Ghost of Christmas Future - Albany Economy Edition


By DIA, Section News
Posted on Wed Feb 20, 2008 at 05:29:15 AM EST

Regular readers of this blog are no doubt familiar with the financial issues facing this city. Currently running a deficit, cash reserves run out this year, high cost of health care and pensions for police and fire, etc, etc. See if you can relate to this article.
Gomes said the situation has been building for more than a decade.

"This has been happening for quite a while. For 15 years the city council has been putting Band-Aids on the problem. (It has been) extending contracts and deferring payments for public safety to the next years as a way of balancing the current budget."
Warmer...getting warmer...
"We've been spending more than we've been making for 20 years and it's time to pay the piper," Gomes said.

Newly elected Mayor Osby Davis is downplaying the possibility, NBC11's Jodi Hernandez reported.

"I like to look on the positive side," Davis said
Sound like someone we know?
In a report to the City Council dated Feb. 13, Vallejo Finance Director Rob Stout projected that without deep cuts, including assumed agreements negotiated with police and fire departments by June 30, the City will be $6 million in debt and will have spent every last penny of its $4 million in reserves.

Gomes said the city has a plan to cut $20 million out of the budget in the next year.
Perhaps these people should've gotten one of those shiny convention centers, then they'd be rolling in the dough!
The plan calls for cutting city salaries to 5 percent lower than June 30, 2007 starting on March 28. Police and firefighter salaries under the existing labor agreements would be reduced 15 percent, by 8 percent for the electrical workers and 5 percent for confidential, management and un-represented employees.

Thirty general fund positions would be eliminated, 16 of which are currently filled and will require layoffs.

Other vacant positions could be filled by transferring employees but the reductions would reduce the general fund positions from 494 to 411, or by 17 percent.
So, they are looking at filing for bankruptcy as a city and cutting salaries and jobs. Now, just going by the numbers, unless the state bails out Albany next year, we will be in worse shape than this city. We have a $9 million hole in our budget in 2008 even with a 4% tax increase. Our cash reserves run out this year. The mayor's favorite dump revenue might be going away soon.

As I've been saying for some time, we are on a crash course with a harsh economic reality. With the current management there is only one real avenue for Albany. Being bailed out by the state. Barring some magical solution, we have a date with reality in the near future. And reality can be a harsh mistress.

Ring, ring...hello...just a minute....Mayor Jennings, it's for you.

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Ghost of Christmas Future - Albany Economy Edition | 2 comments (2 topical, 0 hidden)
As I read this entry, I couldn't help... (none / 0) (#1)
by Jim Travers on Wed Feb 20, 2008 at 09:19:56 AM EST
but think of this LTE in today's TU and wonder why we haven't seen anything similar come from any city resident anytime in the past fourteen years. (Besides those coming from the Honorable Dominic Calsolaro.)

http://timesunion.com/AspStories/story.asp?storyID=665152&category=LETTER&BCCode=&newsda te=2/20/2008

Reduce the assets on the City's Balance Sheet (none / 0) (#2)
by albarbor on Wed Feb 20, 2008 at 12:42:46 PM EST
For about one year I have been on DIA, talking about the Government Assets and the Government balance sheet. Today again I asked why does the government have to own housing enterprises and health-care enterprises.

The sad part is the state is not going to be able to bail out Albany. The two bloomberg.com articles that I have attached make my reasoning. The municipal bond insurers are having problems and I predict the state is even going to have problems raising funds through bond sales. Warren Buffet is ahead of the storm and that is why Berkshire Hathaway made a bid for New York State and the WORLD'S largest bond insurers (FGIC and MBIA).  I respect Buffet, but he is betting that the state and local governments will take on more debt so that your children, grandchildren and great grandchildren can spend the rest of their life paying it off.

If DIA is correct if and when Albany has to file for bankruptcy like the San Fran city. The first thing that needs to happen is that the post bankrupt city needs to start off loading its government assets ie: (housing, health-care and pensions/emergency relief). There are about 1 million proposals out there including mine, all Mr. Jennings and the city council have to do is choose one. Prior to a convention center being built we should see a 10% reduction in overall taxes and the city should be in a surplus not deficit. Who cares about the dump revenue or anything else. If I recall Colonie also has a deficit give the dump to them we don't need it. Albany has enough resources to out pace Colonie in one year if the proper leadership is in place at City Hall. For once Mr. Bernanke has it right yes it is inflation, but lets be clear it is housing inflated prices that is dragging our economy down. I say put every last house in America in one market and let them all compete. As I stated to my family the biggest problem in America is the lack of awareness. Instead of interacting on DIA, we spend our time watch CNN, FOX and allow the Times Union to make our mind up about the world.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a4.KuEoJpVLI
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aofcePWmxldo
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aftwqRJFDc9k

Ghost of Christmas Future - Albany Economy Edition | 2 comments (2 topical, 0 hidden)
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