Reuters blog archive
Since going through a three-year bankruptcy process, a lot of wonderful initiatives have taken place in Vallejo, California - a city of 118,000 people in the northern end of the San Francisco Bay. After the city’s police force was cut down over 300 community watch groups formed to protect neighborhoods. The city recently launched Nextdoor, a private social network platform for neighborhood communication. In the most substantial move, the city has established a first in the nation “Participatory Budgeting” process. It was described by a participant as:
Funded by $3.2 million dollars allotted by a citywide sales tax passed by Vallejoans while still in bankruptcy, the city of Vallejo embarked on Participatory Budgeting (PB), the first US city to ever try PB citywide. PB Vallejo garners ideas from its stakeholders and citizenry with the goal of funding proposals that benefit the public, are a one-time expenditure, and are implemented by the city of Vallejo or other approved public agencies and nonprofits.
Did the city residents take it up?
Over 600 people assembled together at meetings across the city and online at www.pbvallejo.org to come up with over 800 ideas and suggestions on the well-being of Vallejo. 100+ volunteer budget delegates have worked together and with city staff to flesh out those ideas into viable proposals. These proposals will go onto a ballot in May where the citizens of Vallejo, ages 16 and above, will vote on which plans will go forward to the city council to fund and implement this fiscal year. The budget delegates are now preparing for three planned expos in April where they will present the proposals that will be on the ballot so the voters of Vallejo can interact, ask questions and walk away with what they need to make an informed vote.
Kudos to Vellejo’s residents for their momentum and spirit in helping their bankrupt city. It shows superior initiative. But the structural fiscal problems, which the city could have addressed through the bankruptcy process and chose not to, remain. Even after spending an estimated $12 million on bankruptcy and legal fees, the city has fiscal problems. Standard & Poor’s Gabriel Petek led a cost benefit analysis on Vallejo’s bankruptcy and determined (emphasis mine):
from Photographers Blog:
As wildfires rage through California, photographers Patrick Fallon and Jonathan Alcorn describe working on the fire line.
By Patrick Fallon
Driving up the 101 towards the Dos Vientos neighborhood in Newbury Park, California, I could see the fire's thick, black smoke - a sign the fire was burning fresh brush, fueled by strong winds.
from Photographers Blog:
Los Angeles, California
By Jill Kitchener
If a guy wanted to take me to a gun club for a date, I don’t know how I’d react. Growing up near Toronto, Canada, guns have never played a role in my life - most certainly not my dating life. Shooting guns as a recreational activity has never caught on in my social circle.
Yet I found myself at the Los Angeles Gun Club with photographer Lucy Nicholson while on vacation.
from The Great Debate:
It is not a national election year, but the “red state versus blue state” wars continue. Texas Governor Rick Perry's recent foray into California, to lure away businesses and jobs, signals more than a rivalry between these two mega-states. The Texas-California competition represents the political, economic and cultural differences driving American politics today – and for the foreseeable future.
Texas and California are robust political and economic competitors. We don’t know which will be the template for the future. As California emerges from its economic and fiscal doldrums and some of Texas' vulnerabilities become evident, it is now far from certain that Texas will emerge the victor.
from The Great Debate:
Valentine’s Day is a time when couples go out for romantic dinners and exchange gifts, while singles meet up in bars, hoping to make some bad decisions. Valentine’s Day is also a day when people with crazy ex-boyfriends or -girlfriends are reminded of how thankful they are for anti-stalking laws.
Every state has made stalking a crime. These laws help protect people who might otherwise live in fear. Yet labor unions have successfully, and disconcertingly, lobbied to be exempt from anti-stalking laws in at least four states – California, Pennsylvania, Illinois and Nevada.
The state of California received some good news this week when credit rating agency Standard & Poor’s upgraded the state’s long-term rating to “A” on its $73 billion in general obligation (GO) bonds (a single A rating is four notches below AAA). It’s certainly a feel-good moment for Governor Jerry Brown and other public officials. The municipal bond market has been anticipating the state’s improving credit position for the last year, as you can see in the chart above. It shows that the extra interest cost (over the AAA gold standard) on the state’s bonds has declined in the last year. The Golden State is getting some sunshine in muniland.
A single “A” rating is not great for a state, especially one as large as California, which has substantial debt to service and relatively volatile tax receipts. Among the positive praise that Standard & Poor’s gave the state, there were also reminders of the risks that the state faces in achieving real fiscal stability. These risks include lawmakers loosening their fiscal restraints and restoring the social spending that had been cut during the fiscal crisis. Translation: Politicians will revert to promising more than they can afford. S&P explains (requires free registration):
The Golden State, under the leadership of Governor Jerry Brown, has done a remarkable job of managing its finances through the worst economic period since the Great Depression. Because the state was the epicenter of the housing bust, its fiscal meltdown was one of the most severe in the nation. Although three California cities have declared bankruptcy (with others to possibly come) the state deserves a lot of credit for getting through a very rough period.
The governor held a press conference touting the state’s recovery. However, fireworks and champagne to celebrate recovery would be a little premature. Adam Nagourney of the New York Times reported:
from The Great Debate:
The Internal Revenue Service created a bit of a kerfuffle last week when it announced that it would no longer publish data on interstate taxpayer migration and the income they take with them. This would be a huge disservice not just to economists and policy analysts but to all Americans.
This IRS migration data provides the best evidence that low-tax, limited-government states attract employers, families and individuals, while states pursuing the same policies as the White House – higher taxes, bigger government and more onerous regulations – drive businesses and taxpayers away. It’s not hard to fathom why the Obama administration, despite its promise to be the most transparent in history, would want the IRS to stop publishing this damning evidence.
In the past year, three California cities have filed for bankruptcy. This casts a pall on the bonds of other California cities, because investors wonder if they also contain buried fiscal issues. In an effort to create more transparency, a new open source ratings project was recently launched:
Responding to market concerns about municipal credit quality, the California State Treasurer’s Office has commissioned a San Jose State University economist and a government-bond research group, Public Sector Credit Solutions, to develop a default probability model for city bonds.
from Unstructured Finance:
By Matthew Goldstein and Jennifer Ablan
It's been almost six months since we first reported on the plan by Mortgage Resolution Partners to find a community willing to use eminent domain to condemn and restructure underwater mortgages and pay a handsome fee to the private investment group for overseeing this process. The proposal has generated a lot interest, debate and heat, but so far no community is yet willing to go down this road.
Still, Steven Gluckstern, chief executive of the San Francisco-based group, said he's confident that by early next year some community--most likely one in California--will go forward with the idea of condemning underwater mortgages and rewriting them so cash-strapped homeowners can afford the payments and stay in their homes.