Soak the Rich Game

Fellow blogger, Ohioan and friend Jason Hart, created a terrific and fun game/graphic that allows you to "Soak the Rich" by giving you a turn at solving America’s $15.6 Trillion national debt.

It explains:

Politicians, the editorial page of The New York Times, the talent at CNN, and the average Fine Arts professor agree: the answer to America’s debt crisis is to make The Rich pay their “fair share.” With this consensus from such a broad swath of America’s leading minds, who are we to argue?

Let’s start with a realistic goal: the 2011 federal deficit of $1.3 Trillion. Click an industry to double income taxes on the nation’s largest employers and take all of their CEOs’ pay. For more information, simply click each industry you’d like to soak. Track your progress below, and click the “Show Results” button at any time to see the impact of your new taxes!

It shows a bunch of green (the color of money) boxes representing industries from Aerospace to Utilities. Below that is a red (color of debt) progress bar. Each individual tick on the progress bar equals $2.16 Billion in new taxes.

As you select an industry, an information box pops up. For instance, I selected Oil & Gas - evil companies that they are - and found this:

Soak Marathon Oil Corp. and the 39 other Oil & Gas companies in the S&P 500 index?

Doubling corporate income taxes and taking CEO pay will provide $63.9 billion in new taxes, undercut 22.1 billion shares of stock, and threaten 672,685 jobs.

Don't worry... some of those jobs are overseas!

Of course, my choice was "soak 'em" and not "cancel" which resulted in the progress bar turning green for about a quarter of an inch. So much for evil oil and gas.

You can then 'check your results' to see what you've accomplished. For my Oil & Gas selection, I managed to cover 4.8% of a single year's federal deficit. Oh - and with that same amount of money I could have bought "Wembley Stadium, a baker's dozen Boeing 787s, a Porsche 911 Turbo for yourself and each of your 99 closest friends, and 5 Manhattan penthouses overlooking Central Park with a cool $1 billion & change left over."

Check it out for yourself here and see if you can solve the budget crisis. Oh - be sure to share it with anyone who spouts off that taxing the rich is the solution.

Toledo CIP - source of all for everything - is running dry

In his State of the City address today at the Toledo Rotary (viewable here), Mayor Mike Bell said he wants to restructure the Capital Improvement Plan funds in order to borrow $28 million for street paving in 2012 and 2013.

The problem is that Toledo City Council has decimated the CIP fund over the past several years in order to cover general fund - or every day - expenses. This has left us with virtually nothing in the CIP to cover the necessary CIP expenses like road repair.

Council transferred funds because they just couldn't find anywhere to cut, despite funding things like Easter Egg hunts, hip hop concerts, arts projects and a host of other unnecessary (though desirable by some) items. In fact, tomorrow they will vote on transferring another million because revenue they expected from the new casino isn't yet coming in due to a delay in the casino opening.

Despite warnings that routinely relying upon the CIP to balance the general fund would lead to shortages in the long-term, council continued to do so.

Now we are faced with borrowing $28 million to cover our necessary expenses because there's nothing left. Interestingly, this will be the highest amount of debt issued since 1998 - more than twice the $13.5 million that was issued in 2003.

Toledo transferred out $7 million in 2011 to cover the 2010 budget deficit. They depleted their rainy day fun years ago. I believe the last time I added it up, it was around $50 million that had been taken out of the CIP and transferred into the general fund to cover every day expenses.

If council had just lived within its means and not transferred the money out of the CIP, we wouldn't have to borrow anything in 2012-13 to pay for road repaving.

But since Toledo voters approved letting council raid the CIP, there is no incentive for them to not do so. They spend the money knowing they can just raid the CIP to cover their pet projects and special programs, expecting to let future councils deal with the consequences.

Fortunately, the 3/4% payroll income tax will be on the ballot this year and Toledoans will have a chance to tell council "NO!"

Obama's credit downgrade speech misses the mark in too many ways

I don't actually watch or listen to any of President Barack Obama's speeches, but I do read each one of them on the White House web page.

I happen to find his speech pattern - specifically the decline/drop of his voice at the end of each sentence - particularly annoying and find that if I listen to him, I pay more attention to that pattern than to what he is actually saying. And that's not a good thing.

It's not just him - I didn't like George H.W. Bush's speech patterns either, though I seemed to enjoy listening to George W. Bush and his odd pronunciation of nuclear. Anyway - it's not a partisan thing, though my opinion about what is being said could certainly be construed as such.

Actually, I don't think my perspectives are as much 'partisan' as they are just common sense. And that goes for Pres. Obama's comments yesterday about our nation's credit downgrade.

He starts with this:

On Friday, we learned that the United States received a downgrade by one of the credit rating agencies -- not so much because they doubt our ability to pay our debt if we make good decisions, but because after witnessing a month of wrangling over raising the debt ceiling, they doubted our political system’s ability to act. The markets, on the other hand, continue to believe our credit status is AAA. In fact, Warren Buffett, who knows a thing or two about good investments, said, “If there were a quadruple-A rating, I’d give the United States that.” I, and most of the world’s investors, agree.

Actually, the downgrade wasn't just because of the wrangling. Their report actually states:

The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics.

Hmm...so what they're saying is that 'it's the spending, stupid.' They do say that the differences between the parties contributes to their concern - not because of the fact that they disagree, but because the compromises don't yield solutions to the debt problem.

They also say:

The outlook on the long-term rating is negative. We could lower the long-term rating to 'AA' within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.

So they warn that continued failure to reduce spending or increased interest rates or other factors that raise the debt higher than their projections will result in further downgrades. This is a common sense conclusion and certainly predictable.

But if the President thinks the main problem is the lack of agreement by politicians, then he's starting with an incorrect premise - and that will lead to incorrect conclusions. Agreement between elected officials won't mean much if the agreement is just a panacea or something designed to give cover to incumbents without actually making the tough decisions that need to be made by a broke nation.

The President then says that the markets continue to believe we have a AAA rating. Um...not sure what 'markets' he's referring to but if he's talking about selling U.S. bonds, then I'm not sure we'd know that until the next sale. If he's talking about Wall Street, well, he's delusional.

He then says:

The fact is, we didn’t need a rating agency to tell us that we need a balanced, long-term approach to deficit reduction. That was true last week. That was true last year. That was true the day I took office.

Well, if that's the case, why didn't you do something about it already, Mr. President? In 2008, you said the need to raise the debt limit was a sign of poor leadership. But once you found yourself in the same situation you changed your mind. Your budgets have proposed increased spending and increased debt - more than the record amount you've already added. If deficit reduction has been a problem you've known about since becoming president, why haven't you done more to address it?

We knew from the outset that a prolonged debate over the debt ceiling -- a debate where the threat of default was used as a bargaining chip -- could do enormous damage to our economy and the world’s.

This is where I had to stop reading. If Pres. Obama knew - as he clearly admits - that using the threat of default as a bargaining chip could do enormous damage to our economy, why did he use it?!?

He is clearly admitting that the threat of default was a political ploy and he willingly used it in the discussions. If he knew it would do "enormous damage" and then he deliberately used it, is he admitting he intentionally caused "enormous damage" to our economy?!? Why would he say such a thing?

This is just outrageous and I cannot believe, even with the main stream media carrying water for him, that no one bothered to ask such an obvious question.

He says the problem is solvable - with his solution:

What we need to do now is combine those spending cuts with two additional steps: tax reform that will ask those who can afford it to pay their fair share and modest adjustments to health care programs like Medicare.

Again, he talks about 'those who can afford it' paying their 'fair share.' Of course, he never defines 'fair share' and it would be hard to do so since the top 1% of income tax payers already are paying 38% of the taxes.

In fact, for tax year 2008, the most recent for which I could find figures, those making more than $159,619 (significantly less than the $250,000 figure always cited by the president) pay 58.72% of the taxes.

Hmm...let's repeat that. The top 5% of wage earners (those making more than $159,619) pay more than half the taxes collected. How, exactly, is that fair?!? It's not - but it falls into the President's penchant for class warfare - and it certainly sounds good to people who are paying nothing.

And what about 'modest adjustments' to Medicare? It is the President's own party and supporters who create commercials of Republicans tossing granny off the cliff at the mere mention that perhaps maybe we could just *look* at Medicare to see what savings we might be able to *consider.*

Does anyone really think that this President is going to propose any concrete changes to Medicare - or that Democrats and/or Republicans in Congress are going to pass them? He knows there isn't the political will for such things - and he even says so.

So it’s not a lack of plans or policies that’s the problem here. It’s a lack of political will in Washington. It’s the insistence on drawing lines in the sand, a refusal to put what’s best for the country ahead of self-interest or party or ideology. And that’s what we need to change.

The problem is that he is the one doing exactly what he's criticizing. He's the one drawing lines in the sand saying that tax increases have to be a part of the deal. But he never actually presented a plan to be voted up or down. And the lack of transparency on this and other items is the butt of jokes - even from liberals.

But don't fear - he has a plan:

I intend to present my own recommendations over the coming weeks on how we should proceed.

I guess I'm wondering why he doesn't already have his recommendations ready?

And the good news here is that by coming together to deal with the long-term debt challenge, we would have more room to implement key proposals that can get the economy to grow faster. Specifically, we should extend the payroll tax cut as soon as possible, so that workers have more money in their paychecks next year and businesses have more customers next year.

This I just don't get. He and his fellow Democrats say the problem isn't the spending - it's that the government isn't collecting enough 'revenue' (meaning taxes). And yet, he wants to continue a tax cut. Now, I happen to believe that lowering taxes is a good thing for an economy, but the President can't have it both ways. He can't say he needs more revenue while at the same time saying he wants to lower payroll taxes. The positions are contradictory and in conflict.

But the worst part about this is that idea doesn't do what it's intended. Tax rebates do not stimulate the economy because people usually save the money - especially in down economic times. Unlike the government, they don't go out and spend it just because they have it.

And a consideration which seems to elude this president, his administration and members of Congress is that even if there is a slight uptick in economic activity as a result, companies are not going to hire new people or build additional plants just because of a one-time boost.

We should continue to make sure that if you’re one of the millions of Americans who’s out there looking for a job, you can get the unemployment insurance that your tax dollars contributed to. That will also put money in people’s pockets and more customers in stores.

Here he is continuing in a failed program - extensions of unemployment payments have not done anything to 'stimulate' the economy. Too many individuals are getting more from unemployment than they can earn (in today's economy) by working. So they are staying on unemployment instead of accepting a position. This is clearly not all individuals, but there are a significant number of anecdotal reports (and I know several people personally) that lead me to believe the number is higher than most might want to admit.

Additionally, since the federal government is borrowing money to hand out to people in unemployment extensions, etc..., the long-term cost of the short-term benefit is extremely high and much more detrimental to the nation than any blip the economy might see from the temporary extension he's suggesting.

We should also help companies that want to repair our roads and bridges and airports, so that thousands of construction workers who’ve been without a job for the last few years can get a paycheck again. That will also help to spur economic growth.

Here we go again with the failed 'stimulus' thinking. It didn't work the first time around and, in fact, the administration's own numbers show that the economy would have been better off without it, as this quote demonstrates:

"According to this study, the unemployment rate with the stimulus plan in the third quarter of 2011 was supposed to be 6.5 percent, instead of the current 9.1 percent. Doing nothing would have yielded 7.7 percent unemployment. Even by their own economic estimates, doing nothing would have been better for America than what the Democrats did."

And if infrastructure spending is such a good idea for a stimulus, why did only 3% of the last stimulus go to such projects?!? Remember those shovel-ready jobs? Even the President admitted they weren't as 'shovel-ready' as he expected, as Jonah Goldberg explains:

After all, Obama has pretty much said the same thing several times. In a New York Times Magazine profile last October, the president admitted he had to learn the hard way that there’s “no such thing as shovel-ready projects.”

This is a staggering indictment of the president, the team he assembled, and the journalists who accepted this administration’s arrogant assertions that they knew exactly what to do, how to do it, and what would happen as a result.

So what makes him think this time around will be any different? The President is being stupid - and insane. You all know the definition of insanity: doing the same thing over and over again, but expecting different results. Another stimulus plan, which is what he's talking about, fits that definition.

These aren’t Democratic proposals. These aren’t big government proposals. These are all ideas that traditionally Republicans have agreed to, have agreed to countless times in the past. There’s no reason we shouldn’t act on them now. None.

Here he is definitely wrong. While I will agree that Republicans and Democrats have supported such ideas in the past, they are clearly a big-government proposal. They are based upon the idea that government is better at spending money than the private sector. They *assume* that government taking taxes out of the economy and spending those dollars on specific projects will have a higher return on investment than leaving in the economy in the first place. They are from the concept that more government spending (and borrowing or taxing to pay for the spending) is a viable substitute for market activity.

It didn't work in the New Deal, it didn't work in the last stimulus and it won't work now. And just in case you doubt me on this - just look at Greece.

The President did try to be reassuring. Reading the words, I'm not sure he was successful in this. But even in his reassuring/rallying call to the American people, he fails to grasp a basic understanding of the majority of this country - and the principles on which this nation was founded; principles which made us so great to begin with.

First, he continually calls us a 'democracy.' We're not a democracy, we're a republic - and there is a significant difference between the two (look it up if you don't already know). That he constantly gets this wrong concerns me. Then he says:

The American people have been through so much over the last few years, dealing with the worst recession, the biggest financial crisis since the 1930s, and they’ve done it with grace. And they’re working so hard to raise their families, and all they ask is that we work just as hard, here in this town, to make their lives a little easier. That’s not too much to ask.

Wrong! Wrong! Wrong!

The American people don't want government to make our lives easier - we want government to leave us the hell alone! My life would be so much easier if I didn't have government thinking it knows better then me how to spend my money, what kind of car to purchase, how many miles per gallon I should get from that car, how many gallons of water my toilet can use to flush, what kind of light bulbs I can purchase, what kind of washing machine I can buy, what the energy efficiency on my refrigerator needs to be, what kind of food I can eat or what kinds of warnings companies must put on their food packaging when I have the temerity to eat stuff the government has decided is 'bad' for me, and on and on and on.

Most people don't get up in the morning and wonder, 'how can government make my life easier?" They usually wake up and just hope and pray government won't find some new way to intrude.

This is clearly a conservative vs. liberal perspective, though not necessarily a Republican vs. Democrat one. Maybe there are some liberals out there who think the proper of role of government is to make their lives easier. That might explain a lot of things. But that is clearly not what our founders were looking for when they left British rule and established these colonies and then an independent nation. In fact, it's just the opposite.

How does a president of the United States get something so completely wrong?

The Washington Times has a great editorial on the speech which hits on a couple of points I don't. And I think, considering their conclusion, I'll leave you with it:

The president refuses to admit that he is part of the problem. “There will always be economic factors that we can’t control,” he said. “Earthquakes, spikes in oil prices, slowdowns in other parts of the world,” seemingly arguing that these factors have something to do with the current crisis, which they do not. He chose not to mention his limitless appetite for spreading around borrowed money. Federal non-defense spending as a percentage of gross domestic product averaged 15.6 percent from 1975 to the advent of the Obama presidency. Since then it has zoomed to an average of 19.6 percent and is headed up. Even the prospective future budget “cuts” in the debt ceiling agreement still institutionalize $7 trillion in spending beyond the government’s means over the next ten years. This is the problem, not earthquakes.

Mr. Obama said he had great faith in the country, but he has a funny way of showing it. In justifying the U.S. credit rating downgrade Standard and Poor’s Managing Director John Chambers quoted Mr. Obama saying that the U.S. political system was “dysfunctional.” Who would invest in a corporation whose chief executive describes the company’s management in such terms? Never fear, Mr. Obama said Americans have always risen to the challenge with entrepreneurship, innovation and hard work. Given Mr. Obama’s insistence on increasing the number of costly government regulation, his blame-the-rich approach to economics, and burdensome, job-killing health care plan, no president has done more damage to this spirit of enterprise. Mr. Obama said that “this is the United States of America… We always have been and always will be a Triple-A country.” If only we had a Triple-A leader.

It's the spending, stupid!

The USA Today's lead story, Americans pay less taxes, demonstrates how percentages and statistics can distort a picture and lead to the wrong conclusions.

The article itself is pretty balanced in terms of presenting the picture, but how it will be used to justify more taxes is the problem. From the article:

The total tax burden — for all federal, state and local taxes — dropped to 23.6% of income in the first quarter, according to Bureau of Economic Analysis data.

By contrast, individuals spent roughly 27% of income on taxes in the 1970s, 1980s and the 1990s — a rate that would mean $500 billion of extra taxes annually today, one-third of the estimated $1.5 trillion federal deficit this year.

"See," the liberals and some politicians will say, "this means we need to raise taxes. The government would have another $500 billion if we just brought taxes up to what they were before."

But that's the problem with such analysis of tax rates - data taken out of context, or without examining WHY the percentages and data exist, mean you come to wrong conclusions.

The article does explain that the percent of income is a reflection of lower taxes, including a recent reduction in Social Security taxes, and a weak economy. But it doesn't explain how much is attributed to each reason.

Obviously, if people are earning less, they're paying less in taxes. And cutting the amount of Social Security tax people pay, while a good idea and one I like, means that Social Security (which is broke already) will certainly run out of funds even sooner than predicted. Social Security is a ponzi scheme that, if done by anyone but the government, would land a person in jail. But that's another post for another time.

Then there is this quote:

"We have a 1950s level of taxation and a 21st-century-sized government," says Robert Bixby, executive director of the Concord Coalition, a deficit-reduction advocacy group.

Hmmm ... If you start from the premise that our current size of government needs to be maintained, your only conclusion is that taxes must go up to continue it. While government has grown, there is no 'evidence' that a 21st-century-sized government is necessary or even Constitutional.

In fact, since the 1950's, we've expanded government exponentially - far beyond what the Constitution authorizes. For instance, there is no authority in the Constitution for Congress to regulate education, yet we have a U.S. Department of Education, a cabinet-level department.

The Department of Education wasn't established until 1979. In 1980, its annual appropriation was $14 billion. In 2009, it was $65 billion. That's a 364% increase in 30 years. Did your wages go up that much??? And if we're really interested in the discrepancy between revenue and spending, shouldn't we first start with cutting spending before confiscating more money from citizens? We could eliminate the Department of Education and get to 13% of the $500 billion figure cited.

The article also includes this quote:

The fall in taxes is almost entirely caused by a weak economy rather than lower rates, says Curtis Dubay of the conservative Heritage Foundation. "It's easy to draw the wrong conclusion," he says.

And Dubay is correct. The problem isn't the revenue, it's the spending, as the last paragraph of the article explains:

Government spent at an annual rate of $18,086 per person in the first quarter. That's up from $13,552 in 2001, adjusted for inflation. The difference between individual taxes and spending comes from corporate taxes, user fees and borrowing.

Corporate taxes are passed along to the individual as an inclusion in the price paid, so individuals 'pay' those taxes as well. According to the analysis, "Individuals paid taxes at an annual rate of $10,549 per person in the first quarter." So government is spending $7,537 more per person than it's getting and corporate taxes and fees don't make up that much of the difference, which is why our government is borrowing to the point that they want to raise the debit limit.

And rather than reducing the spending, they keep wanting to take more of our money.

I'll say it again: we have a spending problem - not a revenue problem, as the majority of Americans are realizing.

Quote of the Day - unsustainable

Since I'm working on gathering information for filling in on WSPD this afternoon from 3-6 p.m, I though it was a good time for this quote from Sheldon Richman, editor of "The Freeman" and TheFreemanOnline.org (publications of the Foundation for Economic Education), on the federal fiscal situation:

"The current trajectory is unsustainable in the ruling establishment’s own terms. If nothing changes, in perhaps a little more than a decade all the central government’s revenues will be consumed by Medicare, Medicaid, Social Security, and interest on the burgeoning debt, which, at more than $14 trillion, is closing in on 100 percent of GDP. The central government now borrows 40 cents of every dollar it spends. Imagine how upset the ruling elite will be when it can spend money on nothing but so-called entitlements and interest? That would leave nothing for the military-industrial complex, nothing for business and farm subsidies, nothing for all the ways that politicians buy off constituents so they can be reelected over and over. Obviously, they don’t want that to happen."

For more, see his complete article, "Had Enough Yet? Thank you, political class."

America's fiscal crisis - a non-political perspective

There are a lot of perspectives on America's financial status these days - mostly political ones. So how is an average person supposed to make heads or tails of the truth considering the claims on both ... well, on ALL ... sides?

TechCrunch had this article which highlights a new study:

So how can we be so apathetic when we see true abysmal fiscal neglect, especially when it’s that of a pseudo-company in which we all essentially own shares?

That pseudo-company is the United States government and in a thorough report issued today, Kleiner Perkins partner Mary Meeker has taken all emotions, politics, spin and manipulation out of the issues, to present a steely-eyed view of just how hosed our financial situation is. Spoiler alert: It’s not pretty. America is gripped by a new red menace and this time, it’s not the commies– it’s a sea of red ink. If politicians reported to voters the way management reports to shareholders, no one would finish out their terms.

If you’re a tax-paying American, you should read the report (embedded below) to see how your money is being spent. If you’re not an American, you should read it too. Far too often blogs like ours trumpet the advantages of living and starting a business in this country, of which there are many. But here’s a sober view of the downside of our wishfully innate belief that we deserve to have it all: We are in a deep financial hole, and there’s not an easy, pain-free or politically palatable way out.

They further explain - and this is the point I like - "the interesting thing is why she wrote it: Because for all the hand-wringing over the cost of health care and the state of our deficit, she had a hard time finding the simplest data for what America’s financial situation was."

Here is the report. Please read it and understand the financial picture minus the spin.

Quote of the Day - Ohio's budget mess

From my friend, Scott Allegrini, who is also the leader of the local tea party group, the Children of Liberty:

"In Ohio spending in 2000 was 19.243 billion it increased to 26.783 billion in 2009 that is a 39.1% increase. Ok well that is a lot of money to spend, but if income kept up it would be no problem right.

Ohio income tax receipts in 2000 was 15.617 billion and it increased to 17.093 billion in 2009 a 9.4% increase. Ok so with a decrease in the tax rate Ohio Tax receipts increase by almost 10%.

So the state increased spending by 39% but income increased by only 9.4%, you don’t have to be a economist to see the problem here."

Roundup: Obama's budget and the deficit

There's been a lot of media and blogger coverage of President Barack Obama's budget, which is anything but the 'limit' on spending that he's trying to spin it as, and the impact on the deficit in the short and long term.

So I thought you'd like to see these two excellent posts to add to your knowledge:

1) My friend Steve Eggleston, who blogs at No Runny Eggs, says there is no deficit reduction. He spent hours comparing the budget to the CBO's "Budget and Economic Outlook" released last month, which assumes revenues and mandatory spending increase (or decrease) according to existing laws up until on-schedule expirations, and that discretionary spending increases at the rate of inflation. He said, "As the old Hertz commercials went, there's "deficit reduction", and "'not exactly' deficit reduction", and this is "not exactly"."

I hope you'll read his analysis: Obama’s FY2012 budget – worse than doing nothing.

2) Keith Hennessey is a former Assistant to the U.S. President George Bush for Economic Policy and Director of the U.S. National Economic Council. He has a blog where he posts on economic policy, among other things. His most recent entry, The long term budget problem begins now, has a startling chart, based upon Obama's own budget numbers, that should have us gathering up pitchforks and marching on Washington. But true to his style, he doesn't just give you the data, he explains what it means.

Take the time to read both of these posts and educate yourself about what your 'representatives' are doing on your behalf (and to your children, grandchildren and great grandchildren!).

Toledo consolidating garages to save money

This press release was sent via email:

FOR IMMEDIATE RELEASE
Tuesday, May 12, 2009

City of Toledo Garage Consolidation Will Save Taxpayers Half-A-Million Dollars

Today Mayor Finkbeiner announced that effective June 5, The City of Toledo Division of Facility and Fleet will consolidate its three Fleet Operations service garages - a move which will annually save Toledo taxpayers approximately $500,000.

Spielbush Garage (1915 Spielbush) will be closed, remaining open only for gas dispensing. All service will be moved to Imlay Garage (3917 Imlay St.), where all Police and Fire safety equipment will be serviced and maintained.

This restructuring will drastically reduce overtime - and save an estimated $500,000 -- by implementing three working shifts, which will give the City of Toledo 24/7 service without emergency overtime costs.

Mayor Finkbeiner released the following statement: "These economically challenging times force us to find new, innovative ways to provide service to our citizen, while reducing costs. This consolidation of our service garages will practically eliminate emergency overtime in Fleet Operations, while improving service to our citizens."

I'm glad they're doing this - I just wonder what took them so long.

And if they're doing this now, it's painfully evident that months ago when they said they'd done everything they could to cut costs, they weren't being exactly truthful.

On the plus side, these savings have not previously been identified in any press release as costs to be eliminated, so this change should directly impact the deficit.

The problem is spending - not a lack of revenue

At yesterday's City Council hearing, the administration presented a chart showing revenues back to 1998, I believe. As I was not able to be at the meeting, I have no idea if they also showed expenses as well - especially compared to those revenues.

So, I thought you'd like to see the expenses versus the revenues from as far back as I could get, which is 2003. In the chart below, the figures for 2009 are projected and the numbers for 2008 are the approved budget, since the final numbers for 2008 are not yet on the city's website.

It's interesting to note that in only two years were the revenues higher than expenses (2005 and 2007) and then only slightly.

What this clearly shows is that the revenue isn't the real problem - the real problem is that the mayors and city councils have routinely spent more than they took in.

So maybe it's no wonder that the presentation included only the revenue side of the equation....


(click on chart for larger version)

State Auditor has checked on Toledo's financial condition

According to a letter from Mayor Carty Finkbeiner to members of council, the State Auditor's office has been in touch with the mayor to check on the city's financial situation.

From the letter:

3. The State Auditor's office was in contact with us late last week requesting information on our current financial situation. We explained the plan that had been placed before City Council, and they indicated they would call back after the Tuesday, April 7th council vote to see what action was taken.

However, it is still unknown if Toledo City Council will be taking any action at their committee of the whole meeting tomorrow. Their next regular council meeting is the 14th and tomorrow (the 7th) would be their agenda meeting. They had originally scheduled a special committee of the whole meeting to discuss the mayor's plan to suspend all union contracts for 1 p.m., but it appears that meeting, along with public comment, will begin at 4 p.m. instead.

Also according to the letter, Carty has updated Gov. Ted Strickland's staff about the current situation and his proposed course of action.

The mayor emphasized in the letter that he is only requesting a temporary rollback of the pension pickups and salary. He pointed out that the concessions requested are for a year and that the current and planned negotiations with the unions would continue.

Additionally, the letter states:

Each union has been notified that for severance pay or compensatory time payouts, the employee's pay rate will be frozen at the rate it was on March 30, 2009 and will not be based on any temporary reductions in salary.

This decision is obviously to stem the thought of retirement and to halt the run on payouts of comp time that were being threatened by employees.

The letter:

Spend, Spend, Spend

Well, what did you expect. If a politician or political body has money - they spend it.

Last night, Toledo City Council voted to spend $39,900 on flowers for the 'gateways.' Interestingly enough, Point Place, which is the major north-south gateway into the city from Michigan and my home neighborhood, doesn't have any special type of entranceway or beautification project. However, the Anthony Wayne Trail does and so do Cherry and Summit Streets downtown. So even if beautifying the city's entranceways is a good idea, the major entrances to the city seem to be neglected. If this money is truely to provide a pleasant view for people entering the city, perhaps the locations of planting should be revised.

Then there is the Labor-Management-Citizens Center which got another $42,886 for a total of $113,314. Now, the LMC is a really great organization and, when I was the Clerk of Court, I took advantage of their services. Both my unions and I were very pleased with the assistance they provided. But the idea that the city just budgets money for an organization has got to end. L-M-C provides a service, but it's a service that other entities can also provide. The city needs to issue an RFP and then enter into a contract with a firm or organization to provide such services. By just listing L-M-C as an item in the budget, the city avoids the need to bid out such services and get the best price for the citizens who are footing the bill.

Finally, there is Sister Cities. I appreciate the work that Sister Cities does. They help to foster good relationships and better understanding, especially in a growing global economy. But they are not a necessity when it comes to the duties and responsibilities of a city. I believe they deserve individual support from citizens and businesses, but not our tax dollars - especially if it means that we need to pay an additional tax (garbage tax) so they can have funding. They got $50,000, but council was told there was a small carryover from 2006 and that was the source of the funds.

Total for the night? $132,786!

It's evident that none of our administrators and elected officials are thinking ahead. They had a small carryover from 2006 of $334,000 and they're going to collect one more month of garbage tax than they originally estimated which is going to generate $364,500. So, obviously, they have money to spend - right? WRONG!

According to earlier estimates, city staff is projecting the 2008 budget deficit to be around $18 million. Wouldn't it make more sense to NOT spend money and set aside any "additional" funds to help cover the deficit for next year?

Ah - but that's not how you buy votes....