Plenty More Pain to Come

It's been four years since the housing boom turned to bust, two-and-a-half years since the financial crisis first got underway, and 20 months since the U.S. recession officially began, and most municipal authorities seem to be in a panic.

Instead of planning early on for the disastrous but utterly predictable impact that the Great Unraveling would have on public finances, many state and local politicians apparently decided that the best approach was to hope and pray or to simply turn a blind eye.

And now, rather than acknowledging that the old days are gone forever, they are still avoiding reality by focusing on quick fixes and accounting gimmicks that fail to address a fundamental truth: their costs are too high and tax revenues are likely to remain under pressure for the foreseeable future.

Unfortunately, while measures like those described in the Reuters report that follows, "Recession Reality: U.S. Cities, States Close for Days," make it seem like governments are taking the necessary steps, the failure to make the kinds of hard-nosed decisions that are actually required means there will be plenty more pain to come.

Frank Giannola drove nearly 40 miles from Lockport, Illinois, to downtown Chicago on Monday, only to find city hall shuttered for the day.

"This is the city that works?" he asked, mockingly referring to a Chicago motto.

The subcontractor, who had taken the day off to obtain a sewer permit, joined a steady stream of residents, contractors and business people who came by car, taxi and on foot at midday looking for city services.

They were greeted with a sign that city hall was closed for "a reduced service day" -- the first of three days this year Chicago will curtail services such as garbage pick-up, libraries and health clinics -- but not public safety -- to save $8.3 million.

The savings is small compared with the $300 million revenue shortfall Chicago expects in its fiscal 2009 budget as the economic recession dramatically slows key tax generators.

"Every dollar we save from these measures helps to save jobs, and in the long term, maintain services for Chicagoans," Mayor Richard Daley said in a statement last week announcing the closures.

For residents in Chicago and many other cities, counties and states, unpaid furlough days are becoming a reality of the recession. Services normally expected to be available may not be accessible on certain days. Or lines for services may get longer if workers can choose the days they are furloughed.

For the governments, it is a sign of how desperate they have become to reduce spending to combat shrinking revenue.

"It's turned into a very wide-spread tactic for dealing with shortfalls this year," said Ron Snell, director of state services at the National Conference of State Legislatures.

With states facing projected cumulative budget shortfalls topping $348 billion from 2008 through 2012, at least 12 have turned to furloughs to save money, according to the legislative group.

A deal enacted late last month to erase California's massive $24 billion budget deficit included three furlough days a month for state workers to save $820 million.

Michigan, which has sprung numerous budget holes due to the ailing automotive industry, has scheduled six days on which it won't pay about 37,400 employees to save $21.7 million by September 30.

Depleted revenue also has counties turning to unpaid worker days. A recent survey by the National Association of Counties found 14 percent of larger counties eyeing furloughs.

"What we have found is that counties are having to turn from less painful spending adjustments -- such as staff travel restrictions and hiring freezes -- to more painful actions -- such as four-day work weeks, furloughs and layoffs -- as revenues from sales taxes, property taxes, investment income and service/building fees continue to plummet," said Jim Philipps, a spokesman for the counties group.

Comments

[Peter of Lone Tree]

"Good night, America, how are you?
Don't you know me I'm your native son,
I'm the train they call The City of New Orleans,
I'll be gone five hundred miles when the day is done." -- Steve Goodman

[farang]

"....the first of three days this year Chicago will curtail services such as garbage pick-up, libraries and health clinics -- but not public safety -- to save $8.3 million. Out of a $300 million shortfall.

How much will they spend on OT for "public safety" the next time the conman Obama shows up at home? As much as on the puppet Bush?

How much will America spend TODAY in Iraq "defending our freedoms?" Try $5000 a SECOND. Um, that is $432 MILLION dollars, Chicago. JUST TODAY.

They want to save money? Legalize drugs, empty the prisons of non-violent offenders. Make the police hire non-exmilitary. Reduce the grossly high wages paid to the taser wielding fascists, and make them work until they are 62 to collect a vastly reduced (at least 35%) pension.

Cut the ability of Daley to hire cronies at godawful high salaries, and put the entire corrupt system of awarding city contracts to bed.

Tax the top 1% of income earners enough to balance what is still short (in the red.)

99% of us will never feel a thing.......

[roger]

And just what are the kind of hard nosed decisions
required? we need some answers here! I have not seen
a single economist come up with something logical or
satisfactory and forget the politicians they are by
far the worst.fixing the financial disaster is not
going to cut it.Is everybody ignoring that there is
an industrial Apocalypse in the making, compliments
of Mother earth.

[roger]

I could not resist this one:
quoting a well know blog on the net ( legal documents
are not ethical documents ,if you can not pay...walk away)
so there is no moral obligation in a contract,,,he he he nice.
I wonder what a person born in the 1800's would think of this.
Witch brings us to another assessment: all the US debt/deficit
is really only a contract with no moral obligation,,,, so why
not just walk away from it.