KeNo's Housing and Economic Portal: Wednesday July 27 Housing and Economic stories

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A Small City’s Depleted Pension Fund Rattles Rhode Island - (www.nytimes.com) The small city of Central Falls, R.I., appears to be headed for a rare municipal bankruptcy filing, and state officials are rushing to keep its woes from overwhelming the struggling state. The impoverished city, operating under a receiver for a year, has promised $80 million worth of retirement benefits to 214 police officers and firefighters, far more than it can afford. Those workers’ pension fund will probably run out of money in October, giving Central Falls the distinction of becoming the second municipality in the United States to exhaust its pension fund, after Prichard, Ala. “Time is running out,” warns Robert G. Flanders, the state-appointed receiver, who recently closed the public library and a community center to save money. He has no power to cancel the city’s contracts with workers, so instead he has begun approaching retired police officers and firefighters with what he describes as “the Big Ask”: will they voluntarily accept smaller benefits in the name of saving Central Falls?

Light bulb ban riles up lawmakers - (money.cnn.com) The so-called light bulb ban, set to begin in 2012, has become a rallying point for conservatives, libertarians, and various free-market activists who deride what they see as unnecessary government interference in the marketplace. A bill calling for light bulbs to become gradually more efficient beginning in 2012 and ending in 2020 -- what critics are calling a ban -- passed in 2007 with bipartisan support and was signed into law by then-President George W. Bush. Because of those higher standards, traditional bulbs will probably be phased out, to be replaced with more efficient incandescent bulbs, compact fluorescents and LEDs. Republicans have been under considerable pressure to roll back those higher efficiency standards, though the House on Tuesday failed to pass a measure that would have done just that. "The government has taken upon itself to decide what people should buy," said Myron Ebell, head of Freedom Action, an activist group he described as "hardcore free market." Ebell's group has been circulating a petition online that he said has garnered tens of thousands of signatures. Many of those who've signed have written their legislators urging an end to the ban.

Plunge Brings Debt Crisis to Italy - (www.bloomberg.com) The plunge in Italian markets overshadowed policy makers’ efforts to fix Greek finances as the euro-region’s debt crisis infected Europe’s largest borrower. Italian bonds fell for a seventh day and the nation’s borrowing costs jumped by more than half at an auction of 6.75 billion euros ($9.4 billion) of bills today. Stocks pared declines after falling to a two-year low. Warnings by Moody’s Investors Service and Standard & Poor’sover Italy’s ability to trim debt, coupled with infighting in Silvio Berlusconi’s government over a budget-cutting plan, fueled the sell-off. “Italy coming under severe market pressure, being the third-largest economy and a founding member of the EU, signals that the sovereign and banking crisis has reached a deeply systemic phase,” Vladimir Pillonca, an economist at Societe Generale SA in London, wrote in a note to investors today. The rout in Italy underscored Europe’s inability to contain the crisis that began in Greece in October 2009 and led to bailouts in Ireland andPortugal. Finance ministers last night failed to agree on how to share with creditors the cost of a second bailout for Greece to be financed primarily by its European Union allies, including Italy.

Cisco Said to Be Cutting as Many as 10,000 Jobs - (www.bloomberg.com) Cisco Systems Inc. (CSCO), the largest networking-equipment company, may cut as many as 10,000 jobs, or about 14 percent of its workforce, to revive profit growth, according to two people familiar with the plans. The cuts include as many as 7,000 jobs that would be eliminated by the end of August, said the people, who asked not to be identified because the plans aren’t final. Cisco is also providing early-retirement packages to about 3,000 workers who accepted buyouts, the people said. Cisco Chief Executive Officer John Chambers is slashing jobs and exiting less-profitable businesses as competitors such as Juniper Networks Inc. (JNPR) and Hewlett-Packard Co. (HPQ) take market share in Cisco’s main businesses with lower-priced, simpler products. Sales of Cisco’s switches and routers, which made up more than half of revenue last year, will continue to slip, said Brian Marshall, an analyst at Gleacher & Co.

The Worst Stadium Financing Deal Ever Is Still Crippling Cincinnati's Taxpayers - (www.businessinsider.com) The Wall Street Journal has a fascinating look at Hamilton County, Ohio, which is being crushed under the weight of the worst stadium financing deal ever. Back in the mid-'90s, the Cincinnati Bengals threatened to leave town unless they got a new football-only stadium. So Hamilton (where Cincy is the county seat) caved. They agreed to build Paul Brown Stadium and to finance almost entire thing. The Journal claims it was the most lopsided of any NFL public stadium financing deal – a problem compounded by the fact that Hamilton paid for it without the help of the state or any of the surround counties. Now, more than 10 years after it opened, stadium costs make up 16.4% of the county budget, with almost no benefit to the surrounding area's economy. (Attendance is actually lower than it was in the old stadium.) Hamilton County faces a $30 million budget shortfall and has had to cancel a planned property tax rollback in order to service their debt.