KeNo's Housing and Economic Portal: Monday July 12 Housing and Economic stories

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Maywood to lay off all city employees, dismantle Police Department - (www.latimes.com) The city of Maywood will lay off all city employees and begin contracting police services with the Los Angeles County Sheriff's Department effective July 1, officials said. In addition to contracting with the Sheriff's Department, the Maywood City Council voted unanimously Monday night to lay off an estimated 100 employees and contract with neighboring Bell, which will handle other city services such as finance, records management, parks and recreation, street maintenance and others. Maywood will be billed about $50,833 monthly, which officials said will save $164,375 annually. "We will become 100% a contracted city," said Angela Spaccia, Maywood's interim city manager. Deputies from the East Los Angeles Sheriff's Station will begin patrolling the 1.2-square-mile city by the end of the month, said Capt. Bruce Fogarty of the Sheriff's Contract Law Enforcement Bureau. The annual cost of providing those services for the small city is estimated at $3.6 million, Fogarty said. At a council meeting Monday night, city leaders said they were forced to dismantle the Police Department and lay off city workers because they lost insurance coverage as a result of excessive police claims filed against the department. They also blamed years of financial abuse and corruption from the previous council. "We're limited on our choices and limited on what we can do," Councilman Felipe Aguirre told the standing- room-only crowd. Frustrated and enraged residents blame the council for the city's predicament, and for not following an insurance agency's recommendations, which council members had agreed to last August. The recommendations included hiring a permanent city manager.

Facing Deficit, Britain Unveils Emergency Budget - (www.nytimes.com) Setting the scene for years of potential strife with the powerful public-sector unions and their allies in the Labour Party, Britain’s new coalition government on Tuesday unveiled the most severe package of spending cuts and tax increases since the early days of Margaret Thatcher’s era. After only six weeks in office, the government of Prime Minister David Cameron took what his coalition of Conservatives and Liberal Democrats acknowledged was a historic gamble: that austerity measures will help balance the government’s books without pitching the country into a double-dip recession. The cuts and tax increases, including average budget reductions of 25 percent for almost all government departments over the next five years, will make Britain a leader among European countries, including Ireland, Greece and Spain, competing to show they can slash spending and appease investors worried about surging debt. But the sharp reductions defy conventional economic wisdom, which holds that governments should increase spending to stimulate growth when the private sector is weak.

BP Oil Disaster Costs U.S. State Pensions $1.4 Billion in Value - (www.bloomberg.com) The California Public Employees’ Retirement System lost $284.6 million in value as the largest oil spill in U.S. history erased more than $1.4 billion from BP Plc shares held by 42 state retirement accounts, data compiled by Bloomberg show. BP, the biggest producer of oil and gas in the U.S., has lost 47 percent of its value since a Gulf of Mexico well blew out April 20, destroying the Deepwater Horizon drilling rig, killing 11 of its crew and polluting beaches from Louisiana to Florida. The declines come as public pension funds are struggling to recover from investment losses that averaged 21 percent last year, according to Wilshire Associates of Los Angeles. U.S. public pension systems held more than 300 million shares of London-based BP, according to Bloomberg data through May 1. Calpers, the largest U.S. public pension at $210 billion, held 58.2 million shares of BP on April 20, more than any other state pension, and saw the value fall to $301 million from $585.7 million, according to Bloomberg data.

Trichet’s fiscal stance to raise hackles in US - (www.ft.com) Jean-Claude Trichet, the European Central Bank president, has put himself on a collision course with the US by arguing strongly that tighter fiscal policies are the best way to foster growth in industrialised economies. Firm control of government spending and tax policy was essential to restore the confidence of households, business and investors, Mr Trichet told the European parliament. "We are in a situation where a lack of confidence is operating against recovery," he said. "A budget policy which from a certain point of view you might describe as restrictive is in fact a policy which we would call confidence building." His comment highlighted the gulf in thinking between US and continental European policymakers and clashed with comments last week by Barack Obama, US president, urging other G20 countries to boost domestic demand. Mr Obama's message appeared aimed particularly at Germany and China and presaged a heated debate at G20 meetings in Toronto, Canada, starting later this week.

U.S. reports fewer enrollees, more dropouts in federal mortgage relief program - (www.washingtonpost.com) The Obama administration's marquee foreclosure-prevention initiative continues to struggle, as government data released Monday show that fewer homeowners are enrolling in the program and more are losing their federal mortgage aid. Lenders enrolled homeowners into the mortgage relief effort, known as Making Home Affordable, at a slower pace last month after federal officials tightened the qualification process. Since the program's launch last year, about 340,000 homeowners have received a permanent loan modification that lowers their mortgage payment for five years. But a growing number of borrowers are failing to move from the program's initial stage into a permanent loan modification. Lenders have said that many homeowners are failing to make the reduced loan payments and others have not been able to prove they qualify for mortgage assistance. The number of borrowers dropped from the program, about 436,000, eclipses those who have been helped, according to Treasury Department data. More than 100,000 borrowers lost their mortgage aid in May.