Nicole Gelinas, writing in City Journal, sketches what may be the next crash to rock our world. It's another investment, like housing, that people assume cannot fail -- municipal bonds. They are risk free, investors have long been assured, because the cities and states that issue them would do anything to avoid default. Besides, "they ... have a captive source of endless funds ... State and local governments ... can always tax their residents and businesses to pay the bills."
Between 2000 and 2008, states were rolling in cash, pulling in tax revenues that outpaced inflation by 15 percent. But instead of using this windfall to reduce their debts, states continued to spend freely, particularly on expensive union contracts, education, and Medicaid. When the recession began, Gelinas notes, "state and local officials should have realized that hard fiscal times were coming and begun cutting back ... Instead they kept on spending, and borrowed to do it." States are now deeply in debt. The most extreme cases -- California, New York, and New Jersey -- are well known. But the average state now owes 2.1 percent of its residents' annual income.
The 2009 stimulus bill only exacerbated the problem by pumping $200 billion in "reality-distorting funds" into state and municipal coffers, delaying the reckoning and permitting states to continue their reckless spending.
What will happen when states can no longer sustain the public employee pensions and health benefits, the Medicaid payments, and the education spending? Gelinas offers a glimpse of a possible future in the case of Vallejo, California. The city declared bankruptcy in 2008 to escape from crippling union contracts. Vallejo was successful, but in the process, it delayed payments on its bonds for three years. Other bondholders might not be so lucky. It's not hard, Gelinas writes "to imagine some future mayor convincing a bankruptcy judge that it's only fair for bondholders, along with union members, to take big cuts in a restructuring."
When Democrats preen that they are fighting for the average guy, ask this: When they vastly overspend, what happens to the ordinary person who dutifully pays his taxes and prudently invests in "safe" municipal bonds?
Jerry Selby's letter in the Pasadena Star News (4/28) stated: "One visit to local schools would demonstrate the need for more funds. Our schools now do not have adequate funds to retain and pay qualified teachers and other employees their rightful worth and keep much-needed programs in place."
Jerry Selby might go back to school and do some homework before making uninformed claims that PUSD needs more than their $350 million per year budget. PUSD is claiming a budget deficit of $20 million which they have supposedly plugged with $13 million in budget cuts but still claim they need $7 million from Measure CC.
But the California Department of Education website reports that the projected deficit in state aid to PUSD for next year is $9.1 million, not $20 million as PUSD claims.
PUSD's online budget data indicates that it will have a $5.5 million budget surplus this year. And PUSD is likely to get $4.4 million more state funds than expected because state sales tax revenues are running $3 billion higher than forecasted. This totals $9.9 million to apply to a $9.1 million deficit. Additionally, PUSD has budgeted a $6.1 million contingency reserve for economic uncertainties for next year. So it is not clear that PUSD even needs the $7 million from Measure CC next year, let alone $35 million over five years. And Measure CC has no provision to rebate taxpayers if they do not need the tax.
Even worse, according to staff at the California Department of Education, state aid to schools is not reduced if PUSD is able to pass a parcel tax. So PUSD could reap a $7 million tax windfall from Measure CC while all those homeowners without children Mr. Selby says never visit public schools struggle with how to pay theirproperty taxes in a deep recession.
Selby is full of feel good cliches and not facts. His uninformed advocacy of Measure CC is cruel to struggling homeowners and senior citizens who do not qualify for an exemption under Measure CC.
I believe Selby lives in an apartment and thus will not even pay the tax!
According to statistics at the State of California Department of Finance, the City of Pasadena grew from 148,940 in January 2009 to 151,578 in January 2010, growing by 1.3% or 2,638 persons. With an average household size of about 2.5, that equates to 1,055 more households.
"The Golden State, routinely described as desperately short of funds because of Proposition 13, brought in $12,776 per capita (per person) in governmental income from all sources -- taxes, fees, federal aid, and revenue from government-owned utilities -- in 2007. Only three states and the District of Columbia received more.
California, in the first place, is not a state with low taxes. It's not even a state with especially low property taxes. In 2007, the year of the most recent Census Bureau data, California's state and local governments levied $1,141 in property taxes per capita (per person), only 1% less than the corresponding average, $1,288, for the 49 other states and the District of Columbia."
-- William Voegeli, "State of Taxiness," LA Times, April 29
Pasadena has a so-called pension "tsunami" of $10 million per year arising from generous retirement packages to former employees. Yawn! So Pasadena will now have to give up a pet project per year? Let's see what pet project might it be:
Ice Rink $18 million
YWCA - $10 million (w/renovation)
Bike Trails - $8 million
Annandale Estates Open Space - $6 million (preserving million dollar views in La Canada)
I am voting NO on CC. The idea of running this mail in ballot along with its individual expense really frosts me. There is a ballot election in June and this could have easily been handled in that manner. Instead, this mail in ballot is used. Why is it being handled that way? Maybe, because PUSD hopes that many people will toss the ballot in the trash can thinking that it will register a no vote and that the bulk of the people that vote will be voting yes. There is a voting mechanism that we are all used to and that is how this measure should have been handled.
That said, I also think that PUSD should seriously be looking at where expenses could be cut. In this current economy with homes going into foreclosure, unemployment and companies going out of business, like Team Chevrolet, PUSD refuses to cut their one third of a billion dollar annual budget by 5%. Everyone is belt tightening and, yet, they want private funding for 5 years. I can't even remember all of the times PUSD has looked for additional funding. We just need money for ... But it is NEVER enough they just keep wanting more. Well, this time, we should tell them that enough is enough and send the mail in ballot back with a big NO on CC vote. It is the only way you will be heard!
Excerpt: As the district
struggles with its finances, Pasadena Unified School District board member
Ramon Miramontes asked for funding for a Hispanic dance troupe during the
Tuesday's board meeting.
Miramontes said the district
should use its Title I money, funds designated for poor and underprivileged
students including English Language learners, to support Folklorio dance
program at Madison Elementary School.
During the meeting, children dressed in traditional
Mexican dresses were accompanied by adults wearing t-shirts from the League of
United Latin American Citizens, an Hispanic-American advocacy group. The
chanted "Yes We Can" in Spanish and asked for funding for a program
that has run with little district support for 12 years.
Comment: Not to worry.Parcel taxes are not restricted in what
they can fund such as Federal Title I Education Funds.Parcel taxes can be used to fund “anything.” An unconfirmed email report in response to the above newspaper story: voters who threw away Measure CC ballots are now dumpster diving for them.
To paraphrase President Reagan in one of his debates with Jimmy Carter, "There they go again."
This time it's the Pasadena Unified School District that apparently agrees with Willie Sutton who when asked why he robbed banks said, "That's where the money is." As far as the PUSD is concerned your home is the "bank."
They are calling this a parcel tax. Maybe I'm a little thick, but isn't this essentially a property tax increase? Just what we need when many are upside down in their homes.
Also, there is no guarantee Measure CC funds will be spent in the classroom. There is no guarantee that if the state fully funds or increases funds to PUSD in any year, that no taxes will be collected.
There is no guarantee the state won't just reduce its share of school funding dollar-for-dollar for any monies from Measure CC.
This tax formula is a disaster for property owners living on the edge. Orphans and widows are completely forgotten. My neighbor lost her only son when he was in the army, and is disabled. She's not yet a senior, so there is no provision for her in this proposition; she's pushed closer to losing the house she inherited. If they would adjust the tax to allow exceptions for hardship, I would be inclined to vote for it. But as it stands, a hundred times no.
Today’s announcement that the Department of Water Resources is increasing 2010 allocations for State Water Project deliveries is welcome news. But the larger story remains that millions of Californians will face water supply reductions this year even as massive quantities of water flow unused to the Pacific Ocean.
Citing late season rain and snowfall, DWR says it can now deliver 30% of requested deliveries to State Water Project contractors, up from the 20% announced earlier in April. That helps, but a 30% supply at a time when the snowpack is at 132% of normal for the date is a clear sign that something is wrong with our statewide water supply system.
Some perspective on these numbers is in order. This week, the Bureau of Reclamation increased releases from a nearly full Shasta Dam to prevent an uncontrolled spill condition. Since demands for water in the Sacramento Valley are fairly minimal right now and regulatory actions continue to restrict Delta pumping, the vast majority of that water will flow straight out to the ocean. About 60,000 acre-feet flowed out in a single day this week, while the state and federal projects managed to pump just 3,000 acre-feet that day for use later this year.
All told, the two projects have lost more than 740,000 acre-feet of water due to pumping restrictions since January. That’s water that could have been moved into storage for the hot dry months ahead, or used to recharge groundwater basins already reeling from a string of dry years.
Though the cumulative effects of dry conditions and low reservoirs play a role in the 30% allocation, it’s hard to miss the fact that regulatory restrictions are squeezing our water supplies and creating huge uncertainties for water users. That reality is unlikely to change until long-term solutions are in place to improve both ecosystem health in the Delta and water supply reliability.
ACWA members are working with environmental groups and other stakeholders to implement solutions through the Bay-Delta Conservation Plan and other forums, but it will be many years before those solutions come on line. In the meantime, water agencies are staying strapped in for the bumpy ride ahead.