Nine Broke Cities
Via Yahoo! News, the economic and business blog 24/7 Wall Street rounds up the municipalities in the US that are in the worst economic shape:
1. Central Falls, RI
2. Pontiac, MI
3. Jefferson County, AL
4. Harrison, NJ
5. Detroit, MI
6. Salem, NJ
7. Riverdale, IL
8. Stratford County, NH
9. Camden, NJ
These are the nine that have a Moody's rating of Ba2 or lower -- I didn't know there was lower -- but what's interesting is -- aside from the terrific showing from the Garden State! Way to go, New Jersey! -- is the reasons why some of these towns are in such trouble. It's pretty much what you'd guess, but the details are illustrative. From 24/7 Wall Street:
Each of these municipalities faces a unique situation, Moody’s explains, and the list is not indicative of a greater trend. Most municipalities, Moody’s writes in the report “face deeper and longer-standing problems than investment-grade issuers.” Analysis by 24/7 Wall St., however, reveals a number of commonalities between the lowest-rated areas.
For instance, a number of the municipalities on the list are facing shrinking tax bases possibly exacerbated by the recession and high unemployment. Some cities, such as Detroit and Pontiac, have had their economies devastated by the recession. Their populations have decreased dramatically and struggling major tax-paying corporations have contributed much.
Other cities have excessive liabilities that they are unable to meet. Central Falls, RI, declared bankruptcy in August due largely to its bloated pension plan. Strafford County, NH, spends two-fifths of its budget on a single nursing home. It funds residents’ Medicaid, but is not receiving full reimbursement from the state, causing multi-million dollar deficits.
Other municipalities have simply made bad investments. Harrison, NJ, built a $200 million sports arena that has not brought in the amount of money the city was expecting. Similarly, Salem, NJ, built a large office building downtown with the intention of leasing office space. But construction delays caused lease payment delays and money has been taken from the debt fund numerous times.
Shrinking tax base, changes in the economy, okay, I get that. But running a nursing home? Funding Medicaid? Investing in commercial real estate?
This is what happens when people in government leverage the taxpayer in order to build monuments to themselves, or in order to make absurd and unaffordable promises to their citizens. It's not the economy, stupid. It's the arrogance.
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Comments:
May '10
Re: Nine Broke Cities
Or, as I believe Mark Steyn has said:
It's the stupidity, economists.
Apr '11
Re: Nine Broke Cities
As you've probably gathered from talking to Mark Steyn, New Hampshire has a fairly frugal approach to providing government services. I used to live in a small New Hampshire town - Boscawen - a few miles north of the state capitol, Concord. Our small town hosted both the Merrimac County Home and the County Jail. Nearby was the County Prison Farm where jail inmates grew produce to supply both facilities. Even the State Prison in Concord had an adjacent prison farm to provide for its needs.
Not all government-provided services are unnecessary or wastes of money. New Hampshire is often a model for providing essential services in a cost-effective way.
May '10
Re: Nine Broke Cities
Watch out, New Jersey! Michigan's on your tail and comin' up fast!
Mar '11
Re: Nine Broke Cities
OK, I spent about 10 minutes with my friend google and got the following info: Central falls has filed for bankruptcy and been put in receivership. Here's what their city gov't is made of:
Central Falls - Four Term Democtratic Mayor Charles D. Moreau OustedCity Council Ward 1: Eunice DeLaHoz (Finance Chair) arrested for DUI Since her party affiliation is not listed, there's at least a 90% chance its (D).Ward 2: Richard Aubin Jr. (Liquor Chair [wouldn't you expect him to be the one to get the DUI, but I digress]) arrested for embezzlement Not much on the folks in the other three wards. But c'mon -- elect folks like this to your city gov't and what do you expect?
Anybody else want to play find the party affiliation for the governing bodies of the afflicted municipalities? Any one want to take odds that is a super-majority of Dems?
May '10
Re: Nine Broke Cities
In Minneapolis, home of Rep. Keith Ellison, the weak mayor system is complemented by a strong city council, which features a plurality of Green Party aldermen/persons. Its finances, despite a more-healthy-than-many economic situation, have been a mess for years. The state rescued most of its pension funds by merging the city retirement system into the state employee retirement system, which is bad enough but nothing like CALPERS. There are some looming teacher pensions that will cause problems.
But fiscal management has been so bad that even the local lefty free paper rag (City Pages) did an expose several years ago, excoriating the fire department for spending its capital budget (fire engine replacement) on operating costs, etc. Since then, of course, they blamed all the budget woes on Tim Pawlenty's refusal to write large state checks to the city to fund all of the wish list.
My point is that this list is likely a lot shorter than it ought to be....
Sep '10
Re: Nine Broke Cities
Duane Oyen: In Minneapolis, home of Rep. Keith Ellison, the weak mayor system is complemented by a strong city council, which features a plurality of Green Party aldermen/persons. Its finances, despite a more-healthy-than-many economic situation, have been a mess for years. The state rescued most of its pension funds by merging the city retirement system into the state employee retirement system, which is bad enough but nothing like CALPERS. There are some looming teacher pensions that will cause problems.
But fiscal management has been so bad that even the local lefty free paper rag (City Pages) did an expose several years ago, excoriating the fire department for spending its capital budget (fire engine replacement) on operating costs, etc. Since then, of course, they blamed all the budget woes on Tim Pawlenty's refusal to write large state checks to the city to fund all of the wish list.
My point is that this list is likely a lot shorter than it ought to be.... · Sep 30 at 2:13pm
So basically the MN plan to save their municipal budgets is the euro model?