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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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untanglingwebs
El Supremo
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| Remember when Woodrow Stanley tried that. People were outraged, but it might be worth a try now. Tree thieves were stealing black walnut trees. |
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Sun May 27, 2012 3:38 pm |
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Adam
F L I N T O I D
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| I never heard about that one. I think lumber prices have gone up some with demand from China. It looks like black walnut can go for
$750 a log
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Mon May 28, 2012 12:30 pm |
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Adam
F L I N T O I D
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Mon Jun 04, 2012 7:23 pm |
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untanglingwebs
El Supremo
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And why does this surprise you? Many communities are in the same boat. For years they used early retirements to reduce labor costs and never really considered the impact to the pension funds later.
Years ago the stock market was booming and even the GM employees were making a killing in the market. Some local governmental units gave what they called a 13th check, which was based on the pension fund having a return over a certain percentage. I quess government thought the stock market roll would go on forever.
Do you remember in council the battles that went on because the three Hurley units changed from the Flint Emplyees Retirement Sytem (FERS) to the Michigan Employees Retirement Systm (MERS). It took a long time to compute what portion of the pension fund was to be transferred.
Department heads start a new budget year with a huge hole in their budget because of the funds set aside for legacy costs. |
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Tue Jun 05, 2012 7:15 am |
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untanglingwebs
El Supremo
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Searched for: CENTER FOR COMMUNITY PROGRESS
ID Num: 70518N
Assumed Names
Entity Name: CENTER FOR LAND REFORM, INC.
Type of Entity: Domestic Nonprofit Corporation
Resident Agent: AMY HOVEY
Registered Office Address: 421 GARLAND ST UNIT A FLINT MI 48503
Mailing Address: MI
Formed Under Act Number(s): 162-1982
Incorporation/Qualification Date: 8-11-2009
Jurisdiction of Origin: MICHIGAN
Number of Shares: 0
Year of Most Recent Annual Report: 11
Year of Most Recent Annual Report With Officers & Directors: 11
Status: ACTIVE Date: Present |
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Tue Jun 05, 2012 7:25 am |
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untanglingwebs
El Supremo
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Amy Hovey worked for Dan kildee under the Land bank and went with him when he created this new entity .
2011 officers at 421 Garland, unit A:
President: Dan Kildee
Secretary: Phil Shaltz of 503 S. Saginaw
VP and Treasurer?
Board of Directors:
Diane Silva Martinez of San Diego, CA.
Ellen Lee of New Orleans, LA
William johnson of Rochester NY |
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Tue Jun 05, 2012 7:30 am |
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untanglingwebs
El Supremo
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Dan Kildee created the Genesee Institute, a research branch and think tank of the Land Bank. They had some outstanding reports come out of the Institute.
However Dayne Walling purportedly worked for the Genesee Institute when he came to Flint to run for Mayor. I never saw any research or other published work with his name on it that came from the Institute.
Does the timing of this report strike you as coincidental? Or could it be a ploy to continue to help Walling explain his difficulty in maintaining a budget and his mismanagement of funds? The Kildees always come to his rescue (the Mott Foundation too it seems).
While Walling initially supported Clinton for President in the last election, he switched to the Obama team. He was a communitiy organizer for the National Voice at one time and worked in three states, including the key states of Michigan and Ohio.
Since Kildee has allegedly opened an election headquarters next to the Obama headquarters, does Walling play a role.
Does anyone know if it is true that the Mott Foundation is paying walling the balance of his salary? |
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Tue Jun 05, 2012 7:42 am |
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untanglingwebs
El Supremo
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SO DAYNE HAD TO GO TO WASHINGTON DC AND GET EDUCATED TO WRITE THIS PIECE. WHY WASN'T HE CONCERNED WHEN HE RAISED THE WATER AND SEWER RATES TWICE FOR A TOTAL 60% INCREASE WHILE MISUSING THE SAME FUNDS TO PAY FOR HIS STAFF AND OTHER THINGS.
Dayne Walling: Strategic investment opportunities are better use of State surplus than tax cuts
Published: Monday, June 04, 2012, 12:15 PM Updated: Monday, June 04, 2012, 12:16 PM
By Bernie Eng | beng1@mlive.com .
By Dayne Walling, Mayor of Flint
Tax cuts? It is being reported that the Governor and Republican legislators have come to an agreement that $90 million of the State surplus will go to an across-the-board income tax reduction.
This would miss a major opportunity to make strategic investments in our common future and pull our local communities out of the starvation diet that is hurting us now.
With the improving national and state economy, we should be choosing to return prosperity back to our cities and improving all of our schools. There are smart investments that can be made this summer that will make us all more safe and healthy. It does not make sense that the Governor's appointed manager in the City of Flint may lay off police officers and firefighters when there is a State surplus.
As the economy picks up and tax revenues are coming back into the State, it is time to put police officers and teachers back to work. Since local governments and school districts are heavily dependent on property tax revenues (and property values will take longer to recover after the recession than employment activity), the first priority in the State surplus should be to replace the public safety and education cuts made when revenues were not available. The Republican budget plan put these priorities way down on the list.
It is not right that Flint is losing teachers, police officers and firefighters even when citizens are being asked to pay additional fees and public employees are getting far less compensation. Yes, the City of Flint has a lower tax base but we can see that this is being artificially maintained by the State.
Many in our Flint community have expressed support for an increased income tax as a fair way to fund essential and emergency services. Republican leadership has not moved this proposal forward. Now it looks like we are going in reverse and will get an income tax cut equivalent to the cost of a candy bar each week when our cities and school districts will continue to starve.
It is time to put our money where our mouth is. Republicans and Democrats at the State have made cut after cut to local governments, school districts, and the state police during the difficult recession years that are hopefully now getting behind us. Now, it is time to be smart and invest in our communities and our children.
doinit4me
For Walling to now claim that he has a clue or an answer is utter nonsense. Once in office he immediately installed a bunch of hacks and continued on the same path blazed by his equally inept, or ineffective to be nice, predecessors and took money from whichever fund he could to shore up shortfalls in other funds due to his own poor fiscal management abilities until the house of cards came crashing down. It is laughable to read his comments regarding how important he now claims Police and Fire services are after refusing to bargain in good faith in order to maintain these same services. Just like most politicians, he only cares about what is best for the citizens when it suits his grandiose plans for his political future. This letter is pandering and quite nauseating.
shanedr
Just like you Dayne the state legislator's are ignoring what's best and going for getting the voter's to re-elect them. Unfortunately there are few who understand that a tax cut is a flash in the pan and will not help the taxpayers nor the economy.
So until we get politicians that will do what's best for everyone instead of trying to snow the voters into thinking they know what's best even when it's not, we'll never improve.
After seeing how you went after the little guy instead of the waste at the top I know that you're just like all the other politician's - Me First.
And Bernie, that is a really appropriate picture of Flint for this article - well done.
fwtbt
That's idiotic! I remember all of you crying when Walling "did what's best" by cutting police and fire to balance the budget, raised water rates, and all the while quietly reduced the number of his appointees. He also proposed RAISING taxes by putting a public safety millage on the ballot to fund the jail 2 years ago.
That don't sound like pandering to the voters me.
rjriley5000
Except now Walling expects all Michigan tax payers to fund Flint. We are already doing so with a large state police presence.
Flint residents need to pay for their own services just like the rest of us do. They also need to play a personal role in putting criminals in jail or making the city so hot for them that they leave.
stikimout
So, we're not referring to him as "Mayor" walling anymore, eh ?
i like it
rjriley5000
It is not right that Flint is losing teachers, police officers and firefighters even when citizens are being asked to pay additional fees and public employees are getting far less compensation. Yes, the City of Flint has a lower tax base but we can see that this is being artificially maintained by the State."
It is not right that Flint political hacks think that the whole state should prop up them up. The surplus is not a city surplus and therefore should not go to the city of Flint.
Perhaps the best way to get the rest of the people in Michigan to invest in the city is for all past and current elected officials to get together, step down and sign a binding agreement to not run for any public office in Flint for ten years. Maybe then residents could elect new leadership who actually have the public's best interests in mind.
So how about a clean sweep?
adamford
I think Michigan needs to repeal the state income tax so poor working class Democrats in mis-managaed Democrat run cities like Flint will be able to afford their exhorbatant water bills and those lucrative pension payments to city retirees.
If you're worried about property values than how about working to lower our water bills Dayne? Who wants to move to Flint and pay high property taxes, a city income tax and $1000 or so a year for water and sewer bills and then to top it off a sky high crime rate that Dayne did virtually nothing to solve.
I think it's unfortunate that Republicans Lansing Michigan are substantially increasing our state's budget instead of substantially decreasing it. If we had conservative leadership in Lansing we could be looking at a full 1-2% cut in our state income tax instead of a meager .1% but I guess Republicans are worried about keeping big government dems, unions, film industry and other special interests pacified at the expense of Michigan taxpayers. |
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Tue Jun 05, 2012 8:08 am |
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Adam
F L I N T O I D
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Tue Jun 12, 2012 7:14 pm |
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untanglingwebs
El Supremo
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This was last year and explains why Snyder is pushing his corrupt PA 4.
Perhaps the whole state needs to go bankrupt
-----------------------------------------------------------------------
New Michigan Governor Says HUNDREDS Of Municipalities Could Go Bankrupt In Next Four Years
Gus Lubin|Nov. 19, 2010, 11:42 AM|5,107|16
This week's attempted bankruptcy by Hamtramck, Mich. could be the start of an avalanche.
Gov.-Elect Rick Snyder says hundreds of Michigan municipalities are nearing bankruptcy, and the darkest hour is years away, according to Bloomberg:
There are “wealthy communities that are not in that different a position” from Hamtramck, said Snyder, a Republican who is a former computer-company executive. “They simply haven’t had the day of reckoning arrive yet that is liable to happen in the next two or three years, with the way property tax revenues are going,”
“The most challenging period is probably about 2013 to ’15. Literally, there could be hundreds of jurisdictions
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Michigan's plan to stave off bankruptcy in Hamtramck is hardly reassuring. The city would receive an emergency loan, while continuing it's suit against Detroit over tax revenue. If Hamtramck survives, it will do so with money from Michigan and near-bankrupt Detroit.
The city would receive an emergency loan, keeping it afloat long enough to settle a suit with Detroit over tax revenue.
The state has offered various kinds of emergency loan,
Read more: http://www.businessinsider.com/rick-snyder-hundreds-bankruptcy-2010-11#ixzz1y3A2VDv5 |
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Sun Jun 17, 2012 6:52 am |
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untanglingwebs
El Supremo
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Distressed Cities Weigh Bold Tactics in a New Fiscal Era
Justin Sullivan/Getty Images
By MICHAEL COOPER and MARY WILLIAMS WALSH
Published: March 31, 2012
PHILADELPHIA — Amid all the sobering discussions of what happens when cities run out of money, fiscal sleight of hand and time, the most telling detail at a conference on distressed municipalities here last week just might have been the one about the fire truck that was the wrong color.
Gretchen Ertl for The New York Times
Tony Tager shutting down a community center in Central Falls, R.I., a city that declared bankruptcy. Other municipalities are considering such a move.
Robert Stout, the former finance director of Vallejo, Calif., was talking about the spiraling public safety costs that ultimately led his city to declare bankruptcy when he mentioned the time a fire broke out two blocks from his home there, not long after the city had closed some of its firehouses to save money.
“The first fire truck that went by was yellow,” Mr. Stout recalled. “Our fire trucks are red. So the first fire truck to respond was on mutual aid from a town 20 miles away. That gives you some sense of what you are facing when you get into these situations.”
These situations, as he put it delicately, are still rare, but not as rare as they once were. A number of cities and counties around the country with long-term problems have found themselves pushed over the edge by the recession and its lingering aftermath. The audience here listened to war stories from the emergency fiscal managers that Michigan has installed in a couple of its most distressed cities. Even Nassau County, on Long Island, one of the wealthiest counties in the nation, has seen its perennially troubled finances placed under a state-appointed control board.
“This is truly a new era for dealing with troubled municipalities,” said Michael Stanton, the publisher of The Bond Buyer, a public finance newspaper, which sponsored the packed two-day conference here with Ballard Spahr, a law firm, and Public Financial Management Inc., a company that provides independent financial advice to governments around the nation.
Attempts to plug budget holes with one-time transactions are giving way to other approaches, Mr. Stanton said. The conference was devoted to a discussion of the strengths and weaknesses of the more powerful tools being used in many cities these days, including receiverships, emergency declarations and even bankruptcy.
New woes were unfolding elsewhere even as a capacity crowd of government officials, investors, lawyers and credit analysts were gathering here to discuss the trend.
In Jefferson County, Ala. — which filed the biggest Chapter 9 municipal bankruptcy in American history this fall after its sewer-construction financing fell apart and a court threw out one of its taxes — county commissioners were voting to default on a general obligation bond payment.
In Detroit, city and state officials were sparring over how much emergency aid the city might be able to get, and how much state oversight and control would accompany it.
Stockton, Calif., was in negotiations in a last-ditch effort to avoid becoming the biggest American city yet to declare bankruptcy. And just two hours west of Philadelphia, Harrisburg, the state capital, recently announced that it would default on a payment coming due to general obligation bondholders.
It all gave a certain urgency to the discussions.
Richard L. Sigal, a lawyer who has played roles in many fiscal crises, including New York City’s in the 1970s, was wary of bankruptcy, arguing that the Chapter 9 law does not bestow the power to tax, cut spending or borrow — the tools that struggling governments need. “I have yet to see a situation where bankruptcy is the right option for any municipality,” he said.
But Robert G. Flanders Jr., the state-appointed receiver for Central Falls, R.I., said his city’s declaration of bankruptcy had proved invaluable in helping it cut costs. Before the city declared bankruptcy, he said, he had found it impossible to wring meaningful concessions out of the city’s unions and retirees — who were being asked to give up roughly half of the pensions they had earned as the city ran out of cash.
“The municipality is on bended knee asking the retirees and unions to come to the table and give up their contract rights,” he recalled. “All of that leverage shifts once you have the gumption to pull the Chapter 9 trigger. And guess what? That produces agreements quicker and more effectively than otherwise.”
Others preferred the approaches some states had taken to avoid bankruptcies. Two of Michigan’s new emergency fiscal managers — Joseph L. Harris in Benton Harbor and Joyce Parker in Ecorse — talked about the sometimes unpopular steps they could take under a new state law giving them the power to reject contracts, including labor contracts.
Pennsylvania officials explained their state oversight program, in which Harrisburg and 25 other municipalities are enrolled. Natwar M. Gandhi, the chief financial officer of Washington, D.C., spoke about how giving budgetary powers to an independent officer had helped put the nation’s capital on more solid financial footing.
But some of the most urgent exchanges concerned bankruptcy, which, in the past, cities sought to avoid at all costs.
Naomi Richman, a managing director at Moody’s Investors Service, wondered aloud whether it might become more acceptable for cities to declare bankruptcy.
“Back in the ’80s, the stigma against corporate bankruptcy fell away, and it became viewed as a strategy a corporation might pursue for various reasons,” Ms. Richman said. “Recently, with the residential housing collapse, individual bankruptcy has less of stigma in society — it’s a strategy that a person might be advised to follow if they have a debt that they can’t afford. Could the same thing happen for municipal bankruptcy?”
A version of this article appeared in print on April 1, 2012, on page A19 of the New York edition with the headline: Distressed Cities Weigh Bold Tactics In a New Fiscal Era.
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Sun Jun 17, 2012 7:01 am |
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untanglingwebs
El Supremo
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Sun Jun 17, 2012 7:05 am |
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untanglingwebs
El Supremo
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Cash-Strapped Cities File For Bankruptcy
Listen to the Story
Talk of the Nation
[23 min 8 sec]
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Guests
Michael Corkery, staff reporter, Wall Street Journal
Marc Levinson, lead bankruptcy counsel for Vallejo, Calif.
Phil Batchelor, interim city manger, Vallejo, Calif.
text size AAA
October 20, 2011
Pennsylvania's capital, Harrisburg, has filed for Chapter 9 municipal bankruptcy. The filing is being contested in court. It's the sixth city to file for protection in 2011, and raises questions about whether Harrisburg can afford to continue to provide the expected level of services to residents.
Copyright © 2011 National Public Radio®. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.
NEAL CONAN, host: This is TALK OF THE NATION. I'm Neal Conan, in Washington. We all know about the debt problems of the federal government. Many states are squeezed, as well. Now more and more cities are in trouble. Harrisburg, the capital of Pennsylvania, petitioned for bankruptcy last week. That filing is being contested in court right now, and it may be weeks before we know how this all shakes out.
But Harrisburg is the sixth city to file for protection under Chapter 9 this year, and, depending on how things play out, we may see the largest municipal bankruptcy in U.S. history later this week in Jefferson County, Alabama, which includes the city of Birmingham.
And when city budgets suffer, sometimes essential services can fall through the cracks: Bridges and roads don't get repaired, budgets for firefighters and police get slashed, teachers laid off, and in a new development, bondholders can get paid off before pension checks go out.
How's this playing out where you live? 800-989-8255. Email: talk@npr.org. You can also join the conversation on our website. That's at npr.org. Click on TALK OF THE NATION.
Later in the program, an evangelical professor on the anti-intellectualism of many fundamentalists. But first, Michael Corkery joins us from Harrisburg. He covers municipal finance for the Wall Street Journal. Nice to have you with us today.
MICHAEL CORKERY: Hi. How are you?
CONAN: And I know you're working on a story about what a city in bankruptcy looks like. What are you hearing today?
CORKERY: That's right. So it's another interesting day in Harrisburg. The governor has just - the governor of Pennsylvania has just signed legislation that would effectively result in the state takeover of the finances of Harrisburg, which is Pennsylvania's capital. And this comes after last week's bankruptcy filing by the Harrisburg City Council becoming, you know, one of the latest cities to declare bankruptcy this year.
CONAN: And what would bankruptcy mean?
CORKERY: Well, it's - one, it's unclear, in part because it's contested. The city council has filed bankruptcy, but the mayor opposes it. The state also opposes it, and they're trying to get it thrown out of bankruptcy court. But it will be weeks before we see a resolution on that question.
In the meantime, you know, police are being paid, teachers are being paid, bondholders are being paid. So it looks like a normal, functioning city. But, you know, sort of symbolically and the reputation of the city has certainly been tainted, you know, particularly because it's Pennsylvania's capital, and it's declared bankruptcy.
CONAN: And a lot of the cities are in - that are in trouble are in trouble because of some great, big project that they started that they hoped would help things along. And in Harrisburg's case, it was a generator, a trash-burning generator for electricity.
CORKERY: Right. That's right. Harrisburg had an incinerator that it had hoped would be self-sustaining and would generate enough revenue that it would actually make the city money. But, of course, after some problems with the construction and after they borrowed $300 million to try to fix it, many, many refinancings, they found themselves way overloaded in debt. And it's something they just cannot pay, which is what brought them to this moment.
And essentially the city's insolvent, and it needs help.
CONAN: The irony is that trash-burning plant is now actually making money - not enough to pay off the debts, but it is actually making money. In Alabama, the problem is a big sewer system, and that's the city of Birmingham. That's rather a larger place, too.
CORKERY: That's right, same - very similar situation. Birmingham had a sewer system. They did a big upgrade, you know, in the beginning of the last decade, borrowed way too much money, took on all sorts of complex swaps and derivatives that ended up going south on the county. And again, they, you know, took on too much debt.
You know, it's definitely a theme with these two cities and in others, where, you know, cities essentially try to get ahead of themselves. You know, they try to take on complex businesses or enterprises that they're just not equipped to do. They mix on, you know, in the case of Jefferson County, some very complicated financing schemes brought to them by Wall Street bankers, and you have a financial disaster.
CONAN: And maybe $3 billion in bankruptcy later this week - again, there's a vote later this week. Boy, it's complicated. But that would be the biggest in American history. It is interesting: Obviously, in better times, a lot of these problems can be papered over if you're still getting a lot of tax revenue.
CORKERY: That's right. So these problems are hitting where cities are facing the problems that states and the federal government are facing. You know, revenue is down. You know, the housing market, I mean, you know, cities get their taxes from, you know, property taxes. Property values are way down.
So they're kind of out of solutions. They're also - you know, cities and counties are getting hit. They're getting squeezed the most. You know, the cuts are starting at the federal government, pushed down to the states. The states are then pushing cuts in aid down to the local level. And it's the local level where the biggest squeezes are feeling. So that's - in the municipal world, that's where the biggest - weakest links are.
CONAN: And we see situations - I think it was Topeka, Kansas, voted a couple of weeks ago to decriminalize domestic violence and misdemeanors because of budget cuts. They didn't have the money to enforce these laws.
CORKERY: Right. It's - they're going down to bare bones. I mean, they're cutting as much as they can. But, you know, in this case, it's - in Harrisburg's case, it's debt. They just can't find the money to pay for it.
In many, many other places, it's things like pensions, where, you know, these are liabilities and promises that were made years ago that are getting bigger and bigger. And again, they're just - there just isn't the will to raise taxes or even the ability to raise taxes in this economy to pay for these things, which in another bankruptcy case in Rhode Island, it's the pensions that actually, you know, prompted the city to file for bankruptcy in the summer, hopefully trying to renegotiate some of those contracts with the retired city workers.
CONAN: And an interesting law in the state of Rhode Island, they passed a law saying if there's a shortfall of income, the bondholders get paid off before the pensioners do.
CORKERY: That's right. It's actually - it's a very groundbreaking law. It still has to hold up to legal scrutiny and a court test. But if it does, that could essentially be copied by other cities, because what it does is it takes away the biggest risk of bankruptcy, which is that, you know, that bond investors will no longer invest in a city's bonds because they're afraid, you know, you'll go into bankruptcy or default.
This would essentially insulate them and allow a city to go into bankruptcy, sort of a strategic bankruptcy like we saw in the case of GM and Chrysler, deal with what they need to deal with - in many cases pensions - and at the same time still have access to the capital markets. I mean, it's sort of the best of all possible worlds if you're a struggling municipality. But again, there's some real legal issues.
That law in Rhode Island was passed right before the city of Central Falls went into bankruptcy. I think the unions that represent the public workers there I think have a pretty strong case that, you know, this is potentially unfair. It's, you know, upholding one creditor over another.
CONAN: So we'll have to see how that shakes out, as well. We've been talking a few individual cases, but Harrisburg is not alone in Pennsylvania, the situation in Alabama not unique. There are many places in California, other cities and municipalities around the country, that are - well, they're not in bankruptcy, but they're approaching the edge of it.
CORKERY: That's right. I mean, bankruptcy, for decades, was something you'd never consider as a city. I mean, it was so taboo, the idea, the taint that it would bring, you know, to your city not only just in the bond market, but just generally, the reputation that it would - the harm that it would do to your reputation made it quite prohibitive.
But we're seeing it. More and more cities, whether they're in it or considering it, it seems to be a viable option. And that represents a big change, I think. And I think there's a couple reasons for that. One is what we talked about, the problems are intractable, and there's just no way out. But I think two, I think there's just a shift in the mentality about default and bankruptcy, generally.
I mean, we, you know, just went through a mortgage crisis where people did the unthinkable: They walked away from houses and mortgages and they defaulted. And I think, you know, the big B word is not such a taboo anymore, and you're seeing that on the municipal side, as well.
CONAN: Michael Corkery, thanks very much for your time today. We look forward to your story tomorrow in the paper.
CORKERY: Okay, thank you.
CONAN: Michael Corkery covers municipal financial issues for the Wall Street Journal, joined us today from Harrisburg, Pennsylvania, which as he explained, is undergoing some difficulties.
Vallejo, California, filed for bankruptcy in May, 2008, as the housing boom collapsed and the city could no longer afford to pay its workers. A judge recently approved the city's Chapter 9 plan. In a couple of weeks, Vallejo should be out of bankruptcy. Marc Levinson is a bankruptcy lawyer in Sacramento and the lead counsel for the city of Vallejo in its Chapter 9 case, and joins us now from a studio in Sacramento. Nice to have you with us today.
MARC LEVINSON: Good afternoon, Neal.
CONAN: And as we just heard, bankruptcy seems to be - obviously, it's a last resort, but Vallejo is very close to being out of bankruptcy, the city still, though, struggling. What's the lesson learned after you go into bankruptcy?
LEVINSON: Well, you have to understand that Vallejo did not file a bankruptcy case as a strategy. It filed for bankruptcy relief because it ran out of money. It simply couldn't pay its bills. And its choice was to default on obligations and get sued and ultimately have to pay the money, or violate California law by borrowing from restricted funds to pay its general obligation debts, or file bankruptcy.
So it filed bankruptcy because it had no choice. Bankruptcy is always a bad choice, whether it's Chapter 11 or Chapter 9. But it becomes a very good choice when it's the only choice.
CONAN: And that is, more and more, the situation of places like Harrisburg and other places?
LEVINSON: Well, I can't speak to Harrisburg and Jefferson County other than what I read in the media or hear in the media. But what I can tell you is that Vallejo filed in May of '08, and there hasn't been a systemic failure of a California city since then.
And why is that? Because Vallejo has helped set some of the ground rules for what can and cannot happen in a Chapter 9 case. And cities and their creditors have been able to work out arrangements to avoid bankruptcy since. And that's the way it ought to work.
That's the way it works in Chapter 11, where you kind of know the ground rules, and you do your best, whether you're the debtor or the creditor, to avoid bankruptcy and the cost and the uncertainty and all the other parade of horribles that Michael talked about.
CONAN: We're talking about cash-strapped cities and what happens after a city or county files for bankruptcy and what pushes it to the edge. How's this playing out where you live? Give us a call: 800-989-8255. Email us: talk@npr.org. Stay with us. I'm Neal Conan. It's the TALK OF THE NATION, from NPR News.
(SOUNDBITE OF MUSIC)
CONAN: This is TALK OF THE NATION, from NPR News. I'm Neal Conan. After the housing bust, a number of states struggle to pay their bills. The steep drop in property values meant less revenue from property taxes.
It's a problem now playing out in many cities around the country, including a number that filed for bankruptcy protection. The drop in revenue raises a number of questions about whether cities and counties can continue to offer the services that residents expect. Bridges and roads don't get repaired, budgets for firefighters and police get slashed, teachers laid off, and in a new development, sometimes bondholders can get paid off before the pension checks go out.
How's this playing out where you live? 800-989-8255. Email us: talk@npr.org. And you can join the conversation at our website. That's at npr.org. Click on TALK OF THE NATION. Our guest is bankruptcy attorney Marc Levinson, the lead bankruptcy counsel for the city of Vallejo, California in its Chapter 9 case. And I wanted to ask you: Is Chapter 9 such a dire prospect, that sometimes cities can use it effectively as a threat?
LEVINSON: The short answer is yes. Bankruptcy benefits the city because it stops lawsuits. It enables it to reduce the payments that it has to make. But ultimately, it's very expensive, very time-consuming. And every dollar that's spent on the bankruptcy process - on people like me, on lawyers for the lenders - is a dollar that ought to be used to repair bridges and pay firefighters. There's no question about that.
So if the parties can sit down in good faith and negotiate a deal to avoid bankruptcy, that's intelligent. That's what ought to happen. And again, that's what has been happening in California.
The problem is that bankruptcy does not create revenue. It only enables the debtor - whether, again, Chapter 9 or Chapter 11 - to readjust - to adjust its debts. So when you have a revenue drain, as we do in California because of the housing bust, the bankruptcy cannot fix that. All it can do is try to adjust the debt to deal with the reduced revenues that are coming in.
CONAN: We want to hear how this is playing out where you live. Let's start with Mike, Mike with us from Dunn County in Wisconsin.
MIKE:
Good afternoon. I just turned on the radio here, on the wonderful show that you have here, unfortunately on a very unfortunate topic. But I was a police officer for 23 years in a town here in northern Wisconsin, a pretty good-sized municipality that unfortunately got involved in some very poor investments in some projects, construction projects and some developments that fell under.
And they literally just laid off the entire police department and brought back those of us with seniority to work as security guards with less benefits and less wages. So after 23 years of being a police officer with this department, I now work a rotation, a Monday-through-Friday rotation, and weekends are covered by the county, as a security guard - basically underpaid or a security guard that makes substantially less than what I used to make.
And we're fighting to maintain some of the benefits and the things that we had contractually obligated that were part of our, you know, our - what our benefits plan that we're trying to fight to keep, because we're in danger of losing most of that, as well.
CONAN: The pensions in particular?
MIKE: The pension, yes, is one of them.
CONAN: And I wondered, Marc Levinson - and I know that the laws are different in different states. But if a city declares bankruptcy, can it get out from under its pension obligations?
LEVINSON: Well, you've got it right, Neal. The laws are different in different states. All I can tell you is that in Vallejo, in our plan of adjustment, the city did not attempt to alter pension benefits, and that was a decision that was made for a number of reasons that are probably privileged.
But one of them that's obvious is that the city did, through its plan, adjust the health benefits that it was paying to its retirees, the so-called OPEB. And the harm to pensioners was great. Reducing the pensions would have been even greater, and there's only so far that the city would go to hurt people like Mike, who devoted their careers to the city. And some don't have the ability to re-earn the money.
But again, it is a matter of local law, and it will be the fight over the next three, five years throughout the country about the ability of local governments and state governments to reduce pensions to people who worked their lives in order to earn the pensions. That's the fight we'll see coming up.
CONAN: Mike, thanks very much for the call, and sorry for your situation.
MIKE: Thank you.
CONAN: Let's see if we can go next to - this is David, David calling from Tucson.
DAVID:
Yes, hello, Neal. I'm past a president of Service Employees International Union with Pima County government. I'm currently president of Pima County Association of Active and Retired Employees. And what we've seen is the consistent cost shifts from the state to Pima County government. We've watched our workforce go ahead and shrink by one-fifth.
We've seen retirees thrown off the availability of a health care plan once they've left service. We've seen attendant care health - home health care attendant workers privatized. The county nursing home was just sold off to go ahead and add $6 million to the general fund. But simultaneously, the state wants to shift care of prisoners on low-level felonies to county government.
So what workers have experienced is a loss of income due to rising health care costs as costs have been shifted to employees. We've seen state retirement contributions have to increase for county employees. And the folks are losing money. We're solvent, but a lot of this is done on the backs of the workers, the civil servants.
CONAN:
Well, David, thanks very much, appreciate that. And I think that's happening in other places, as well. We've been talking about Vallejo, California. Joining us now is Phil Batchelor, who was brought in as interim city manager there. Nice to have you with us today.
PHIL BATCHELOR: Thank you, Neal. Nice to join you.
CONAN: And would you recommend bankruptcy for anybody else?
BATCHELOR: No. I think bankruptcy is the last alternative. I think, you know, you need to look at what the ramifications are of going into bankruptcy. It's not just about money.
CONAN: What else is it about?
BATCHELOR: It's about the cost of the people that are involved in it. For example, what is it like once a city declares bankruptcy and they're under the banner of bankruptcy? What does the word bankruptcy equate to in most people's minds? You know, is it insolvency? Yes, but it's other things, too.
It is dysfunction. It is, you know, broken. And it's very difficult, not only for the citizens of the city to be living in a city that's considered to not be functioning properly, but the employees. The employees are caught up in this.
Once we declare bankruptcy, we're not suddenly off the hook. We then begin, as Marc indicated, we have to reduce the expenditure levels in the city. In 2008, when the city declared bankruptcy, filed for it - for Chapter 9, as Marc talked about - we then began a process of reducing our expenditure level to match the revenues. The expenditure level was at $83 million. The revenues were $65.
CONAN: Yeah. And is the answer sometimes to punt problems down the road, for example, maintenance on city facilities?
BATCHELOR: Absolutely. So what happens, we started to make reductions. Our fire department, we have eight fire stations. Three of them were closed. Four engine companies were disbanded. Our police department saw 47 percent decrease. We stopped paving most of the roads that we didn't have federal funds to pave.
CONAN: And what does the future look like?
BATCHELOR: Well, we are in the process - we're just about out of bankruptcy, as Marc and the Orrick team have done a wonderful job working with us and getting us out of it. And it's just a matter of the technicalities to be out, but for all practical purposes, we're out, and we're beginning to rebuild.
We went to the federal government and said: What can you do to help us? They said: We've got our own problems. The state of California has multi-billion-dollar problems, also. So we're on our own.
CONAN: Marc Levinson, you talked that Vallejo, unique in California, but obviously not elsewhere, as you read in the media. Is this going to be a growing problem?
LEVINSON: You know, the commentators are split on this. Some people see the coming flood, and others say, no. This is a political issue that can be solved by legislatures and taxpayers. No one really knows. All of this is new, but what I do see is that cities are - and local governments generally are deferring infrastructure maintenance. They're cutting back on the workers. They've cut to the bone.
When Vallejo filed its bankruptcy case, it had already cut everything that was possible to cut legally. It wasn't funding library and museum services. It had reduced repairs on the police vehicles and the like. And sooner or later, that catches up to you.
I forget if it was you, Neal, or Phil who mentioned, you know, kicking the can down the road.
CONAN: I think it was me. Yeah.
LEVINSON: That's what governments have done, is that they've always been able to refinance. But now as they lack the revenue to refinance, they're making the cuts. And sooner or later, something has to give. And when you factor in the pensions that are getting - the pension obligations that are getting larger and larger and larger - and that's what threw Central Falls in. That's what threw Pritchard, Alabama, into bankruptcy. Sooner or later something has to give.
And either there have to be voluntary concessions, or there will be bankruptcies. Hopefully, the legislatures will step up and fix the problems, but, you know, I don't want to get political but I haven't seen the political will in state legislatures to help bail out the cities. Which, as Michael said earlier, are the recipients of the cuts and have nowhere else to turn because they're at the bottom of the food chain.
CONAN: Marc Levinson, thanks very much for your time today |
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Sun Jun 17, 2012 7:26 am |
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brianstarr
F L I N T O I D
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| well adam i have to say that flints going to be in bankruptcy in probably less than three years and in case you havent noticed they keep shoving all these businesses downtown and it makes no difference because the city as a whole is too far gone so what your going to have is a upgraded downtown surrounded by a crime ridden wasteland of a city whats going on downtown is not going to solve anything cause the citys too far gone overall all you have to do is drive out of the downtown area in any direction |
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Tue Jun 19, 2012 2:55 pm |
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Adam
F L I N T O I D
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Stockton, Calif., Could Go Bankrupt
Stockton, Calif., could become the biggest U.S. city to file for bankruptcy as local officials struggle to restructure millions of dollars of debt. Council members met Monday night. The city had until 11:59 p.m.to reach a deal with its creditors under a new state mediation law designed to help municipalities avoid bankruptcy. Stockton spokeswoman Connie Cochran said those negotiations were confidential, and that nothing would be announced at the deadline. |
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Adam
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Tue Jun 26, 2012 2:01 pm |
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