KeNo's Housing and Economic Portal: Thursday February 18 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Big changes in store for Marin governments – (www.marinij.com) IT'S TIME to take stock of where California government, both local and state, is headed. The first thing to understand is that there will be no future tax increases. The only exceptions are the occasional parcel tax or bond to fund specific community or school needs in prosperous communities. The two-thirds super majority at the ballot box and in the Legislature guarantees that current revenues will not expand. Even those sources are at the mercy of the economy. Tax proceeds will not increase until the state's private sector fully rebounds. Long-term structural deficits imply that the flush old days are gone for good. It's a pipedream to think that voter approval of constitutional reform will eliminate the existing super majority requirement for tax increases. Accept it. The two-thirds rule, meaning veto power by the Legislature's Republican minority and anti-tax folks at the ballot box, is here to stay. Golden State voters have reached their limit. Right or wrong, that's political reality. Excepting social services, and higher education, state cut backs will be felt more by government employees than by service recipients. Relatively few citizens are impacted by prison closures and smaller regional agencies. Infrastructure spending will decrease, but it will take some years to see the impact on highways, bridges and transit. In Marin, the hits will be direct: Decreased park and road maintenance, shorter hours at planning offices and libraries, fewer social services and police and fire departments stretched thin. This isn't a threat. It's a statement of what will inevitably happen as a direct result of dysfunctional state government. The trick is adapting and replacing the old paradigm with a new way of doing business. As in San Rafael, where police and fire personnel refused to agree to a modest 5 percent salary cut to preserve jobs, North Bay governments will be left with smaller cadres of well-paid public employees providing ever declining levels of services.

Phoenix management's 6-figure salaries worry councilman, union head - (www.azcentral.com) Note the Executive Assistant to the City Manager making $170K per year in salary. The 527 city of Phoenix employees who earn more than $100,000 in annual wages account for 7.4 percent of the total salaries paid to full-time workers. But an Arizona Republic analysis shows that those six-figure earners represent only 3.7 percent of the city's 14,343-employee workforce. About 1,375 employees earn more than $88,005, or the base salary of Mayor Phil Gordon. And only one of the top 10 Phoenix earners was a woman. In 2008, the average Arizona worker made just $34,335 a year, according to the U.S. Commerce Department. Councilman Sal DiCiccio, who has criticized the size of Phoenix's spending on employees, said his calculations show the average total cost per worker is more than $100,000, something he sees as untenable as city leaders struggle to close a $245 million budget shortfall through the 2010-11 fiscal year. "That's extremely high, and it tells me we have systemic issues we have to deal with at the city," DiCiccio said. Labor union leaders, who are negotiating a new two-year contract, said the number of six-figure salary earners suggests there's still too much fat at the top.

State workers protest proposed cuts - (www.krqe.com) SANTA FE, N.M. (KRQE) – Angry and passionate protestors took to the roundhouse Saturday, calling for lawmakers to protect the salaries of educators and state workers. The protest was organized by AFSCME, the union which represents many state employees. It started on the steps leading into the roundhouse and continued as hundreds marched around the capitol building. Recently, a proposal was introduced that would cut the salaries of state workers and educators by two percent. On Saturday, a couple of lawmakers spoke out against the proposed cuts. They said the state needs to roll back tax cuts for wealthy residents and make big out-of-state corporations pay more taxes. That message was also echoed by the demonstrators. "They need to do things like charge Wal-Mart for their damn taxes, not us," state worker Linda Komula said. Some lawmakers said they know the cuts will affect thousands of families, but they are needed. Sen. Sue Wilson-Beffort, R-Sandia Park, said the state is in pain right now and lawmakers are trying their best to not hurt one group of residents more than any others. "We have done our best not to have any layoffs with our government employees," Wilson-Beffort said.

LA's budget crisis - (www.scpr.org) The Los Angeles City Council is considering as many as a thousand layoffs – and extending mandatory furlough days for city employees – to address a projected $200 million deficit. City Council President Eric Garcetti says he hopes it won’t come to that, but the situation is extremely serious and drastic measures must be taken. Mayor Villaraigosa says there are concessions other than layoffs that could help, such as pay cuts and letting private contractors take over some city services. What proposals are on the table? And can the cash-strapped city avoid bankruptcy?

Wall of Junk Debt Maturities Looms, Moody’s Says - (www.nytimes.com) The boom in the high-yield debt markets has bought time and breathing space for companies needing extra financial flexibility. But that has come at a cost, according to the latest annual report by Moody’s Investors Service: more than $700 billion will come due between 2012 and 2014. Thanks to both the earlier buyout boom, born of an unprecedented wave of cheap credit, and the recent reopening of the financial markets, companies with speculative-grade paper will find themselves in need of refinancing or repayment in a few years. Whether the improvement in the economy and the rediscovered appetite for risk will head off another disaster remains to be seen, Moody’s analysts caution. “If everything behaves normally and you have an efficient market, things should be OK,” Kevin Cassidy, a senior credit officer at Moody’s, told DealBook on Monday. “But that’s a big if.” With the onset of the credit crunch in 2008, restructuring professionals — the bankers, lawyers and consultants who shepherd clients through reorganizations or bankruptcy filings — found themselves busier than they had been in years. While the number of filings declined later last year, these advisers cautioned that a wall of coming maturities could make increase their workloads yet again.

A Curveball Alters Talks Over Reform of Wall St. - (www.nytimes.com) President Obama’s proposals to tax and curb the activities of Wall Street have thrown an unpredictable element into the debate over financial regulatory reform. They also have touched off an intensive new round of lobbying and raised questions in Congress over whether his plan will add urgency or merely bog things down. For two months, four pairs of Senate Banking Committee members — each with one Democrat and one Republican — have been meeting behind closed doors to reach a bipartisan compromise on regulatory reform. The House already adopted its version, largely along partisan lines, in December. The new White House approach has already prompted the Senate panel, led by Senator Christopher J. Dodd, Democrat of Connecticut, to interrupt those negotiations. On Tuesday, in the first of several hearings on Mr. Obama’s proposals, the committee will hear from Paul A. Volcker, a former Federal Reserve chairman, and the deputy Treasury secretary, Neal S. Wolin.