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| Image: Giotto di Bondone (1267-1337), Basilique Assise, Legend of St Francis, St Francis Giving his Mantle to a Poor Man. There's been bad news on the city budget front... sort of... maybe.... Before I get to that I want to recognize the glorious level that government spending has reached in our country and state. The federal debt has reached $12,245,872,000,000. We have a population of 307,000,000. So each person in the US owes roughly $39,900. Recent suggestions by our government that they will increase the debt ceiling by $1.43 trillion would add $4,766 to that individual debt. As the head of a family of 4, my wife owes the federal government $179,000. I'm just happy she wears the pants in the family, otherwise that crushing debt would depress my every living moment. On the state front, California has a population close to 37 million, and a long term debt of $83.5 billion (note: I should probably double check this number... seems too low). This means each Californian owes about $2,300. Now, that state debt is more reasonable, especially considering the fact that we can benefit from things like public lands and roads. I know it seems unrealistic to consider the debt of government as our own debt. I'm not really going to have to write a check for $180,000 to pay for my family of 4 (I'm sorry, my wife isn't really going to have to write that check). It seems unrealistic, but it's not. The fact is she will have to write that check. And it will be on top of our existing tax liabilities. We should probably be happy that our city is not suffering this crushing debt. But the reality is they too are having problems. And we will have to pay for it in one manner or another. Preliminay estimates by the Finance Department suggest that next year's City of Chico budget deficit may reach as high as -$4 million. The published estimate is -$1.7 million. This is not long term debt, as I discussed earlier regarding federal and state money. This is the day-to-day checking account balance. The Finance Department was clear that this was a rough estimate that shouldn't be considered highly accurate until more data is available. The data needed to refine the city budget estimates is the sales tax income for the city. I will go out on a limb and forecast that sales tax income for the City of Chico will continue to decline for the period this estimate will cover. If the city is currently estimating a deficit -$2.3 million worse than the estimate they made last year, then I think a 10 year budget deficit in the area of -$30 to -$40 million is likely. The 10 year deficit is currently estimated to be -$18 million. If this turns out to be the case then all of the budget cuts, while significant, will have made little impact on the 10-year deficit predicted back in 2006. It's hard for me to imagine what the city will cut if this preliminary predicition becomes reality. An 8-10% cut in General Fund spending would be needed to close a $4 million gap. It's fair to say that the city is tracking their deficit, and making spending corrections on-the-fly. It's also fair to say that they have not implemented financial planning that attempts to produce ongoing budget surpluses. It's kind of like bailing out a boat with the emphasis being on using the smallest bucket available. |
Crushing Debt
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Lon
About Me: Fasten your seatbelts for an exhilarating trip through Chico's public policy; I guarantee it's marginally better than public access TV.
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Hey Lon
On the state front -- no need to double check your numbers. Wall Street Journal reports the debt at $64 billion, so you are not too low, but are probably predicting the future.
http://online.wsj.com/article/SB10001424052748704586504574654673186751100.html
Its a good article. Unlike the federal government California just cannot print more money, but the debt basis is not astronomical. Just pretty damn impressive.
And yes I read the Wall Street Journal online -- my measly 401K is not going to invest itself. . .
Decent article, a little rosy though. I'm glad the number I came up with is in the ball-park. I suppose there is a difference between general obligation bond debt ($64b) and total long term debt ($83.5b).
The article cites the difference between what California contributes to the US government in taxes and what it gets in return. This was used as an example of how our economy floats the nation. The author, tongue in cheek, suggests we'd be better off if we seceded.
But with 10%+ of the US population, we're also responsible for 10%+ of the US debt. Seceding would be the ultimate dine-and-dash.
Lon
we need to go back to those covert armies that covered their own expenses by dealing drugs. Reaganomics.
Predatory Lending is a major contributor to the economic turmoil we are currently experiencing.
Here is an example of what I am talking about:
Scott Veerkamp / Predatory Lending (Franklin Township School Board Member.)
Please review this information from U.S. Senator Jeff Merkley regarding deceptive lending practices:
"Steering payments were made to brokers who enticed unsuspecting homeowners into deceptive and expensive mortgages. These secret bonus payments, often called Yield Spread Premiums, turned home mortgages into a SCAM."
The Center for Responsible Lending says YSP "steals equity from struggling families."
1. Scott collected nearly $10,000 on two separate mortgages using YSP and junk fees. 2. This is an average of $5,000 per loan. 3. The median value of the properties was $135,000. 4. Clearly, this type of lending represents a major ripoff for consumers.
http://merkley.senate.gov/newsroom/press/release/?id=A09C6A80-537A-4EB1-83C5-31925F046B6F
Omigod, a real conversation about the banks, can't resist. This is a lot more interesting than the Frisbee Golf cavalcades.
so, did you see Ray Suarez interview former bank regulator Bill Black on Lehrer last night?
http://www.pbs.org/newshour/bb/business/jan-june10/solman_02-17.html
He reminded us that after the old "savings and loan scandal" (remember Neal Bush and his gold-lined executive toilet?), the perpetrators went to the federal pen. Sure, you heard reports of "country club prisons" - that was hype. They might have been allowed to play tennis, but they were incarcerated, away from their big teak desks and their mistresses. I think they made them clean their own toilets too, now that's some justice.
He also reminded us that not one perpetrator has even been indicted in this latest mess. And it's all right there. We caught them in the cookie jar, in fact, we caught them running away with the cookie jar, and the government doesn't do anything. Just business as usual.
Because, if you look at the campaign donations, it's the same old story - these corporations dole it out both ways. Both sides of the aisle get their money from the same people. Duh. So we continue to live in a world where the corporations are the raptors and we are the squirrels and rats.
Recently our credit card company tried to pull a fast one that should be illegal but isn't. First they sent this letter saying, if we were late, they'd raise our rate. So, the next bill came, I sent my payment and it was automatically deducted from my checking account, as always. But when the next bill came around, they tried to say I paid late! Tried to foist us with a $39 late charge and a new interest rate! Boy, was that a fun phone call, to the Philipines. I told the guy, I got my checking statement right here, it shows the payment was taken well ahead of the due date. He was all over himself with apologies, didn't even ask me for proof, just took the charge off. You know it's a scam when they don't fight back. I wonder how many people they got with it.
Jerry Olenyn just talked about another kind of credit card scam on the local news the other night.
So I am debating whether or not I should make copies of all my paper and notes and send them to Herger. Will he do anything about it? Hmmmmm. I'll let you know if I get anything interesting.
It's going to dump this weekend. Sorry, I need the rain, I just reseeded a lawn and transplanted a bunch of shrubs (found a huge pile of uprooted privets in the park, just what I needed to keep my new neighbors from seeing me nekkid). Maybe we will be able to help you at some point in the future. We got a good wheelbarrel AND a little cement mixer. We pour alot of sidewalks, etc. Talk to you when the weather is better.
Sorry to be such a chatterbox. I finally got over that cold and I feel like Atom Ant!
http://www.youtube.com/watch?v=Y3g5G0PFuXQ