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This page contains a single entry from the blog posted on June 27, 2012 11:03 AM. The previous post in this blog was Chainsaws in the Gorge. The next post in this blog is Streetcar Smith gets one right. Many more can be found on the main index page or by looking through the archives.

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Wednesday, June 27, 2012

Whoa, Domino

Stockton, California is going into bankruptcy. Kate Brown suggests that Oregon counties can't do the same, at least not yet. Well, they'll have to do something.

Comments (16)

http://www.oregonlive.com/newsflash/index.ssf/story/stockton-faces-end-of-mediation-weighs-bankruptcy/4c4e59470c4d495aad4c5d8e95fca87e

From the article above...

"The river port city of 290,000 in Central California has seen its property taxes and other revenues decline, while expensive investments and generous retiree benefits drained city coffers."

Sound familiar?

So what would Kate propose a municipality do when they can't make payroll and/or pay their pensioners and bondholders? At some point, you run of assets you can liquidate or future revenues you can borrow agaisnt.

Entities that are unlikely to cover their debts eventually lose the ability to borrow.

Even Portland will lose the ability to raise new taxes and fees: Greece is a fine example of the end game for a dramatic increase in tax collections coupled with reduced services, infrastructure maintenance, and political stability.

Portland's day is coming.

Stockton is very similiar to Portland in terms of how they got into trouble. Generous retiree benefits coupled with silly investments. I think they built some parking garages, a new city hall and a hockey arena that they couldn't pay for.

Portland is even worse since the morons who run this place have run up a much bigger tab. Idiot Sam is still trying to make the city go bankrupt in his last few days as mayor and nobody on the city council seems to be interested in stopping him.

Yep, I've seen this before, at least twice. If you think it's crazy now, wait until someone actually threatens to close the money spigot. That's when you'll have everyone panicking about getting theirs and leaving some other poor shyster with the tab. (This happened with a vengeance in North Texas in 1986, when the price of oil dropped to less than $10 a barrel and everyone realized that damn near everything in Dallas was tied to oil in one way or another. The real crunch hit when the developer weasels couldn't get loans, and the bankers who gave them the "gentleman's agreement" loans had to call them in. That Christmas was a particularly painful time, and we're still cleaning up the mess a quarter-century later.)

Kate Brown's audit report states that Oregon is one of the states that does not allow a county to file bankruptcy; federal law does allow such a filing under Chapter 9 (i.e., Orange County, California 1994).

While Sam might be an ignorant stooge in the spending spree, Randy is far darker.

Remember his little junket to NYC to meet with the Lords of Finance?

There is dumb and then there is intentional...

There is at least one hidden nugget of gold in a CofP bankruptcy.

The Portland Police and Retirement Fund is a general obligation funded solely through current property tax payments made to the city. The police and fire boys, cutting a fat hog for so long, are going to be in for a huge surprise.

Other CoP retirees are under PERS, and won't be affected by a CoP BR.

Kate the incompetent keeps singing her tune that Oregon municipalities and counties are not permitted to file BR petitions in federal court. Interestingly, in every one of those pronouncements by Kate, there is no citation to any provision of the ORS so providing.

Whether an Oregon city or county are prohibited by state law from filing a BR petition may be moot. Any three creditors can file an involuntary petition against a debtor. Surprise Katie.

This is depressing. We need a fun diversion. I know! Let's build a sustainability center!

Why aren't they just selling more bonds?
Boy are those folks in Stockton dumb, you just keep selling bonds, FOREVER!

That's what the FED's do, so why can't municipalities?

"Kate Brown suggests that Oregon counties can't do the same"

Who the heck would've thought Kate Brown would EVER draw the line local govt?

Any three creditors can file an involuntary petition against a debtor. Surprise Katie.

That rule is inapplicable to Chapter 9 municipal bankruptcies.

If an Oregon county can't file for bankruptcy, how about a city?

http://nwfreepress.com/molalla-busteroo/mark-ellis/

How about remodeling City Hall into financial sensibility center? It sure isn’t happening with Sammyboy as the lead tax pimp and Fireman Randy hosing him down. Yes, an inside put a bird on it person told me told me Fireman Randy has something on Sammyboy and can actually control what goes forward with the City Council. Also, just over a couple of years ago, Fireman Randy also met with the Portland lords of finance and big business. The no transparency meeting was limited to 50 people. The report I got back from one of the attendees was that Randy was worthless with what he had to say and the meeting was less than productive.

"Why aren't they just selling more bonds?
Boy are those folks in Stockton dumb, you just keep selling bonds, FOREVER!"

Still got checks in the register... Works for me!

I hope I live long enough to see the faces on those fat cat PERS Tier 1'ers when their house of cards comes crashing down!

Then the argument "But we had an agreement! The Supreme Court said you have to honor the agreement!" will run straight into "But there is no more tax money, the high producing tax payers left the state!"

Then the Tier 1'ers who retired outta state to avoid paying their state taxes will get what is coming to them. LOL!

It'll be a GRAND day when TriMet files Chapter 9.

As much bandstanding they are doing with the whole labor dispute, it's remarkable that TriMet could in one quick motion put an end to it by declaring Chapter 9. That'd end all the union contracts; let the feds take over the pension and TriMet would have solved it's issue - by it's own definition.

One problem: TriMet would have to forgo any light rail expansion. Good luck selling bonds, which are a necessity to raise the money needed for a light rail project.

That, my friends, is the real issue. TriMet just does not want to admit it. TriMet refuses to admit that it spends tens of millions each year just paying interest on past bonds; or its massive Capital Projects Division that exists solely to support current and new light rail projects; or the general fund expenditures needed to support the same. That's why TriMet is being obnoxiously loud about the union benefits issue...it's trying to distract us from the real issue.

Because...if it were JUST about the unions, TriMet could eliminate it just with a quick in-and-out at the Federal Bankruptcy Court.

The thing about TriMet and Chapter 9 is that the metal guys will probably already have harvested the tracks by the time they let granny start her own jitney company, to compete with this too-big-to-operate mess. I'm not seeing that there will be much value to part out to little people. What is granny going to do with a huge bus built in a former Soviet Empire-controlled country? I do think there is value in looking down the track far enough to contemplate how this monster is going to get parted out.


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