First large city - BANCKRUPT

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Bushwhacker

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#70
Apr 8, 2013
 

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Be sure and try to say, it's a problem of retired folks deserving an EARNED PENSION, after all they can always do the "right" thing & die, huh ???
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#71
Apr 10, 2013
 

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San Bernardino sought bankruptcy protection in August, after discovering the city had exhausted all its reserves and was nearly $46 million short of the money to pay a projected $166 million in expenses this fiscal year. Yet last week the City Council approved nearly $1 million in pay hikes for police and firefighters — without any choice in the matter, thanks to the city charter. Council members will now have to look for an additional $1 million in budget cuts elsewhere to offset the new expense.

It takes no great financial acumen to deduce the lunacy of an automatic salary increase in a city that already lacks enough money to cover its bills. A provision in the city’s charter sets police and fire salaries at the average of what 10 “comparable” California cities pay. The exact cities can vary, thanks to a convoluted selection process. But the end result is that San Bernardino sets pay based on what other, wealthier cities offer, without any regard for San Bernardino’s own financial condition.

If San Bernardino is forced to sell off its former redevelopment properties — including the historic California Theatre and the multiplex cinema downtown — it will drive a stake through the heart of the ailing city.


State Controller John Chiang issued a report Wednesday saying the city illegally held onto $420 million of assets, including the theaters, that should have been transferred to a new agency when the state dissolved redevelopment in 2011.

After redevelopment debts are paid, the assets are to be sold off; proceeds go to schools and other agencies.

As if San Bernardino didn’t have enough problems with its bankruptcy. Since last year, it also has battled the controller over whether it properly handled the redevelopment asset transfers.

Chiang said his review found $108.4 million of San Bernardino’s redevelopment properties, cash and investments were inappropriately transferred to the nonprofit San Bernardino Economic Development Corp.

He also said $420.5 million in assets are still being held by the city when they should have been transferred.

Assets include the California Theatre, Regal Cinemas multiplex and Sturges Center for the Arts. The entertainment venues are the city’s best hope now of reviving its struggling downtown.

Meanwhile, the bankruptcy question is going nowhere fast — on a spin cycle, as one observer put it.

http://blog.pe.com/cassie-macduff/2013/03/06/...
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Apr 10, 2013
 

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Stockton Bankruptcy The Result Of 15-Year Spending Binge

* City manager: Retirees' healthcare "a Ponzi scheme"

* Police officers can retire at 50 years old with pension

* No early signs of alarm about city's fiscal mismanagement

* Stockton's fortunes linked to housing boom and bust

By Jim Christie

SAN FRANCISCO, July 4 (Reuters)- The man in charge of the biggest U.S. city ever to file for bankruptcy is clear about the root of the crisis.

It was a decision that gave firefighters full healthcare in retirement starting on Jan. 1, 1996, s aid Bob Deis, the city manager of Stockton, California.

At the time, the move seemed cheaper than giving pay raises s ought by unions, officials involved in the decision said. When other Stockton employees demanded the same healthcare deal in following years, the city agreed.

Deis, who signed Stockton's bankruptcy filing last Thursday, s lammed the decision to provide free healthcare to retirees as a "Ponzi scheme" that eventually left the city with a whopping $417 million liability.

Before the turn of the millennium, things looked very different in California.

The U.S. stock market was booming, bolstering Stockton's p ension funds. Real estate values were about to soar, too, bringing a flood of new tax revenue to the once quiet farming town of about 300,000 people - abo ut 85 miles east of San Fran c isco - in California's Central Valley.

THE TRADE-OFF

To counter demands for wage hikes from city workers in the 1990s, Stockton offered to extend their health insurance in retirement past age 65 - a benefit they embraced and assumed to be rock solid until the insolvent city's officials put it on the chopping block in a bankruptcy plan last week.

"It was a balancing act," said Dwane Milnes, Stockton's city manager at the time. "The unions wanted retiree medical ... We said if you want to continue your medical for current employees and retirees, you'll have to do it through wage containment."

Milnes, who represented Stockton's retirees in recent talks with City Hall, said the strategy was sound at the time.

"We were satisfied that based on a conservative view of the economy and based on the medical inflation rate we were experiencing in the 1990s, the city could adequately fund retiree medical."

Detective Mark McLaughlin said Stockton's labor unions embraced the trade-off, which in the police department's case helped with recruiting and retention.

"It was an easy sell," he said, adding that city workers believed the money they gave up in pay increases would be able to pay for the health benefit.

SPEND, SPEND, SPEND

Other U.S. cities have also experienced boom and bust like Stockton.

But analysts and investors generally see Stockton as an extreme case of fiscal mismanagement over the past two decades.

Daniel Berger, a senior market analyst at Municipal Market Data, a unit of Thomson Reuters, said last week, before the bankruptcy filing, that the municipal bond market had viewed Stockton's fiscal problems as "a slow-moving train wreck." The possible bankruptcy filing, he said at the time, was seen as an "isolated occurrence."
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Burnsville, MN

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#75
Apr 10, 2013
 

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As the 2000s advanced, Stockton continued to spend freely with the support of voters, politicians from both parties, employees and bondholders. Rating agencies were quiet about any risks and only started to downgrade the city's creditworthiness two years ago.

Generous pension deals were offered in the early 2000s.

City officials, looking to transform their sleepy downtown, approved spending on large projects to raise Stockton's profile and turn it into a bedroom community for San Francisco and the Bay Area.

Homebuilding went into overdrive. Home prices skyrocketed to a median of nearly $400,000 in 2006 from a median of $110,000 in 2000.

Stockton's revenues jumped, too. Its general fund, which pays the city's operating costs, swelled to $186.4 million in 2007 from $139.1 million in the 2001 fiscal year.

ROYAL PENSIONS

Like other cities in California, Stockton chose to offer many public safety workers the same benefits as those mandated by a state law for highway patrol officers. The change allowed police officers to retire at 50 with pensions based on 3 percent of final pay for each year in service, up from 2 percent before.

City employees in other unions also received more generous pensions with eligibility to retire at age 55 - with 2 percent of final pay multiplied by the number of years of service.

This is in contrast to the vast majority of private-sector workers who cannot receive Social Security p ayments b efore they are at least 62.

By the 2000s, Stockton's full-time employees were also entitled t o free healthcare for life.

Still, there seemed little cause for concern.

With huge stock market gains from the 1990s, city officials were confident about meeting pension costs. After all, the Standard & Poor's 500 Index index quadrupled between early January 1990 and late March 2000.

Police and firefighters continued to win further concessions. Generous allowances were offered to police officers to buy their uniforms, bonuses were introduced based on years of ser vice, and retiring officers cla imed cash payments for unused vacation days - accumulated over years in some cases.

Warning signs grew that retiree healthcare costs were rising fast. The city miscalculated the rate of inflation for medical costs during the 2000s.

But Stockton's leaders burned through their reserves and began planning new construction projects to make the city more appealing to new residents.

A $47 million bond issue in 2004 was meant to finance construction of a sports and concert arena to revitalize t he city's do wntown. The arena was built, but it ended up losing money.

A downtown high-rise building was acquired for a new City Hall. A revamp of Stockton's downtown riverfront was financed, along with other projects, by more than $100 million in debt between 2004 and 2006 by the city's redevelopment agency.

Stockton ended up absorbing that debt after California's governor eliminated local redevelopment agencies last year.

It seems unlikely that Stockton will be able to sell those real estate assets at a gain.

"Most of the assets that look nice are under water," said Deis, the city manager.

A $125 million pension obligation bond sold by Stockton in 2007 also backfired. Stockton passed the proceeds to the California Public Employees' Retirement System, or Calpers, to pay down unfunded liabilities at the pension fund. Then the fund suffered steep losses when financial markets plunged in 2008 and early 2009 and left Stockton with a 23 percent loss on its invested proceeds and in debt to investors who bought the bonds.
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#76
Apr 10, 2013
 

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HOUSING BUST'S TRAIL OF PAIN

The worst damage was done by the housing crash. Median home prices in Stockton slumped to $110,000 in 2009, erasing nearly a decade's gains. General fund revenues in the current fiscal year are projected at $155 million, just above their level in 2001.

The real estate bust made Stockton one of the foreclosure capitals of the United States. Property-tax revenues tumbled. The city began its new fiscal year on July 1 with its 1,420-strong workforce down by a quarter from three years earlier.

Debt service has ballooned to $17.2 million a year from $3 million just six years ago.

Stockton has already defaulted on about $2 million in bond payments since February.

Recriminations about Stockton's budget need to be set aside to avoid the kind of lengthy bankruptcy suffered by Vallejo, an other California casualty of the boom-to-bust cycle. It emerged from bankruptcy last year after three years in Chapter 9 that cost it $10 million in legal fees.

Stockton has earmarked $3.5 million for bankruptcy court expenses b ecause it h opes for a quick e xit from Chapter 9.

Bondholders, employees and retirees will be hurt in the process. Axing retiree medical benefits is now central to efforts to restructure Stockton's finances, Deis said.

Many retirees are in a state of shock about that.

"I believed the city would honor its commitments," said Geri Ridge, 56.

The former clerk retired last year after 26 years with Stockton's police following a second heart attack.

Ridge lives off a monthly pension of $1,895. She learned on Friday that she now faces a $576 monthly premium for her health co verage - or $1,277 a month if sh e keeps her daughter on her plan.

She has no idea of how to pay for the coverage, which the city will fully eliminate in a year. And she has harsh words for Deis.

"I want him gone. I'm hoping whoever gets elected into office fires him, bankruptcy or not," Ridge said.

http://www.huffingtonpost.com/2012/07/04/stoc...
Bushwhacker

Kent, WA

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#77
Apr 10, 2013
 

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Rethuglican't DEATH DEALERS !!!

Be sure and try to say, it's a problem of retired folks deserving an EARNED PENSION, after all they can always do the "right" thing & die, huh ???
Bushwhacker

Kent, WA

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#78
Apr 10, 2013
 

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Only a true tea-sagger would continue to post crap under BANCKRUPT !!!

IrishMN?/Fake Liberal wrote:
It doesn't work with door to door people, but phone solicitors are always welcome to call me. When I answer the phone and they ask for IrishMN, I respond with:
"Oh, I am sorry. He just died. I am here clearing out the last of his belongings."
The silence is deafening.
And yes, I am that warped.

They ask for your moniker, TROLL ??? Of course, you lie, it's your nature....
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#79
Apr 10, 2013
 

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Detroit emergency manager threatens municipal bankruptcy

By Lawrence Porter
18 March 2013

One day after being named Detroit’s emergency manager, Kevyn Orr threatened to use the bankruptcy courts to impose drastic cuts on workers in the nation’s poorest large city.

Speaking to the Detroit Free Press Friday, Orr said he had already considered a prepackaged bankruptcy approved by vendors of goods and services, municipal bondholders, unions and pensioners.

“I would think it would be reasonable within their authority to make a negotiated solution,” said Orr.“I don’t think that’s extreme. I think that’s apparent, frankly, and that’s why I say you can do this consensually.”

Orr, a bankruptcy attorney for the Jones Day law firm in Washington, one of the largest corporate law firms in the US, represented Chrysler in the Obama administration’s 2009 restructuring of the auto industry that resulted in the elimination of tens of thousands of jobs.

Orr’s stated preference for a “consensual” agreement is a signal to the unions that he wants to work with them in attacking workers’ wages and benefits.

If a negotiated agreement cannot be reached, the bankruptcy courts could be used to impose cuts.“The one thing everyone needs to know, if you go into bankruptcy, Chapter 9 of the bankruptcy code is weighted toward the municipality,” Orr said at his introductory press conference on Thursday.“I don’t want to pull that cudgel out unless I have to. I prefer to pursue a consensual resolution.”

According to the Free Press, Orr acknowledged “that the threat of such a bankruptcy is a tool he can use to force cooperation on creditors and retiree and employee benefits groups, even those whose leaders would have a difficult time convincing the people they represent to accept losses or benefits cuts.”

The threat of bankruptcy also provides a tool to union executives to push through concessions on the grounds that even worse cuts would be imposed by a bankruptcy court.

While presented as “equal sacrifice” by all those involved, including bondholders, the principal target of a bankruptcy would be the city’s working class. The political establishment and media are particularly eager to slash pensions for current retirees, which under state law cannot be done except through bankruptcy.

Orr has repeatedly said that he is prepared to carry out whatever action is necessary to achieve cuts.“Everything is on the table,” stated Orr.“I’ve got guns. We are not afraid.”

Orr also said on Friday that he is looking into privatizations and the leveraging of city assets to generate profits or cut costs. One target, according to a report in the Detroit News, is the Water and Sewerage Department.

For years, the DWSD has been at the center of schemes by Detroit politicians and the corporate elite. Detroit Water and Sewerage takes in revenues of $800 million annually.
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Burnsville, MN

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#80
Apr 10, 2013
 

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According to the News,“Orr said he might consider turning over management of the city’s Water and Sewerage Department to a regional authority to leverage lease payments and shed billions of dollars in debt from the city’s ledger.” This is likely another step towards privatizing the department along the lines put forward by Mayor David Bing a few months ago, calling for the elimination of 81 percent of the workforce and the outsourcing of most functions.

Orr also indicated he is open to leasing Belle Isle Park. Belle Isle, the largest island city park in the US, was designed by Frederick Olmstead who also designed Central Park in NY. It has been the subject of repeated proposals for state ownership, leasing or even sale to private investors.

The media and the political establishment have enthusiastically welcomed Orr, embracing the need to dispense with democratic forms in sharply escalating the attack on the working class.

Seeking to assuage popular hostility, Orr declared,“The concepts of reorganization, conservatorship, receivership, trusteeship have existed since good King George began granting tariffing commissions in the colonies. So while I understand there’s a lot of concern and emotion behind the concept that I’m depriving people of certain rights, actually it’s very consistent with both the history of this country and specifically in this state.”

Conveniently omitting the fact that American colonists waged a revolutionary war against the hated “good” King George in order to establishe a democratic form of government, Orr went on to point out that emergency managers had been named by Democratic and Republican Michigan governors.

“EMs have been appointed in 5 cities and 4 school districts.” In fact, he suggested,“This is democracy in action.”

http://www.wsws.org/en/articles/2013/03/18/de...
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#81
Apr 10, 2013
 

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Bushwhacker wrote:
Rethuglican't DEATH DEALERS !!!
Be sure and try to say, it's a problem of retired folks deserving an EARNED PENSION, after all they can always do the "right" thing & die, huh ???
Stockton Bankruptcy The Result Of 15-Year Spending Binge

* City manager: Retirees' healthcare "a Ponzi scheme"
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Burnsville, MN

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#82
Apr 10, 2013
 

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Funny, most of the bankruptcies now and historically happen in Democratic party controlled cities. Coincidence? Probably not.
Bushwhacker

Kent, WA

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#84
Apr 10, 2013
 

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Pretty funny, rich Snyder cutting American worker's pay, NOT HIS OWN.
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Burnsville, MN

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#85
Apr 10, 2013
 

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And yes, for you, specifically chapter 9 bankruptcies, slewchebag.
Bushwhacker

Kent, WA

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#86
Apr 10, 2013
 

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Yeah, I'm in Detroit now too, right wing nutter ?? Poor non-smart, just a child trying madly to blame others, because you LOST !!! Does it suck being broken, boi ??

IMMR
+11.40 +0.58‎ (+5.36%‎)
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#87
Apr 10, 2013
 

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Bushwhacker wrote:
Yeah, I'm in Detroit now too, right wing nutter ?? Poor non-smart, just a child trying madly to blame others, because you LOST !!! Does it suck being broken, boi ??
IMMR
+11.40 +0.58‎ (+5.36%‎)
You lost again, and brought up your "stock pick" to make yourself feel better.
Bushwhacker

Kent, WA

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#88
Apr 10, 2013
 

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IMMR
+11.40 +0.58 (+5.36 )

That's an interesting theory, except I brought it up.... to burn some trash... LMAOROTFU~!

Poor non-smart, wrong on Boeing, my pay, my investments, Hostess, and sucking at LIFE...
Bushwhacker

Kent, WA

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#89
Apr 10, 2013
 

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Sure hope all you geniuses are on board. Of course, all my shares are freebies... LMAOROTFU~! Just think,$4 1/2 in October and $11.40 now... SWEET ~!
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#90
Apr 10, 2013
 

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Bushwhacker wrote:
Sure hope all you geniuses are on board. Of course, all my shares are freebies... LMAOROTFU~! Just think,$4 1/2 in October and $11.40 now... SWEET ~!
Your shares must have been freebies, the NASDAQ doesn't take DOJO dollars.
Bushwhacker

Kent, WA

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#91
Apr 10, 2013
 

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I have $50k to wager, you have gums to flap....

Pretty funny, right ???
Bushwhacker

Kent, WA

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#92
Apr 10, 2013
 

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By your "logic", I'll take the month bet, from the day I said it would take a month....

"The battery rework will take a month or less."

My month started 2/3/13 are you accepting the 50k wager ???

COME ON MOUTH !!! LMAOROTFU~!

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