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  #101  
Old 02-14-2012, 04:59 PM
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http://www.wpri.com/dpp/news/local_n...-gap-in-prov?2

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PROVIDENCE, R.I. (WPRI) - The Taveras administration acknowledged Saturday that Providence has no clear plan for closing the $22.5 million shortfall in the city budget, with less than five months before the end of the fiscal year and the possibility of bankruptcy looming.

"Since taking office the administration has worked to close the gap on a $110 million structural deficit that was identified," David Ortiz, spokesman for Providence Mayor Angel Taveras, told WPRI.com. "Despite how far we've come, there is a $22.5 million shortfall remaining that is not within our ability to fix without help."
....
Earlier this month, Taveras described Providence as being on "the brink of bankruptcy" thanks in large part to the Medicare ruling and his inability so far to convince the city's largest tax-exempt institutions to contribute an additional $7.1 million to the city budget.
....
Brown University President Ruth Simmons, who's been at loggerheads with Taveras since December over the school's payments to the city, said in a statement Saturday there are "now productive and positive discussions with the city and state leadership to determine the exact nature of the university’s contributions."

Brown's 54-member governing board, the Corporation, "considered various scenarios and options for assisting the city" during a regularly scheduled meeting this weekend and "strongly endorsed the continuation of discussions to identify as soon as possible a suitable plan," Simmons said. Taveras wants $4 million from Brown, while Brown wants to give $2 million.
....
"Tax-anticipation notes are essentially payday loans where we continue to kick the can down the road - unless we are addressing the core problems that are driving this crisis," he said. Taveras has singled out the city's $901 million unfunded pension liability, which ballooned after former Mayor Buddy Cianci agreed to 5% and 6% cost-of-living adjustments in 1991.
5%/6% COLAs every year for over 20 years?

Yeah, that may make a bite.

I also love that shakedown of Brown University. I'm sorry, panhandling. Uh, request for contributions. Whatever.
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  #102  
Old 02-15-2012, 12:11 PM
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screw em. let them file bankruptcy... terminate the ridiculous pensions placed upon the back of future taxpayers.
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  #103  
Old 02-15-2012, 12:20 PM
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screw em. let them file bankruptcy... terminate the ridiculous pensions placed upon the back of future taxpayers.
They've got to go to the state for permission to file for bankruptcy, I believe.


I'm sure they will default eventually. But, as we've seen with Greece, "eventually" can take a long time to get there.
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  #104  
Old 02-19-2012, 04:57 PM
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Let's check in on the largest muni bankruptcy --

http://www.nytimes.com/2012/02/19/bu...1&ref=business

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ONE county jail here is so crowded that some inmates sleep on the floor, while the other county jail, a few miles down the road, sits empty.

There is no money for the second one anymore.

The county roads here need paving, and the tax collector needs help.

There is no money for them, either.

There is no money for a lot of things around here, not since Jefferson County, population 658,000, went bankrupt last fall. There is no money for holiday D.U.I. checkpoints, litter patrols or overtime pay at the courthouse. None for crews to pull weeds or pick up road kill — not even when, as happened recently, an unlucky cow was hit near the town of Wylam.

Some special Black History Month content:
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If you want to take a broad view, the trouble really began with the Constitutional Convention of the State of Alabama in 1901. The document that emerged there — written to empower business interests and disenfranchise African-Americans and poor whites — gives towns and counties little authority over local issues. Local taxing power rests with the state, though state lawmakers are loath to wield it today, in an age of anti-tax populism. Last summer, the Supreme Court of Alabama struck down a tax that was a crucial source of revenue for Jefferson County, finally pushing the county over the brink.

Whitney may just have been ahead of events:
Quote:
About 300 municipalities nationwide are in default on their debt, but most of them are so tiny that they draw little attention. What is more, after New York City ran into financial trouble in the ’70s, and Cleveland fell into a hole in the ’80s, the federal bankruptcy code was changed to ensure that certain types of muni bonds would keep paying interest and principal even if the issuing government authority sought bankruptcy.

Yet Chapter 9 bankruptcies have been so rare, and Chapter 9’s involving lots of bonded debt rarer still, that there is almost no legal precedent for what is happening in Jefferson County. Its lawyers are negotiating with roughly 4,000 creditors, from suppliers to hedge funds. The federal bankruptcy judge in the case is exerting enormous influence. By the time this is over, the lines between state and federal power may be redrawn when it comes to who, if anyone, can force a community to make good on its promises.

Ah, swaps:
Quote:
Desperate, Jefferson County turned to Wall Street, particularly to JPMorgan Chase. The bank was able to persuade the county to agree to a bond deal with terms that included complicated interest-rate swaps. Those swaps blew up during the financial crisis of 2008, leaving the county with even more debt than it had started with.

In addition, the project and its financing led to a variety of criminal and civil charges, with several officials and others receiving prison time. In one case, Larry Langford, a former president of the Jefferson County Commission and former mayor of Birmingham, was sentenced to 15 years in prison.

In another case, J.P. Morgan Securities dropped claims to $647 million in termination fees it had tried to make the county pay on the swaps, as part of a settlement that also called for J.P. Morgan to make payments of $25 million to the Securities and Exchange Commission and $50 million to the county.

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  #105  
Old 03-11-2012, 11:29 AM
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http://www.nytimes.com/2012/03/11/ny...tion.html?_r=2

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Even as there are glimmers of a national economic recovery, cities and counties increasingly find themselves in the middle of a financial crisis. The problems are spreading as municipalities face a toxic mix of stresses that has been brewing for years, including soaring pension, Medicaid and retiree health care costs. And many have exhausted creative accounting maneuvers and one-time spending cuts or revenue-raisers to bail themselves out.

The problem has national echoes: Stockton, Calif., a city of almost 300,000, is teetering on the verge of bankruptcy. Jefferson County, Ala., made the biggest Chapter 9 bankruptcy filing in history in November and stopped paying its bondholders. In Rhode Island, the city of Central Falls declared bankruptcy last year, and the mayor of Providence, the state capital, has said his city is at risk as its money runs out.

New York City’s annual pension contributions have increased to $8 billion from $1.5 billion over the past decade.

“We really are up against it,” Mayor Michael R. Bloomberg said during a recent trip to Albany, urging the state to reduce pension benefits for future public employees. In a radio interview on Friday, Mr. Bloomberg noted the spreading financial woes of local governments, saying, “Towns and counties across the state are starting to have to make the real choices — fewer cops, fewer firefighters, slower ambulance response, less teachers in front of the classroom.”

And Thomas S. Richards, the mayor of Rochester, recently described a grim situation facing New York’s cities in testimony to the State Legislature, saying, “I fear that Rochester and other upstate cities are approaching the point of financial failure and an inevitable financial control board — as is the case in Buffalo — unless something is done now.”

The concerns of municipal officials are validated by the ratings agency Moody’s, which downgraded the debt of Rockland County and Utica last month, and Yonkers and Long Beach last year. New York is hardly alone, and certainly not the worst; for four straight years, Moody’s has had a negative outlook for the country’s local governments. And the problems are likely to persist.

“We expect that the pressure from fixed expenditures, and pensions in particular, will continue to be a strain,” said Geordie Thompson, a Moody’s analyst. “This is where the budgetary tradeoffs will continue to be difficult. There will have to be tradeoffs that will have to be made to make those payments.”
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  #106  
Old 03-12-2012, 04:22 PM
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http://mobile.reuters.com/article/id...20310?irpc=932

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Harrisburg, Pa. to skip two debt payments
Sat, Mar 10 01:54 AM EST
By Hilary Russ

March 9 (Reuters) - Pennsylvania's distressed capital city, Harrisburg, will skip $5.3 million of debt payments due next week, the first time the city has defaulted on its general obligation bonds, to ensure there is enough cash to fund vital services.

Pennsylvania's capital of 50,000 people is mired in $326 million of debt due to the expensive retrofits and repairs of its troubled trash incinerator.
....
Holders of the affected bonds and notes do have some protection because principal and interest payments are insured by Ambac Assurance Corp., Unkovic said.

So far in 2012, there have been 21 defaults on muni debt totaling $978 million, according to Richard Lehmann, publisher of Distressed Debt Securities Newsletter, who expects the pace of defaults to increase.

"For cities and counties it's starting to happen now because they're running out of cash," he said, noting that Stockton, California, announced a default last month.

During the same period in 2011, there were 28 defaults totaling $522 million, while the full-year total was a whopping $25.2 billion, which included defaults on $18 billion of tobacco bonds that occurred when reserve funds for the issues were tapped, Lehmann said.

In a sign that Harrisburg's financial crisis was expanding to affect additional types of debt, Unkovic noted that this is the first time the city has defaulted on its general obligation debt. It has previously defaulted on revenue bonds tied to its incinerator project, and continues to not make those payments.

The payments that will be skipped consist of: $2.735 million due on the city's general obligation refunding bonds, Series D of 1997, and $2.53 million due on the city's general obligation refunding notes, Series F of 1997, Unkovic said.

The city filed a rare municipal bankruptcy, but a judge threw out the case last year.
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  #107  
Old 03-12-2012, 05:02 PM
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IIRC, New York is letting municipalities make their required pension payments by ....... borrowing the money from the pension fund.

No, I have no idea how that fixes anything either.
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  #108  
Old 03-12-2012, 05:33 PM
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IIRC, New York is letting municipalities make their required pension payments by ....... borrowing the money from the pension fund.

No, I have no idea how that fixes anything either.
Yes, you recall correctly.

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  #109  
Old 03-19-2012, 01:28 PM
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http://www.bloomberg.com/news/2012-0...-stockton.html

Quote:
National Public Finance Guarantee Corp., which insures municipal bonds against default, will participate in mediated talks with Stockton, California, under a new state law intended to forestall a bankruptcy filing, said a person with direct knowledge of the decision.

Agreeing to the talks doesn’t mean the company, a unit of MBIA Inc. (MBI), will accept a loss on the $224 million in city bonds it insures, according to the person, who declined to be identified because he isn’t authorized to speak publicly on the matter. The company also isn’t giving up its right to sue the city for failing to make payments on $32.8 million in bonds for parking garages, the person said yesterday.
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  #110  
Old 03-28-2012, 12:44 PM
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http://mobile.bloomberg.com/news/201...udget-gap.html

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Providence (1055MF), Rhode Island’s capital and biggest city, probably will seek bankruptcy court protection to deal with a budget deficit, Robert Flanders, the state- appointed receiver for nearby Central Falls, said yesterday.
“I don’t see how they can get out of it without going there,” said Flanders, a former state Supreme Court justice and a partner at Hinckley, Allen & Snyder LLP in Providence. He put Central Falls into bankruptcy in August and has since torn up contracts with city workers and cut pension benefits.

Providence Mayor Angel Taveras has put pressure on Brown University and other nonprofit organizations to help close a budget gap of at least $20 million, while Governor Lincoln Chafee is pressing lawmakers for action on measures to curb municipal pension costs.

Unsustainable retiree expenses helped push Central Falls (1058MF) into insolvency. Moody’s Investors Service cut Providence debt a step to Baa1, third-lowest investment grade, this week citing its “strained” finances.

“Bankruptcy is not the preferred option for restoring Providence’s fiscal health; it is the last option, and I will do everything in my power to prevent it from happening,” Taveras said in a statement in response to a request for comment on Flanders’ remark. “I respectfully disagree with Judge Flanders that bankruptcy is unavoidable.”
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