The Comedian's "Economic Holocaust" ping list...
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Posted on 01/07/2011 12:41:12 PM PST by SeekAndFind
The San Joaquin Valley town of Chowchilla — known for its dairy farms and prisons — has defaulted on a municipal revenue bond, underscoring the tight times and drastic choices faced by struggling California cities.
The city, which has a skeletal manufacturing base, failed to make its January payment on a bond issued in much flusher times to renovate the ample City Hall, which houses a government that has seen a 45% cut in its workforce since mid-2009.
But Assistant City Administrator Wayne Padilla said Thursday that he had negotiated with the bond trustee to draw down on bond reserves Friday and make the January payment, the last one due for this fiscal year.
The default comes as the city of Bell in Los Angeles County teeters on the edge of insolvency because of inflated salaries and alleged fraud and other cities struggle with unfunded pension obligations and ballooning healthcare costs.
Chowchilla, which has been hit hard by plummeting home prices, an unemployment rate near 18% and commercial vacancies, has cobbled together one-time plans to plug this year's $1-million budget shortfall.
But more solutions are in order if the city hopes to avert an eventual repossession of its seat of government, which includes 5,000 square feet of commercial space that now sits empty.
"The question remains, 'What do we do about the debt next year?' " said Padilla, who is also the city's finance director. "The decision hasn't been made one way or another whether we're going to be able to make the debt payments."
Chowchilla, cleaved by California Highway 99 and known for its annual Western Stampede, expected $4.1 million in revenue this fiscal year, but faced $5.2 million in budgeted expenses. It failed to make its January bond payment after drawing down on reserves to make a payment
(Excerpt) Read more at latimes.com ...
“Tom Dresslar, spokesman for California Treasurer Bill Lockyer, said he hoped Chowchilla ‘will be an isolated case.... There’s no imminent threat of widespread municipal defaults in California.’”
There will be plenty of munincipal defaults in California, but they are not imminent and widespread. I think Lockyer is saying that the defaults will not be in the next 48 hours and will involve less than 90% of the munincipalities in California.
“”There’s a general perception among municipal bond buyers, ‘Let’s avoid any and all things California,’””
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I am a regular buyer of municipal bonds and 0ver 50% of the bonds on the market are from California.
Bond buyers are avoiding California because they cannot trust the political leaders to stop the insanity.
California needs to raise taxes or cut expenses.
The politicians do not want to do either.
So until California gets its act together, investors should avoid California Bonds. There are many states in the USA who have prudent leaders and bonds are available in those states.
They GOLD-PLATED their govt offices, and then they WALKED ON THE CHECK!
Yes, and I want some of what Bill Lockyer is smoking!
A city with less than 10,000 residents and a budget of $5 mil should be running city hall out of a couple of portables.
They should never have made a capital expenditute of any kind. I haven’t seen it but I would bet city hall in Chowchilla is pretty extravagant.
Is this the part of Cali where the enviro-wackos turned off the irrigation water and trees died and people lost jobs?
I really cannot believe you said that. Of all places, on Free Republic. First of all, any bond buyer deserves what they get. They are funding the politicians' ability to take money away from those who earn it and spend it on things that are not needed. Second of all, you should know better than the lower the tax rates are... the higher the tax revenues.
The politicians in California are very willing to do the first one, and dead-set against the second.
“I haven’t seen it but I would bet city hall in Chowchilla is pretty extravagant.”
I’ll check it out for you next time I’m out that way (my folks live in Chowchilla). :)
My little town, population 20K, shot down the building of a brand new 15 million dollar City Hall. It was only a brief moment of sanity, though.
The very next month they approved the building of a brand new 8 million dollar Police HQ.
I think all of the kids lived.
The reason I said the California politicians need to raise taxes is that is what it will take for the citizens to revolt and vote the politicians out of office.
We need to keep in mind that California is more European than American.
Was that where the bus full of students kidnapping occurred decades ago?
“houses a government that has seen a 45% cut in its workforce since mid-2009”
Was there a corresponding cut in spending? I doubt it.
Great!
We can see the light at the end of the tunnel!
Yes it was. I remember it quite well, I was in high school at the time.
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