijk wel belasting heffen om daar iets van te krijgen. Maar zelfs een (naar Nederlandse begrippen) uiterst bescheiden belasting zou voldoende zijn.

Idem Amerikaans begrotingstekort. Dat is nul (0) als er daar een 'kwartje van Kok' zou worden ingevoerd. En dan is de benzine daar nog 2x zo goedkoop dan hier.

Alles in het juiste perspectief.

Op welke ZMLK school heb je gezeten ?

Dus 12 T schuld kun je oplossen met 25 dollar ct per liter.
Doe eens een rekensom. Naar verbruik

ff rekenen..
9,6 miljoen vaten per dag.
9.6*1e6* 117,35 liter * 0,25 dollar ct = 281640000 Dollar.
12*1e12/28164000 = 426076 dagen
426076/365.25 = 1166 jaar, Dit gaat hem niet worden denk ik.

quote:

Op maandag 6 augustus 2012 14:34 schreef LXIV het volgende:

[..]

Begrotingstekort is iets anders dan staatsschuld, ZMLK-kind.

Passen we aan....
Begrotingstekort feb 2012 = $229 miljard
Laten we ruig doen... 100 miljard per maand = 1.2 T per jaar. (Er zijn ook iets gunstigere maanden)
Zelfde berekening.
117 jr. Voor een begroting van 1 jr.

Nog iets ?

Opnieuw.....

2009 : 137,916,660,000 gallons

1 gallon = 3,78541178 liter
Dus 522.071.349.422 liter finished high grade fuel

1T (ik schatte 1.2T will do) = Prijsverhoging van 1,91 dollar per liter. Vergeet de verkiezingen dan maar.