By Tec Jonson
Some juicy reading for a Sunday. Any parallels on our local financing? From Bloomberg.com:
April 11 (Bloomberg) -- They're talking more about Chapter 9 municipal bankruptcy in Jefferson County, Alabama, the home of the largest city in the state, Birmingham.Read the full article here.
Who can blame them?
The county is now being whipsawed by an ill-thought-out debt policy and the collapse of the bond insurers. Credit-rating downgrades all around have triggered a series of events that are no longer in the county's control, leaving it at the mercy of securities firms that have little room for maneuver themselves.
This has produced a steady series of stories in my new favorite newspaper, the Birmingham News, all about how the county is preparing to declare bankruptcy any day.
Perhaps the best article ran on Sunday, April 6. It began: "Jefferson County officials have laid the groundwork for the largest municipal bankruptcy in the nation's history while publicly saying they have no imminent plans for a filing.''
The one that ran on Wednesday, April 9, was no less compelling: "Talks on the sewer system's debt crisis aren't making progress, increasing the odds that the county will file municipal bankruptcy, Jefferson County Commission President Bettye Fine Collins said Tuesday.''
This is how it ends for the little county that was going to teach America how to use interest-rate swaps.
Comments, anyone?
8 comments:
Wouldn't it be nice if we had a local paper that actually published sentences like the one quoted above?
This sentence --- ""Jefferson County officials have laid the groundwork for the largest municipal bankruptcy in the nation's history while publicly saying they have no imminent plans for a filing.'' --- reflects exactly the kind of skeptical approach to all official statements by elected officials that characterize good newspapers. I suspect the same story in the SE would have been headlined: "County Officials Deny Bankruptcy Considered." The following story would have reported the officials' denial. Period.
This is what Moyers was talking about too as one important characteristic of good journalism: digging out information that elected officials and other powerful folk would prefer not see the light of day.
And if they can do it at the Birmingham News, the question naturally arises, why can't they do it at the Standard Examiner?
The Jefferson county problem has been in the news for awhile. By the time the Ogden City Council discusses defaulting on its tax increments, RDA, and other debt that the mayor has said is not real debt, this sort of thing will be old stuff nationwide, as will be the business and personal bankruptcies.
On another subject, I liked this letter on the ripoff that Stadium of Fire has become.
Click Here
I went to the very first one, 28 years ago! I thought it was a ripoff then. Which raises a point: Why be loyal in a free market? If the vendor is giving you a bum deal, the bond of loyalty is already broken. Feel free to go elsewhere. The economy will be better for it.
There were a lot of good letters this week.
Click Here
I do appreciate the paper, whatever I may say.
Danny:
I think for the letter writer what mattered was that the SOF had become a family tradition. The loyalty involved was more to that than the SOF management. Writer ticked off that the family tradition of spending the 4th at the SOF had been truncated now, by the management. I can understand the anger. Tales of bad SOFs probably became part of the family lore, along with fond memories of good ones. ["God, remember the two years they had that gas bag Sean Hannity MCing?" And so on.]
Have to admit, the attraction of stadium shows on hot summer afternoons and eves escapes me, but hey, diff'rent strokes for diff'rent folks. And the managers of the SOF made, I suspect, a bad business decision not providing for regular ticket buyers to get priority. But we shall see....
danny,
our mayor writes off rda debt against the city's general fund. 6 million dollars worth in 2007 and our council just lets him do it.
you ever wonder why the city infrastucture is so run down and city provided services are so lacking. wonder no more ten percent of our budget is going to pay off bad rda debt. it will only get worse as some of the mayors recent rda projects start to go negative like the rec center.
now he is claiming we have a budget surplus right when everyone else including the governor is claiming shortfalls and guess where he wants to spend the majority of those surplus dollars. thats right business development.
i dont believe we have a surplus or at least wont by the end of the year but by then it will be too late and he will have funded his pet projects and we residents will have to put up with more cuts in services.
anyone but godfrey.
Disgusted:
With respect to this part of your post only: our mayor writes off rda debt against the city's general fund. 6 million dollars worth in 2007 and our council just lets him do it.
To be fair to the Mayor, we should keep in mind that the RDA "debt" [i.e. money supposed to be paid to the city from RDA projects approved long before he took office] represented, according to the Mayor [and the council concurred], un-collectable debts. The projects approved, long ago, turned out not to be as successful as was hoped at their inception, and so were not generating the kind of revenues for the city as had been hoped for. Granting that to be so [and the Council seemed to think it was so], I see no point in carrying on the city's books as assets revenues that were never going to come in. Recognizing and writing off in timely fashion "assests" that are in fact not assets and never will be is good financial management. Carrying bad debt on the books as assets makes little sense, and can lead to bad decisions based on the false conclusion that the city's finances are healthier than they are, based on those ghost "assets." Ask any bank stuck with bad below prime mortgage backed securities how that works.
Whether the Mayor has prudently handling the city's indebtedness since he took office is quite another matter, and I share your concerns about that.
One of the cuts that has affected the whole city and the neighborhoods has been the the Spring Clean conducted by the city. How many trees, couches, yard waste, and general trash remains in the city instead of being hauled off every spring by the city. Those on fixed incomes and those without trucks to haul it off to the green waste station just lets it sit in their yards. How can we bring back some of the services the mayor has cut to divert funds for the rec center and ice towers.
not all of those rda write offs are as represented.
One of the rda write offs was the loan to the hotel that was renovated on the corner of washington and 24th st. as i recall.
now he wants to put up rda money for another hotel just one block away from where the write off is taking place. is he a slow learner or is it more important to him to take care of his fom buddies.
oh btw he didnt consult with the council about the write off it just showed up on the annual report.
he continues to move money around using the city general fund as his slush fund to provide the funds for his pet rda projects since he has committed all the rda revenues being generated from other rda projects to finance the rec center. rda has no funds left unless they borrow from the city general fund. this is where we are vunerable to financial risk. the city council should be better guardian of our money.
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