Friday, August 10, 2012

Gosh...I think it is your fault.

So are our woes due to over promising or under taxing? can get mad over Capitol Gains taxes, you can get mad at anything you want...however, what got us into this mess, what is destroying our country, is over promising (for political you get this?), government largess..local, state, federal.  

Our problems keep repeating themselves on a local, state and national level (Greece) and your ilk keep trying to blame the "rich".  So don't obfuscate, don't not answer, try this one (call Beedie and Gorman if you must).  Are our problems because we have under taxed the rich or because we have over promised to the elderly, pensions, welfare and unions?

And if you are really vigorous and really want to answer a question, try this one....which political party, Liberal or Conservatives (Socialist or Capitalist) benefits most by promising (over promising) to those groups.  Now Terry...don't run away...answer this question.   Why are we in this mess?

Budget crunches already have prompted Michigan lawmakers to authorize emergency fiscal managers, and led the mayor of Scranton, Pa., to temporarily cut the pay of all city workers to the minimum wage.
In a majority of the nation's 19,000 municipalities—urban and rural, big and small—stagnant property tax revenues, less aid from states and rising costs are forcing less dramatic but still difficult steps.
Moody's Investors Service recently said that while municipal bankruptcies are likely to remain rare, it warned of a "a small but growing trend in fiscally troubled cities unwilling to pay their debt obligations."
"We need help right now," said William Schirf, the mayor of Altoona, Pa. Crime in the city of 46,000 rose 11% last year, while the number of police officers fell 8% over three years because of budget constraints. The city has reduced the number of streets it is repaving and clearing of snow, and cut down on leaf pickups and removing dead animals, trash and bicycles from roadways.
Altoona officials projected a $3 million deficit for fiscal 2012. Under state law, the city can't raise property taxes—its greatest source of revenue—any higher. In April, Altoona was declared fiscally distressed under a state law, enabling it to restructure its finances. "We just don't have the income to match our expenses," said Mr. Schirf.
A study by the Center for Retirement Research at Boston College found that annual pension payments for state and local plans more than doubled to 15.7% of payrolls in 2011 from 6.4% a decade earlier.
The Nelson A. Rockefeller Institute of Government said local governments made roughly $50 billion in pension contributions in 2010, but their unfunded pension liabilities still total $3 trillion and unfunded health benefit liabilities are more than $1 trillion.
Local government cuts are one factor slowing the broader economic recovery, offsetting stronger private-sector growth. State and local government spending and investment fell at a rate of 2.1% in the second quarter, according to the Commerce Department, the 11th consecutive quarterly drop. Local governments also have cut 66,000 jobs in the past year, mostly teachers and other school employees.

"Cities are still going to be facing very rough waters for the next couple of years," said Michael Pagano, dean of the college of Urban Planning and Public Affairs at the University of Illinois at Chicago.
There also was a backlash in Michigan after Gov. Rick Snyder won legislative approval of a measure that allowed him to appoint emergency managers for troubled cities and school systems—allowing collective-bargaining agreements to be tossed. Voters will decide in November whether to repeal the law.
To boost revenues, cities are increasing fees and property taxes—where they can. In Chicago, private investors are investing in public infrastructure projects. El Monte and Richmond, Calif., want to tax soda.
Towns and cities in energy-rich regions likewise are faring well. Just 100 miles north of Altoona, five hotels have been built in the past four years in downtown Williamsport, Pa., where natural gas companies have flocked to develop the Marcellus Shale. A new civic arena, residential housing and an airport terminal to provide direct flights to Houston are being planned. "Most citizens you talk to, they're very excited," said Williamsport Mayor Gabriel Campana, who refuels his natural-gas powered car at home.
But in far more cities, the outlook is darker. Although some suffer from specific problems—a bloated incinerator project in Harrisburg, Pa., and a bad real estate bet in Mammoth Lakes, California—most cities face falling revenues and rising costs.
Indeed, while housing is showing signs of improvement, real estate assessed values remain depressed, eroding property tax receipts, which provide 29% of revenue for municipalities, according to a Moody's analysis of census data. State aid, the biggest source of revenue for local governments at 34%, is falling and the growth of receipts from wage, sales and other taxes, which provide 10% of local budgets, is slowing.
At the same time, pension and health-care costs are rising despite efforts to restructure those benefits. The most vulnerable cities are ones that experienced drastic reductions in property values or are in states like California that limit municipal options to increase revenues. In addition, nearly a third of California cities require collective bargaining and prohibit outsourcing of administrative and maintenance services.
Since 2008, four California municipalities have filed for bankruptcy protection—Vallejo, Stockton, Mammoth Lakes, and most recently, San Bernardino, which declared bankruptcy Aug. 1, in large part because sales and property taxes fell after the real estate bust. The assessed value of homes in San Bernardino dropped to $10.3 billion in 2011 from $12.2 billion in 2008.
On top of a declining property tax base, the city has faced a significant drop in sales tax collections since 2005. Economist John Husing said San Bernardino's retail sales fell 30% during that period. Likewise, a decline in construction means less revenue from things like building permits and development fees.
While many municipalities nationwide have offset property-tax declines by raising tax rates, California's 1978 law dubbed Proposition 13 caps property taxes at about 1% of a home's value and forbids major tax increases unless a home is sold or rebuilt, though it permits taxes to fall if a home's value drops.
Residents in El Monte, Calif., 15 miles east of Los Angeles, will vote in November on a soda tax that could raise about $10 million annually. The city, which lost four major car dealerships that generated a large share of the city's sales tax revenue, cut nearly 30% of its workforce to help close a $3 million budget deficit but still faces $2 million deficit for the current year.
Local merchants oppose the measure. "I'm struggling to stay open and here they want to tax me even more. It's crazy," said Arthur Meier Jr., who owns Arts World Famous Burgers in El Monte.
Elsewhere, the cost of shoring up underfunded pension plans for public workers is going slowly. In many states, benefits are guaranteed and difficult to modify unless a city is declared "fiscally distressed." "Because of the guaranteed nature of benefits, there's no quick fix," said Thomas Fitzpatrick, an economist with the Federal Reserve Bank in Cleveland.
Steven Kreisberg, collective bargaining director at the American Federation of State, County and Municipal Employees, the nation's biggest public-sector union, said pension problems were caused by investment losses that can be gradually recovered, rather than due to overly rich benefits. "When you lose 20% of your assets in a single year that's what created the problem," he said.


Baxter said...

It is hard to say that our problems come from being overtaxed. That is just silly - we are at 60 year lows and have lower taxes than other developed nations.

The public pension issue is a serious one. A lot of cities will need to negotiate a better deal. In the future, I expect we will see more defined contribution programs and fewer pension plans.

terry said...

Jim I don't know how long it will take for you to truly understand my position. I will again make it as clear as I can. I am NOT for taxing the rich only. I don't believe thew rich are job creaters any more you are living in a different world today. trickle down is OFFENSIVE to me. I got a job because their was a NEED. We need a middle class. My vote is simple number ONE Which canidate is the MOST LIKELY to get us in another WAR, Which canidate will cut DEFENSE? We spend so much money on defense, we have a NAVY that is 16 times larger than any civilized country on the planet. We are over reacting in fear. We have not overpromised the poor, we simply have spent the money in fear. To blame the economy on a 30 year school teacher pensions is idtiotic Jim! Jim I have made a living wprking for wealthy people in their pursuit of leisure time, so I am for people being rich. Please Please stop the madness and claiming I blame " rich folks", never once have I said that. The way you make up deficits in a family or in a government is simply find more income, and save more expenses. I am for a tax increase on everyone. Did you hear that I am willing to pay more taxes, and I am middle class. My one personal gripe is the taxes are never LOW ENOUGH for coservatives. Let me ask you when your house is on fire and the firemen arrive and put it out do they send you a bill? No we need government.

Baxter said...

Final demand is a job creator, not capital, management or labor - all of which respond (directly and indirectly) to demand.