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| Should Flint File for Bankruptcy? |
| yes |
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69% |
[ 9 ] |
| no |
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30% |
[ 4 ] |
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| Total Votes : 13 |
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Adam
F L I N T O I D
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Tue Jul 10, 2012 11:35 am |
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Crowfeeder
F L I N T O I D
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| I understand that EM Brown is downgrading COF Retirees Health Insurance from BCBS Master Medical to the cheaper BCBS PPO.I thought that these retirees benefits were untouchable.
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Tue Jul 10, 2012 3:36 pm |
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patclawson
F L I N T O I D
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Flint should follow several California cities and file for bankruptcy protection. It's the only way to deal with the tough restructuring decisions that have to be made. The following report from the Los Angeles Times provides good insight on this issue.
Pat Clawson
Swartz Creek
patrickclawson@comcast.net
latimes.com/news/local/la-me-san-bernardino-bankruptcy-20120712,0,2433019.story
latimes.com
Rising costs push California cities to fiscal brink
Throughout the state, local governments are slashing services to avoid bankruptcy. For some, it's too late.
By Phil Willon, Catherine Saillant and Abby Sewell, Los Angeles Times
July 12, 2012
Facing the same financial stressors that pushed San Bernardino toward bankruptcy, cities across California are slashing day-to-day services and taking other drastic actions to skirt a similar fiscal collapse.
For some, it may not be enough.
San Bernardino on Tuesday became the third California city to seek bankruptcy protection in the last month and, while no one expects the state to be consumed by municipal insolvencies, other cities teeter on the abyss.
"There are likely to be more in the future, but it's hard to know, since a lot of struggling cities may manage to work things out,'' said Michael Coleman, a fiscal policy advisor for the California League of Cities. "Some cities may not go into a bankruptcy, but they may dissolve. They may cease to exist.''
Once rare, turning to bankruptcy has become a painful but enticing option for cities whose labor costs and municipal debt far outpace anemic tax revenues. 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. On July 2, the tiny resort town of Mammoth Lakes filed bankruptcy papers in part because it was saddled with a $43-million court judgment it couldn't pay.
San Bernardino couldn't close a $45.8-million budget shortfall and would be unable make its payroll this summer. Days before Tuesday's City Council vote, the city of 211,00 people had just $150,000 in the bank. The city barely scraped together enough money to cover its June payroll.
The city had largely patched over its growing fiscal ills, exacerbated by the struggling economy, by tapping out its reserves over the last several years, according to a fiscal report submitted to the council before Tuesday's vote.
That 4-2 decision to file for bankruptcy protection was the easy part, San Bernardino Mayor Patrick Morris said Wednesday. Now the city has to pull together a plan to emerge from its fiscal crisis. It has already cut its workforce by 20% over the last four years.
Morris, a former judge elected on an anti-gang platform, says the city may have to dissolve its Fire Department or portions of the Police Department, an unavoidable reality when public safety accounts for nearly 75% of the general fund budget. The city would then contract with county and state agencies for those services.
"I think all possibilities should be on the table," Morris said. "That includes privatizing services; that includes regionalizing services."
Steve Tracy, a fire engineer and spokesman for the city firefighters union, said San Bernardino's labor groups already gave up $10 million in concessions. He blamed the financial crisis on the mayor and former city manager spending money on such pet projects as a new downtown movie theater.
"Before you start putting blame on the labor groups, get your own fiscal house in order," Tracy said.
Vallejo was in a similar bind when it filed for bankruptcy four years ago. Now Mayor Osby Davis wonders if the painful road to recovery was worth the cost.
The Bay Area city of 112,000 was forced to shut down two of its fire stations and today fixes just 10% of its crumbling roads. Its workforce, including police and firefighters, is about half its pre-bankruptcy size and those people left are "insanely" overworked.
Meanwhile, Vallejo spent $10 million on legal fees. It ended up with employee contracts that Osby thinks the city could have struck more cheaply if it had stayed out of bankruptcy court and turned to the bargaining table.
His advice to other cities on the financial brink? Don't do it.
"It takes an enormous toll on everyone,'' Davis said. "And you have the stigma of being a bankrupt city. How do you come out of being labeled a bankrupt city to one that is a desirable place to live?"
The San Bernardino City Council meets Monday to hash out the painful road ahead, including how to scrape together enough money to sustain city services before officially filing for bankruptcy protection. That could take a month or longer.
The city is expected to declare a fiscal emergency, which would trigger an "emergency exit" clause in the new state law that governs municipal bankruptcies. Otherwise the city would be forced to mediate with labor unions and creditors, an expensive, months-long process that Stockton slogged through without arriving at any agreement.
Karol Denniston, an attorney who helped draft the state bankruptcy law, said the emergency exit was designed for cases such as that of Orange County, which in 1994 became the largest county in the United States to go bankrupt, largely because of an unanticipated downturn in its risky investments.
Meanwhile, San Bernardino is likely to be scrutinized over how it managed to come to the brink of disaster, seemingly so quickly. City Atty. James Penman said budget figures submitted to the council had been fabricated for 16 years. Interim City Manager Andrea Miller was less harsh, saying the city's budget was erroneously said to be balanced for the last two years.
"The real horrible question here is: How do you end up with 30 days of liquidity?' Denniston said. "You have city leaders saying fiscal information was not accurate or reliable. This could create multiple layers of litigation that hurts creditors, employees and taxpayers for a very long time to come."
Rising public pension costs are one of the catalysts pushing cities into fiscal peril. In San Bernardino, the city's obligation to its employee retirement system rose from $1 million in the 2006-07 fiscal year to nearly double that in the current budget year. In three years, those costs are expected to swallow up 15% of the budget.
Pension spending grew an average of 11.4% a year in the state's biggest cities and counties between 1999 and 2010, roughly twice as fast as spending on public safety, social services, recreation, health and sanitation, according to a February report by the Stanford Institute for Economic Policy Research.
Joe Nation, a Stanford economics professor and co-author of the February report, thinks that for at least some cities, insolvency is inevitable unless they can wrest much bigger concessions on salaries and pensions from public employees.
"I think this is the tip of the iceberg in terms of the problem,'' Nation said. "Stockton was spending $12 [million] or $13 million on pensions 10 years ago. By 2010, it was $30 million … and will double again over the next five years, unless something is changed."
Meanwhile, as news of the bankruptcy wafted though San Bernardino on Wednesday, residents feared for the city's uncertain future.
"People are losing their homes because they have no jobs. It's been really tough, so it doesn't surprise us," said Rose Garcia, 46.
But Garcia, a stay-at-home mother, said she and her husband, a dispatcher for Vulcan Materials, are anxious about potential cuts to public safety.
"It's an uncertain feeling we have right now," she said. "We're actually talking about moving."
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Thu Jul 12, 2012 10:09 am |
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patclawson
F L I N T O I D
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Why do I suspect that something similar to this would be one of the results of a City of Flint bankruptcy?
And why do I suspect that is why are local officials are so opposed to a bankruptcy filing?
Pat Clawson
Swartz Creek
patrickclawson@comcast.net
-----------------------------------
http://latimesblogs.latimes.com/lanow/2012/07/san-bernardino-bankruptcy-criminal-probe-underway.html
San Bernardino bankruptcy: Criminal probe underway
July 12, 2012 | 6:37 pm
Law enforcement officials said Thursday that they have an open criminal investigation regarding allegations of misconduct in the city government of San Bernardino, which announced this week it was going to file for bankruptcy.
The San Bernardino County Sheriff's Department released a statement confirming the probe but released few other details.
"Several months ago at the request of San Bernardino city officials, the San Bernardino County Sheriff’s Department, along with the San Bernardino Police Department and the district attorney’s office began an investigation related to allegations of possible criminal activity within departments of the San Bernardino city government," the statement said. "The investigation is continuing, and details will not be released at this time. Updates will be provided as new information becomes available."
There have been allegations that some financial documents were falsified to hide the seriousness of San Bernardino's financial woes.
Meanwhile, San Bernardino’s police and fire chiefs Thursday assured residents that the agencies will continue to aggressively respond to crime, fires and medical emergencies despite the city’s decision to seek bankruptcy protection.
Police Chief Rob Handy, who took over the job in October, said he plans to shift officers from specialized assignments, including gang units, to patrol duty to ensure quick response to reports of crime.
“We will continue to provide emergency and essential services to the residents of this community. We will do what it takes," Handy told reporters at a morning news conference at police headquarters.
Still, Handy expects more officers to leave or retire as the cloud of bankruptcy hangs over the city, an attrition that he said could eventually affect crime prevention and community policing programs.
The city already has seen an increase in violent crime this year.
Handy and acting Fire Chief Paul Drasil said officers and firefighters are concerned that they may feel the brunt of the city's fiscal crisis, given that public safety agencies account for 75% of the city’s budget. But they declined to address austerity proposals, including suggestions the city could either share fire services with other areas or contract other public safety agencies, such as the San Bernardino County Sheriff’s Department and the state firefighting agency.
Drasil said San Bernardino poses unique challenges for firefighters, with its aging urban neighborhoods and proximity to the San Bernardino Mountains.
On Tuesday, the City Council voted to seek Chapter 9 bankruptcy protection, a section of federal law for municipalities facing insolvency. Interim City Manager Andrea Miller told the council that the city faced a $45.8-million budget shortfall, the equivalent of about 35% of the city’s annual budget, and would not be able make payroll this summer.
San Bernardino is the third California city to seek bankruptcy protection in the last month, joining Stockton, in the Central Valley, and Mammoth Lakes in the eastern Sierra Nevada.
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Fri Jul 13, 2012 9:25 am |
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brianstarr
F L I N T O I D
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| sorry to say your probably right because a bankruptcy filing would mean the truth would finally have to come out and in this town the truth is being covered up with lie after lie after lie by worthless walling and mike the clown brown since they dont want you to know how bad things really are or whats really going on at city hall but i still think bankruptcy is going to happen at some point due to how bad off this city is overall |
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Sat Jul 14, 2012 8:36 am |
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Adam
F L I N T O I D
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Mon Jul 16, 2012 3:05 pm |
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brianstarr
F L I N T O I D
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| well pat im sure your totally right about why local flint officials are so against a bankruptcy filing cause they now if it happens all the dirty little money secrets will have to come out like the amount of money thats being slipped into peoples pockets |
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Mon Jul 16, 2012 3:35 pm |
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Dave Starr
F L I N T O I D
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| Adam, can you imagine the results if someone drops a lit match down one of the dozens of test wells that dot the site? |
_________________
I used to care, but I take a pill for that now.
Pushing buttons sure can be fun.
When a lion wants to go somewhere, he doesn’t worry about how many hyenas are in the way.
Paddle faster, I hear banjos. |
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Mon Jul 16, 2012 5:36 pm |
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annie226
F L I N T O I D
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Planning for long-term care expense requires that financial advisors. They think rationally, even in the worst situations and they understand the client’s situation.
retirement plan advisors
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Fri Jul 20, 2012 1:06 am |
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untanglingwebs
El Supremo
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The city retirement system has always hired financial managers and evaluated their services. Flint, like other communities, did well when the stock market did well.
The collapse of the stock market and other investment services has impacted municipal and individual pension funds nationwide.
The main problem was many muinicipalities got overly generous with their pensions or gave out early retirement packages that transferred their salary problems to the pension funds.
I never quite know where you are coming from with your out of the blue comments that often seem irrelevant to the topic. |
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Fri Jul 20, 2012 7:21 am |
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Adam
F L I N T O I D
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quote:
Dave Starr schreef:
Adam, can you imagine the results if someone drops a lit match down one of the dozens of test wells that dot the site?
I think they might be able to afford security unlike the citizens of Flint. |
_________________
Adam
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Mysearchisover.com
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Sat Jul 21, 2012 12:56 pm |
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Dave Starr
F L I N T O I D
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quote:
Adam schreef:
quote:
Dave Starr schreef:
Adam, can you imagine the results if someone drops a lit match down one of the dozens of test wells that dot the site?
I think they might be able to afford security unlike the citizens of Flint.
Not really. One of the gates along Hamilton Ave. has been knocked down & replaced by yellow tape. I'm waiting for someone to start taking all the fence down for scrap. |
_________________
I used to care, but I take a pill for that now.
Pushing buttons sure can be fun.
When a lion wants to go somewhere, he doesn’t worry about how many hyenas are in the way.
Paddle faster, I hear banjos. |
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Sat Jul 21, 2012 5:44 pm |
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zenne0105
F L I N T O I D
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quote:
brianstarr schreef:
sorry to say your probably right because a bankruptcy filing would mean the truth would finally have to come out and in this town the truth is being covered up with lie after lie after lie by worthless walling and mike the clown brown since they dont want you to know how bad things really are or whats really going on at city hall but i still think bankruptcy is going to happen at some point due to how bad off this city is overall
I have read from an article that at one time, municipalities sold bonds to fund public works projects. These investments were safe, because elected officials did not want to risk defaulting on voters. However, their very safeness led insurance companies to cover them against default for small premiums.
Nowadays, not only a municipality or two are having a hard time with these municipality bankruptcies. In fact, there are so many that declared
Chapter 9 bankruptcies,
including the three California municipalities. |
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Tue Jul 24, 2012 12:49 am |
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Adam
F L I N T O I D
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Flint Union Contracts A Major Reason For City's Financial Problems
City workers plummeted, expenditures skyrocketed
In 2006, the city of Flint operated at a $5.9 million surplus. Four years later, the city was $48.1 million in the red.
Examining how Flint ended up with an emergency manager in 2011 reveals a laundry list of issues that hit municipal finances at the same time.
“It’s hard to tie it to one thing,” said Michael Brown, the city’s current emergency manager.
At a time when the city’s revenue was evaporating, its expenses were rapidly escalating.
For example, the city’s revenue from property tax, income tax and state-shared revenue dropped a combined $19.2 million from 2006 to 2011. Yet, the city’s contributions to the pension and benefit trust funds increased by $6 million over five years. It jumped from $22.2 million in 2006 to $28.2 million in 2011, a 27-percent increase.
And while its revenue was drying up, the city had to deal with rising employee costs. Michigan Capitol Confidential examined the two contract settlements of two public safety unions from 2006 and 2007 after getting them from a Freedom of Information Act request.
In May 2006, an arbitrator ruled that the Police Sergeant’s Union members should get bonuses totaling $7,350 in the agreement. Some police sergeants saw their base salary increased 14 percent. All members received additional 2.5 percent increases in each of the two years of the contract. Then in September 2007, the city agreed to a two-year contract with its fire department union. The city gave firefighters with five years experience a $6,000 signing bonus and pro-rated the bonus for those with fewer than five years. They then gave an 11-percent raise retroactive to 2006 and then followed that with 2 percent raises in 2007 and 2008.
City records show that Flint spent $45.2 million on public safety in 2006. Within two years, the city spent $78 million on public safety.
And the costs were climbing despite dramatic cuts to police and fire. Flint had cut its sworn police officers from 259 in 2006 to 132 in 2011 and had reduced its fire department from 130 full-time employees to 75 in 2011. Yet the public safety expenses increased from $45.3 million in 2006 to $53.1 million in 2011.
In a 2011 study on the city of Flint’s finances, Michigan State University’s Eric Scorsone, a former senior economist at the Michigan Senate Fiscal Agency, wrote, “Expenditures, especially those related to labor costs, are at alarming levels.”
Overall, the city’s workforce dropped from 1,104.5 full-time jobs in 2006 to 835.3 full-time jobs in 2011. Despite a 24 percent reduction in the full-time workforce, the city’s expenses went up 28 percent. Expenses for “total government activities” increased from $109.9 million in 2006 to $140.8 million in 2011. Brown said about 80 percent of the city’s costs are tied to employees’ costs.
By the end of 2011, Brown took over as emergency manager of a city deep in red ink, and with expired union contracts.
Instead of thousands of dollars in signing bonuses and 11 percent retroactive raises some unions received years earlier, city employees were forced to take 5 percent cuts in pay and an overall 20 percent cut in total compensation, Brown said.
“That’s a major step,” Brown said. |
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Adam
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Thu Jul 26, 2012 8:34 am |
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Adam
F L I N T O I D
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Thu Jul 26, 2012 12:53 pm |
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