August 17, 2011

Florida and California in state of financial emergency again

Being European I have devoted too much time lately to the sorrow state of the Eurozone and lost focus on the twin crisis evolving on the other side of the pond, while in Europe we have failing nations the situation in US is not dissimilar with the MUNI Crisis and the failing states. A couple of new reports today from Florida and California highlighted below:

Miami Declares Financial State of Emergency

Bloomberg reports Miami Declares ‘Financial Urgency’ as It Moves to Cut Worker Pay, Benefits
Miami, facing a $61 million fiscal 2012 deficit, declared a state of “financial urgency” for a second straight year, moving toward wage and benefit cuts.

The declaration gives unions for municipal workers two weeks to agree to contracts for the year that starts in October or be subject to actions imposed by the City Commission. Workers including police and firefighters absorbed about $80 million in reduced pay, health insurance and pensions in fiscal 2011.

Miami joins at least two Florida cities that also have invoked the fiscal statute, including one that may force reductions on union workers. Hollywood, which made a declaration in May, is set to cut salaries, including for police and firefighters, as much as 12.5 percent. State law gives cities special powers when they declare financial urgency.

Standard & Poor’s cut Miami’s general-obligation bond rating two steps to BBB, the second-lowest investment grade, on June 28 and gave it a negative outlook, partly because of lawsuits from city unions stemming from cuts imposed in August 2010. The legal actions “expose the city to significant liabilities at a time when its available reserves and liquidity are low,” S&P said in a report.
California Revenue $541 Million Below July Forecast

More budget cuts are coming to California where Revenue Fell $541 Million Below July Forecast.
California revenue fell short of budget estimates by $541 million or 9.2 percent in July, the first month of the 2012 fiscal year, the state Finance Department reported.

The data was similar to figures from Controller John Chiang, who said Aug. 9 that cash receipts for the month missed the forecast by $538.8 million. Chiang said the shortfall may mean further budget cuts are needed.

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