Ruling Expected Today in Detroit's Bankruptcy Case
DETROIT (AP) -- Detroit is eligible to shed billions in debt in the largest public bankruptcy in U.S. history, a judge said Tuesday in a long-awaited decision that now shifts the case toward how the city will accomplish that task.
Judge Steven Rhodes turned down objections from unions, pension funds and retirees, which, like other creditors, could lose under any plan to solve $18 billion in long-term liabilities.
But that plan isn't on the judge's desk yet. The issue for Rhodes, who presided over a nine-day trial, was whether Detroit met specific conditions under federal law to stay in bankruptcy court and turn its finances around after years of mismanagement, chronic population loss and collapse of the middle class.
When the INSANE are running the ASYLUM In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. -- Friedrich Nietzsche
“How fortunate for those in power that people never think.” Adolph Hitler
Bankruptcy would be the best thing that could happen to this city. It would take our money out of the hands of the rapacious carpetbaggers and they'd have to leave early for their high-paid retirements elsewhere. I'd like to emphasize another point that I made in another thread. The point of population loss. Some places in the country truly lost population with the decline of industry or farming. Detroit is NOT one of them, neither is Schenectady. The people who tell you this is so, are largely the same people who didn't tell anyone about the banks and Wall Street until AFTER the worldwide collapse. The Detroit area, and Schenectady as well, are highly congested population centers. We didn't so much as lose population, as it shifted outside the city limits. You see this hole-in-the-affluence-doughnut effect in Albany and Troy as well. You also see city workers living outside the city, where they can enjoy lower taxes and better services, the importation of 'problem' people, so that other communities can be nicer than ours, and, reckless spending by the politicians to keep the whole thing afloat. See my post about Detroit's "Renaissance" center. Is there a renaissance in Downtown Detroit? Of course not. Downtown Detroit is crime, and muslims on welfare. So why then, do other communities copy the "if you build it, they will come" model from Detroit? BTW, what people fail to recognize, is that the automobile industry is still active in Detroit. Not as big as in its heyday, but Detroit definitely still has industry. The problems in our cities have been, if not solely caused by, made MUCH worse by government.
The future is now. At least Detroit still has the Big 3 Auto makers-what does Schenectady have? The highest unemployment rate, the highest tax rate, the lowest resale property rate in the Capital District. City Hall is filled with incompetent liars and County DSS is the biggest disaster in Upstate New York. GE announced a second round of white collar layoffs and transfers to Florida. But we have new curbing, bike paths and governmental gin mills. Still waiting for even a Mikey D's or DD to open Downtown. Tourists in the Stockade asked where's the grocery? I sent them to Gabriel's in Scotia. We should have had a State takeover 10 years ago like Troy did. At the very least it would clear out the 7 City Council rubber stamps.
About $10 billion of the city’s long-term debt comes from unfunded pension and health care coverage for its 18,000 retired city employees. Detroit still has about 10,000 active public workers in a city that has seen its population plummet from 1.8 million to about 700,000.
List of Bankruptcy Filings Since January 2010
All Municipal Bankruptcy Filings: 38
General-Purpose Local Government Bankruptcy Filings (: -- City of Detroit -- City of San Bernardino, Calif. -- Town of Mammoth Lakes, Calf. (Dismissed) -- City of Stockton, Calif. -- Jefferson County, Ala. -- City of Harrisburg, Pa. (Dismissed) -- City of Central Falls, R.I. -- Boise County, Idaho (Dismissed)
Moody's warns that Scranton could be facing default or bankruptcy ...
Stockton, California became the largest city to file bankruptcy when it did so on June 28, 2012. After slashing more than $90 million in spending in recent years to a point where city officials said further cuts would endanger public safety,
Mammoth Lakes, California filed for bankruptcy protection on July 3, 2012. The city has sought legal advice on municipal bankruptcy after the appellate court upheld a $30-million judgment against the town for breach-of-contract which leaders are unsure how to pay.
San Bernardino, California became the third California city to file for bankruptcy in two weeks when it filed on July 11, 2012. The city filed because it faced a budget shortfall of $45 million and annual deficits over the next five years despite cutting the workforce by 20 percent and negotiating $10 million in annual concessions from employees in each of the prior three years.
Harrisburg, Pennsylvania's city council voted 4-3 to file for Chapter 9 bankruptcy protection on October 11, 2011. The council members in favor of filing under Ch. 9 hoped it would give the city some relief from lawsuits against it i light of the city's $300 million debt crisis tied to a project to revamp its incinerator. City Council President Gloria Martin-Roberts said filing for bankruptcy would only create more lawsuits against the city.[11] As of October 2011, the city's debt burden was five times its general-fund budget.
Central Falls, Rhode Island A June 17, 2011, report by Moody’s Investors Service said that the city’s pension plan is expected to run out of assets by October without additional funding or significant concessions from both current workers and retirees. After retirees failed to accept cuts in pensions and benefits, the city filed for bankruptcy on Aug. 1, 2011.
Vallejo, California filed for Chapter 9 bankruptcy protection in May 2008. It submitted its bankruptcy exit plan to the court on Jan. 18, 2011, and the plan focused on scaled-down employee benefits and pensions included in the city's proposal are being closely watched by many municipalities whose budgets have been pressured by rising costs and declining revenues as a result of the recession. In response to the Vallegjo bankruptcy filing, California Gov. Jerry Brown signed a bill in October 2011, requiring that municipalities in California will have to submit to a neutral review of their finances, or demonstrate a fiscal emergency, before seeking Chapter 9 bankruptcy protection in federal court.
Boise County, Idaho filed for bankruptcy on March 2, 2011. It did so to seek protection from its creditors because of an inability to pay a multimillion-dollar judgment after it lost a federal lawsuit against it.
Facing Bankruptcy
Those governments that are currently considering declaring bankruptcy include:
Scranton, Pennsylvania San Diego, California Hamtramck, Michigan Jefferson County, Alabama
Central Falls, Rhode Island
Bell, California
Gary, Indiana w
Flint, Michigan
Considering Bankruptcy Due to Pensions
Prichard, Alabama The financially troubled suburb of Mobile turned to bankruptcy court in October 2009 when it "simply ran of money to pay its pension obligations.
Chicago, Illinois
Bennett County facing bankruptcy
Harrisburg, Pa; Boise County, Idaho, and Jefferson County, Ala. facing bankruptcy
Think Motown is the only major U.S. city in a boatload of financial trouble? Think again.
Detroit's bankruptcy filing sent shivers down the spine of municipal bondholders, government employees, and big-city urban residents all over the country.
That's because many of the 61 largest U.S. cities are plagued with the same kinds of retirement legacy costs that sent Detroit into Chapter 9 bankruptcy this summer.
Editor's Note: ‘This Wasn’t an Accident’ — Experts Testify on Financial Meltdown
These cities have amassed $118 billion in unfunded healthcare liabilities. These are legal promises to pay healthcare benefits to municipal workers beyond the employee contributions to finance those funds. This is a giant fiscal sink hole — and because of defined benefit plans, the hole keeps getting deeper.
Detroit may be the largest city in American history to go bankrupt, but it is not alone. The city raced to the financial insolvency finish line before anyone else in its class.
Keep an eye on "too big to fail" cities like Chicago, Philadelphia, and New York.
According to an analysis by the Manhattan Institute, several Chicago pension funds are in worse financial shape than the worker pensions in Detroit. One is only 25 percent funded, and where the other 75 percent of the money will come from is anyone's guess. And there are about a dozen major California cities having systemic problems paying their bills.
Here is my worry list, based on bond ratings and other data, of the top 20 cities to watch for financial troubles in the wake of the Detroit story:
1. Compton, Calif. Compton has teetered on the brink of bankruptcy after it accrued a general-fund deficit of more than $40 million by borrowing from other funds, depleting what had been a $22 million reserve.
2. East Greenbush, N.Y. A New York state audit concluded that years of fiscal mismanagement — including questionable employment contracts and illegal payments to town officials — left East Greenbush more than $2 million in debt.
3. Fresno, Calif. Fresno had the ratings of its lease-revenue bonds downgraded to junk-level by Moody's, which also downgraded its convention center and pension obligation bonds due to the city's "exceedingly weak financial position."
4. Gulf County, Fla. Fitch Ratings warned that Gulf County's predominately rural economy is "narrowly focused," with income levels one-quarter below national averages and economic indicators for the county also comparing unfavorably to national averages.
5. Harrisburg, Pa. Harrisburg is at least $345 million in debt, thanks largely to municipal bonds it guaranteed in order to finance upgrades to its problematic waste-to-energy trash incinerator.
6. Irvington, N.J. Irvington has a violent crime rate six times higher than New Jersey's average, with Moody's citing "wealth indicators below state and national averages and tax-base and population declines due to increased tax appeals and foreclosures."
7. Jefferson County, Ala. Jefferson County, home to the city of Birmingham, has been dealing with the collapse of refinancing for a sewer bond. It filed for bankruptcy protection in 2011 over a $3.14 billion sewer bond debt.
8. Menasha, Wis. Menasha defaulted on bonds in 2007 it had issued to fund a steam plant which has since closed and left the city permanently in the red and, as of 2011, had $16 million in general fund revenue, but had $43.4 million in outstanding debt.
9. Newburgh, N.Y. Newburgh was cited by Moody's for "tax base erosion and a weak socioeconomic profile," with 26 percent of its population below the poverty line and its school district facing a $2 million budget gap.
10. Oakland, Calif. Oakland is trying to get out of a Goldman Sachs-brokered interest rate swap that is costing it $4 million a year. According to a recent city audit, Oakland has lost $250 million from a 1997 pension obligation bond sale and subsequent investment strategy.
11. Philadelphia School District, Pa. Philadelphia's school district, the nation's eighth-largest, faces a $304 million deficit in its $2.35 billion budget, and is seeking $133 million from labor-contract savings to prevent further cutbacks.
12. Pontiac, Mich. Pontiac, where the emergency manager has restructured the city's finances, was downgraded by Moody's, reflecting the city's history of fiscal distress and narrow liquidity.
13. Providence, R.I. Providence, rumored to be filing for bankruptcy for more than a year, experienced consecutive deficits through fiscal 2012, has a high-debt burden and significant unfunded pension liabilities, as well as high unemployment and low income levels.
14. Riverdale, Ill. The credit rating for Riverdale is under review by Moody's because the city has not released an audit of interim or unaudited data for the year that ended April 30, 2012.
15. Salem, N.J. Salem is under close fiscal supervision after it issued bonds to finance the construction of the Finlaw State Office Building, which was delayed by construction issues, and its leasing revenues are not enough to cover the debt payments and the maintenance fees.
16. Strafford County, N.H. Strafford County regularly borrows money to cover its short-term cash needs after it spent two-fifths of its budget on a nursing home, which lost $36 million from 2004 to 2009.
17. Taylor, Mich. Taylor has a large deficit and is vulnerable due to significant declines in the tax base, limited financial flexibility, and above-average unfunded pension obligations.
18. Vadnais Heights, Minn. The St. Paul suburb of Vadnais Heights had its debt rating downgraded to junk last fall by Moody's after the city council voted to stop payments to a sports center financed by bonds.
19. Wenatchee, Wash. Wenatchee defaulted on $42 million in debt associated with the Town Toyota Center, a multipurpose arena, and has ongoing financial issues due to the default.
20. Woonsocket, R.I. Woonsocket faces near-term liquidity shortages necessitating an advance in state aid, a high-debt burden and unfunded pension liabilities, with Moody's citing the city's continuing difficulties in making spending cuts because of poor management and imprecise accounting.
Had a sales guy come into a 'big box home improvement' store that I was in. It was interesting to hear him pitch his product to the department manager on how they now offer a better product because they are made in KOREA!!!
When the INSANE are running the ASYLUM In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. -- Friedrich Nietzsche
“How fortunate for those in power that people never think.” Adolph Hitler
Logged
The future is now. At least Detroit still has the Big 3 Auto makers-what does Schenectady have? The highest unemployment rate, the highest tax rate, the lowest resale property rate in the Capital District. 
