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On May 7th city of Vallejo, California voted to declare Chapter 9 bankruptcy. Tyrone, Georgia could be next.
The Citizen is reporting Tyrone finance director: "We’re broke"
The Tyrone Town Council got a huge dose of reality Thursday night. “We’re broke,”said Finance Director Mary Sturm. Sturm said the city’s operating costs per month are $275,000 per month, but the town has only collected $53,000 in revenue this month.Math Lesson Needed
The economic climate has taken its toll on the town, with only two building permits this month, she added. The town currently has a Certificate of Deposit valued at $794,000 that earns just over 4 percent interest. Sturm recommended cashing in the CD, and invest in another CD when tax money starts rolling in at the end of the year.
“We only have 7,000 residents and we’re providing services that towns such as Peachtree City with a population of 40,000 provide,” she added. The town reluctantly agreed to cash in the CD, but Councilman Tracey Young wants to make sure this does not happen again.
Cuuncilman Young and finance director Sturm need a math lesson. The city is currently losing $222,000 a month. At the current pace, Tyrone will run out of money in 3 1/2 months or so. Tax money will start coming in at the end of the year. That is 4 months away.
What then? How long will it last? I see no evidence of a debate on why Tyrone is offering services that cities over 5 times as large are providing, or more importantly what the city intends to do about it. The solution is the same one bureaucrats almost always make: postpone the problem, squandering cash in the meantime.
Cities spent way beyond their means in the property boom. The only option now is a drastic cutback in services that perhaps people got used to. Facilities are going to be closed and services reduced or taxes will have to raised to pay for them. Can Tyrone afford to raise property taxes? I doubt it.
Already, Taxpayer Revolts Are Brewing in Massachusetts, Nevada, and North Dakota.
Nationwide, hundreds, perhaps thousands of libraries, swimming pools, local museums, senior citizen facilities and the like are headed for the White Elephant List. Indeed, the Herd Of White Elephants Is Large And Growing. Entire cities are on the list. Inquiring minds who have not yet done so will want to take a look at that link for some shocking images of abandoned malls and factories.
Economic conditions are now deteriorating rapidly. The Fed, Congress, and we the people are all to blame for wanting and believing in the free lunch theory of economic advancement.
Indeed, much of the so called growth of the last seven years was nothing more that a giant Ponzi scheme with Greenapan, Bernanke, and Paulson acting as the head cheerleaders. All the financial wizardry schemes have now run their course. The payback is deflation, and the payback time is now.
Mike "Mish" Shedlock
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