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A little something from over at Mish's site

 

City of Houston

Disturbing Financial Facts---October 2009

By: Bob Lemer, Aubrey M. Farb and Tom Roberts

 

The City of Houston is financially broke and it appears that the mayor who takes office in January 2010 may have to captain the City through bankruptcy procedures.

The City’s unrestricted assets were $1.2 billion short of the already recorded

corresponding liabilities these assets

 

......

 

The City is in a real financial dilemma, because now its two principal sources of general fund revenues are in trouble---sales taxes and property taxes. Sales tax revenues already are dropping significantly and property tax revenues will commence dropping at an even more rapid rate after the next annual appraisal and assessment process. And the City will have to go to the voters for any contemplated rate increases in either the sales tax rate or the portion of the property tax rate allocable to operations.

 

It appears to us that there may be no viable alternative to bankruptcy proceedings and thereby positioning the City to regain control over its overspending, through addressing structural spending problems such as overstaffing and overly generous employee benefits.

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Another week goes by....

 

...and FRONTLINE hits it out of the park again

 

Recession special about folks that are out of work.... fascinating

 

 

Video Here ------> FRONTLINE

 

Summary

 

As the U.S. unemployment rate hits a 25-year high and the Dow Jones Industrial Average hits a six-year low, award-winning FRONTLINE producer Ofra Bikel chronicles the recession's impact on one unlikely American neighborhood -- New York's Upper East Side.

 

In Close to Home, Bikel sets up her cameras in the hair salon she's patronized for 20 years. It's an intimate space where she has come to know well the surprisingly diverse clientele -- from athletic trainers and housewives to high-end bankers, actors and opera singers. Despite expectations that this neighborhood is a secure bastion of privilege, these days, when clients get in the chair, they offer a window into the country in recession: Some are broke, others don't have a plan, and they're all looking to commiserate.

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A little something from over at Mish's site

 

 

Just another example of big giant sucking sound of overbloated clueless government enriching themselves at the taxpayer expense....

 

This section pretty much sums it up....can imagine there are many other cities in the same boat.....

 

Apparently the City has no idea as to what has transpired financially since June 30, 2008 or will transpire this fiscal year ending June 30, 2010, on the full accrual basis of accounting. But even on the modified accrual basis of accounting (essentially cash basis) followed by the City and all other municipalities, the $236.8 million fund balance in the City’s general fund as of July 1, 2009 (the beginning of this current fiscal year) would not exist except for the City having deposited the proceeds of pension obligation bonds into the City’s general fund instead of depositing them in their legally required immediate destination, the pension plans’ bank accounts.

 

The City is in this dangerous financial position because its total spending since fiscal year 2003 has greatly outstripped its total revenues in that period. And the rate of growth in the City’s total revenues since 2003 has, in turn, greatly outstripped the City’s rate of growth in population plus inflation.

 

Thus the City’s problems are a result of greatly overspending and not a result of insufficient revenues. All of this occurred before the current severe recession. Now the City has the added burden of the recession.

 

The City is in a real financial dilemma, because now its two principal sources of general fund revenues are in trouble---sales taxes and property taxes. Sales tax revenues already are dropping significantly and property tax revenues will commence dropping at an even more rapid rate after the next annual appraisal and assessment process. And the City will have to go to the voters for any contemplated rate increases in either the sales tax rate or the portion of the property tax rate allocable to operations.

 

It appears to us that there may be no viable alternative to bankruptcy proceedings and thereby positioning the City to regain control over its overspending, through addressing structural spending problems such as overstaffing and overly generous employee benefits.

 

 

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Edging Toward a Turn- Professional Edition

by Lee Adler, Tuesday, October 27, 2009, in Professional Edition, Today's Markets | Permalink |Comments (0) Edit Intermediate indicators remain on the cusp of clear signals of an important turn. Click here to download complete report in pdf format (Professional Edition Subscribers). Try the Professional Edition risk free for thirty days. If, within that time, you don’t find the information useful, I will give you a full refund. It’s that simple. Click here for more information.

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Just another example of big giant sucking sound of overbloated clueless government enriching themselves at the taxpayer expense....

 

This section pretty much sums it up....can imagine there are many other cities in the same boat.....

 

Apparently the City has no idea as to what has transpired financially since June 30, 2008 or will transpire this fiscal year ending June 30, 2010, on the full accrual basis of accounting. But even on the modified accrual basis of accounting (essentially cash basis) followed by the City and all other municipalities, the $236.8 million fund balance in the City’s general fund as of July 1, 2009 (the beginning of this current fiscal year) would not exist except for the City having deposited the proceeds of pension obligation bonds into the City’s general fund instead of depositing them in their legally required immediate destination, the pension plans’ bank accounts.

 

The City is in this dangerous financial position because its total spending since fiscal year 2003 has greatly outstripped its total revenues in that period. And the rate of growth in the City’s total revenues since 2003 has, in turn, greatly outstripped the City’s rate of growth in population plus inflation.

 

Thus the City’s problems are a result of greatly overspending and not a result of insufficient revenues. All of this occurred before the current severe recession. Now the City has the added burden of the recession.

 

The City is in a real financial dilemma, because now its two principal sources of general fund revenues are in trouble---sales taxes and property taxes. Sales tax revenues already are dropping significantly and property tax revenues will commence dropping at an even more rapid rate after the next annual appraisal and assessment process. And the City will have to go to the voters for any contemplated rate increases in either the sales tax rate or the portion of the property tax rate allocable to operations.

 

It appears to us that there may be no viable alternative to bankruptcy proceedings and thereby positioning the City to regain control over its overspending, through addressing structural spending problems such as overstaffing and overly generous employee benefits.

 

 

After reading the article I made some calls and got additional information. I am not sure that this matters in the big scheme of things, but here again there is a split between cash and accrual accounting. The debt and the obligations mentioned in the article are considered to be all due now (accrual basis accounting perhaps), but the city may be on a cash basis and thus the full amount of the obligations are not all due at this time. Again I am not sure this discrepancy between cash and accrual is even important in bankruptcy court. I do have some reason to believe in the comments quoted in Mish's article.

 

I am writing this only in response to the several comments on this board and to once again mention cash and accrual basis accounting problems highlighting how messed up things are..

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Another week goes by....

 

...and FRONTLINE hits it out of the park again

 

Recession special about folks that are out of work.... fascinating

 

 

Video Here ------> FRONTLINE

 

Summary

 

As the U.S. unemployment rate hits a 25-year high and the Dow Jones Industrial Average hits a six-year low, award-winning FRONTLINE producer Ofra Bikel chronicles the recession's impact on one unlikely American neighborhood -- New York's Upper East Side.

 

In Close to Home, Bikel sets up her cameras in the hair salon she's patronized for 20 years. It's an intimate space where she has come to know well the surprisingly diverse clientele -- from athletic trainers and housewives to high-end bankers, actors and opera singers. Despite expectations that this neighborhood is a secure bastion of privilege, these days, when clients get in the chair, they offer a window into the country in recession: Some are broke, others don't have a plan, and they're all looking to commiserate.

 

 

Doesn't give the warm fuzzies on Bank credit card assets, does it?

 

"How did you pay for it?"

 

"I charged it."

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