There's been a lot of time, energy and focus spent on the Presidential race, especially as it pertains to the financial meltdown that seems to never end: Another 500 point loss yesterday.Once this marathon of partisan negativity and divisiveness is over, for lack of something better to do, we may just be forced to look at the reality of where we as individuals, and all of us as a nation, find ourselves, financially. Personally, I don't know anyone who has not been adversely impacted by these past two months. The older you are, the worse this fall has been because you have a shorter time left to recover, unless of course you're John McCain and can still work full time and put in 16 hour days at age 72. But I digress....
Once we are forced to examine the overall state of our economy, we are likely to find that our own personal finances are only the tip of the iceberg. The entire United States economy is in serious trouble. And for all the talk of "trickle down economics", we're about to see that theory work in the negative. From the federal government to the states to our local municipalities, the shortfalls in revenue are going to put tremendous downward pressure on governments to raise taxes and fees.
Jon Hammer, Bethlehem Township Manager, and former Executive Assistant to Mayor Bill Heydt, had an illuminating, and scary, op-ed in the Philadelphia Inquirer, titled, "Stretched local governments will be providing even less". I'm not sure why this excellent piece was not in The Morning Call, perhaps Jon didn't submit it, but I'm glad I found it on the Inquirer's website.
One of the most telling lines in Hammer's commentary relates to the impending perfect storm of decreased services and increased taxes that most of us are about to experience. Hammer says, "If your local government is telling you something different, it's not true".
The local government that immediately comes to mind is Allentown. As one of the lone voices in the wilderness, who has been saying for two years that the city of Allentown's finances is a game of smoke and mirrors, I shudder to think of what the financial future is going to look like for the city's taxpayers when the full impact of this financial crisis comes home to roost.
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38 comments:
pam, couple that with the Allentown School District who also will undoubtedly be asking for a tax increase next year as well.
Hello Pam,
As we enter my first budget cycle on behalf of city residents, I look forward to wrestling with the impact of the economic situation we all face. I agree with the above comment about the school district's budget, which will also be tested.
However, I do feel that the last two years improvement in city finances has not been based on smoke and mirrors. Based on my reading of 8 years of audited financial statements, I have repeatedly said that the operating results are the best in years, and that the two financings were part of a normal financial strategy to fix cash positions that could not be fixed overnight. Those horrible cash positions were caused by decisions made in prior administrations.
Indeed, imagine what the city's finances would be like if we had not restructured the debt to smooth out the major bubble due over the next few years. I wish we had not had to restructure the debt, it did come at a breakeven cost of about 7.8%, but past administrations had not done residents a favor when they borrowed and put the maturities to be paid into a narrow time-period. In this economic climate, we would not have been able to borrow to cover what certainly had been a shortfall. Services would have to be tremendously cut, and a tax increase would have been inevitable.
So now, after two good operating years, we face declining tax revenues and a tough look at expenses. This will not be fun, but I welcome the challenge and look forward to sharing my decision-making process on my own blog.
Take care, Pam. I always enjoy your posts.
Michael Donovan
Michael,
Allentown borrowed $33 million over two years to produce a surplus of $14 million. Perhaps "smoke and mirrors" might not be the technically correct phrase though the sentiment is accurate. How about "living on plastic"?
i think michael's economic thinking was more precise back in the days when he was a Republican Congressional candidate.
Anon 9:34,
I don't like being a doomsayer, but the reality we are facing in Allentown looks bleak at this moment in time.
Even the city's share of the millions in revenue it is expecting from the casino, may be in jeopardy according to an article in today's TMC.
I fail to see where this article is so illuminating. It seems to me that anyone who follows local politics is aware of the subject matter, fewer road repairs, personnel salaries, police contracts, etc.
Jon might have been more helpful to the subject by injecting some helpful ideas on how to survive the economic downturn, rather than telling us what we already know.
Bob
Michael,
I'm not blaming this administration for the original financial condition in which they found the city. It's not a question of blame, anyway. It's a question of how to survive the next 10 - 20 years without driving the middle class out of the city.
I do think however that Mayor Pawlowski has been less than forthcoming about the city's financial stability. If you listen to one of his PP presentations, you would think the streets are paved with gold.
Any time you're borrowing money to pay for your borrowed money...your financial situation is not stable. And in this economy there's no way the original revenue projections are going to hold up.
Joe,
I just made that same point to Michael in my response...
No matter how you spin it, we're "balancing the budget" with borrowed money.
Anon 5:26,
Yes, but he was a Republican in Maine: That's like being a Democrat in Pennsylvania.
Bob,
Solutions would certainly be welcome from any quarter.
What are yours?
Hi.
Since it is has surfaced, let me clarify my former life in Maine. I was a moderate Republican who ran for a state representative position many years ago, not congress. I had friends who ran for congress. One, a Republican, lost. Tom Allen, the current first district Democratic Congressman is a friend. He is also a fellow Alum from Bowdoin College. Susan Collins and Olympia Snow, both Republicans are people I respect greatly. I've had conversations with them, and find them good people. My Republican beliefs were founded on a small business experience growing up as a child. I shifted to the Democratic Party when the Republican Party moved so far to the right in the arena of personal decisions.
I need again to stress that the city's finances are always going to be based on the city's economic success.
We are faced with difficulties, but those difficulties would have been much, much worse if we had not taken the financing steps over the last two years. Of course, it would have been nice if they were not needed, but the city was left with no choice and if they had not been done, the situation would be far worse. There is a difference, a big difference, between cash management, and general operational results.
We are not "balancing the budget with borrowed money." We are managing the cash position while trying to get the operation back to a pay as you go system. That was done for the last two years. In addition to the scheduling of debt to mature all at once, a former administration did not adequately finance the risk management fund in order to make the general fund look better. I can see that tragedy in the audited statements quite clearly.
The city, as Pam says, has difficulties, but that is a matter of putting into place excellent community and economic development practices. I'll go on record that I think we can do better than we do now. It is not all wine and roses. That doesn't mean that we can't succeed.
Joe, I have never said that the surplus you describe is not caused by borrowing. I don't look at that surplus. I look at year to year results and ask are we running an operating surplus and what is that doing to improve our position. Looking ahead, I want another year of success, and that is what I'll be working toward in the budget season.
My hope is that any future borrowin is always to cover only capital items.
Best regards,
Michael
"Now, many of those people are out of work. Many have seen their savings eaten away by inflation. Many others on fixed incomes, especially the elderly, have watched helplessly as the cruel tax of inflation wasted away their purchasing power."
"My view of government places trust not in one person or one party, but in those values that transcend persons and parties."
"As an immediate program of action, we must abolish useless offices. We must eliminate unnecessary functions of government...we must consolidate subdivisions of government and, like the private citizen, give up luxuries which we can no longer afford."
"When those in leadership give us tax increases and tell us we must also do with less, have they thought about those who have always had less -- especially the minorities? This is like telling them that just as they step on the first rung of the ladder of opportunity, the ladder is being pulled out from under them".. "millions of Americans find themselves out of work. Millions more have never even had a fair chance to learn new skills, hold a decent job, or secure for themselves and their families a share in the prosperity of this nation."
"We are taxing ourselves into economic exhaustion and stagnation, crushing our ability and incentive to save, invest and produce."
"Work and family are at the center of our lives; the foundation of our dignity as a free people. When we deprive people of what they have earned, or take away their jobs, we destroy their dignity and undermine their families. We cannot support our families unless there are jobs; and we cannot have jobs unless people have both money to invest and the faith to invest it."
Pam -
I can see the spin machine is already trying to shift the blame for the situation Allentown is in. City Hall has record revenues in the general fund, but has matched that with record spending.
For now, I would think the city would do well by demanding that department heads - all of them - present department budgets that trim 10% from the prior year amounts actually spent. Trim the fat across the board.
There should then be a focus on core services - police, fire and public works. Cut hard from other areas that are not essential.
Once that is done, re-evaluate and re-allocate to the core services.
Anyone on council who believes that 207 officers is an acceptable number to budget for (we all know the actual figure is much lower) should be thrown off council.
Crime is the #1 problem in the city. We don't need more cameras, more blue lights, or another consultant's report - we need more police officers.
donovan is such an apologist...for the administration and his own ideology.
perhaps the name of his blog should be changed to: "FOREGONE CONCLUSION".
Pam I was going to respond to the question you directed to me, on what solutions I had. I can only say that Glenn has stated the solutions as or more eloquently than I.
Suggest you send Glenn's response to Jon.
Bob
If Donovan is the great one to preach "inclusion", why does he always vote for the mayor and believe he is always right. Maybe his blog should be called, "the mayor's boy".
Anonymous said... "I can only say that Glenn has stated the solutions as or more eloquently than I."
Sorry. I was being a bit disingenuous and devious. Those are the words Reagan At 1980 Republican National Convention.
http://www.youtube.com/watch?v=RmmgVFByeaI
The text of that speech is here...
http://www.nationalcenter.org/ReaganConvention1980.html
The text of that speech is here...
www.nationalcenter.org/ReaganConvention1980.html
"I was a moderate Republican ..." Michael Donovan
And I was a teenage werewolf. All kidding aside, the above admission explains a lot but begs the key question: is that fake blood coming from MD's newly bleeding heart?
pam, i would like to inject a positive tone here and compliment peter schweyer ...who is doing a fine job on city council and who shows that you can serve with great distinction without being considered a "pimp" for the administration, any special interest or for some cockeyed ideology.
i hope he doesn't disappoint me now.
Pam:
You must read a lot of newspapers to have found my article!
Bob asked a good question, 'Why not write about the solutions?'
Two reasons : 1. The purpose of the article was to raise awareness of the problem, and 2. I had space limitations.
Pam, thanks for bringing awareness to this important issue. And thanks Glenn for the links. Glenn, if you haven't read the Reagan Diaries, it's a great read. All the best.
Jon Hammer
Anon 7:04,
Although I don't follow council as closely as I used to, it does seem that Peter is proving to be somewhat independent; more so than I expected.
Like you, I hope he doesn't turn in a disappointing performance through the police contract and budget process.
Jon,
Thanks for posting, and thanks for being our warning system for what lies ahead.
I hope you will continue to write about this financial crisis as it evolves, especially with your ideas about how to best survive it.
I'm very worried about the future of Allentown.
Greetings:
Such friendly comments.
I do have hope for Allentown or I wouldn't be involved.
Critics may say what they want about me, but being right is not one of my claims. A lacky of the mayor is also not one of my jobs.
Let me put it this way, if one considers the legislation that has been put in front of us over the past 10 months, a great percentage has been merely pass-through grants. Even the community policying policy has been incompletely presented. I am deeply troubled by this.
So, I haven't really had anything to vote on. The challenge in the next year (beginning with the budget), is to get into the critical tools that change an urban landscape. I believe I can contribute to that. My first year has been determining where the emphasis must be.
However, some just conclude that since I'm willing openly to present myself to the constituency, that makes me a bad person.
I can understand that, but it really is fun to see and reflect upon.
I could hide, but what good would that do?
Best regards,
Michael Donovan
ps....moderate republicanism and pragmatic democratic beliefs do have much in common. They consider evidence and not just raw emotion. I think that has a valid place in government.
the problem we are all trying to politely communicate to you, michael is that all your rantings on the blogs are all about YOU ...and very little about your constituents and the community you wish to serve.
if you doubt me, just count up all the first person singular pronouns "I" in each of your blog entries.
great leaders are consumed with the needs of those they represent, not with protecting their prickly egos.
the greatest problems, in my our mind, are not whether certain policies or commentators are right about policy questions . . . but whether they agree with YOU.
Hello anon 4:34
"I," "we," "us," "they."
If you feel that the entries are not speaking on behalf of Allentown, ok. Nothing that can be done about that.
Those statements offer some rationality to the analysis. None has attempted to paint a picture that is right or wrong. To interpret them as claiming perfection is to demonstrate an unwillingness to enter into conversation.
What is presented by some is this lament about the horror of liberalism. The blog entries presented in response are to suggest that liberalism is a marketplace of ideas to be considered, critiqued, and used for the best possible solutions.
Shying away from a discussion is not the best approach in solving problems. Equally, many entries made by critics could be interpreted as being "right," themselves.
If we look at the original entry that came from me, it focused on the fact that the next budget cycle is critical.
That was the focus of the entry, nothing more other than to say that some of the financial interpretations of the borrowings differ from what were presented in audited statements.
So...always a pleasure.
You might be surprised about how much care does exist in my heart for the city of Allentown.
woops...the word "my" was used. Sorry.
Sincerely,
Michael Donovan
Michael Donovan, it's great to have you on the good guy Democrat Team and I'm sure many more moderate Republicans will be jumping ship to our side on November 4. You're guilty only of being ahead of the pack. Again, great to have you on board and I believe your heart's in the right place.
Michael,
All one has to do is look at the council's agendas to see that council has done very little in the last few years to address ANY of the concerns of their constituents. In fact the little they have done has hurt the taxpayers more than it has helped. No Councilperson has to sit by and wait for an administration driven piece of legislation to hit their desk. Perhaps, you and other members of council would best the serve the public by initiating legislation that would have a direct effect on our quality of life. First of all it is imperative to find out the needs and wants of the community. To do that requires listening and very little to do with talking.
Anon 9:04
Thanks for making an excellent point. Council behaves as if were only a reactive body, when in reality they should be initiating ideas and solutions.
anon. 9:04...great point. i will take it one step further and take the pledge to not support any more candidates who have their own blogs. i would rather have as my elected officials people who spend their time listening rather than blogging (about themselves)
Hello,
Sitting and "listening" to blog entries and other verbal comments made out in the open, it is clear that people do want council to develop policy on its own, something which I agree with totally.
Often and unfortunately, however, we have been told that we are to wait for legislation on which to vote. We are not supposed to "set policy." Yes, that is the truth. I've been told that several times.
That is too bad, and something that needs to be changed. It should be a cooperative affair. There are a variety of topics to be addressed. Inside city hall, for the last 10 months, council has strongly urged action on a variety of issues. We were willing to wait because there are promises that legislation on important items are "in the works." After all, council is part-time with only 1 person directly assigned who can research and write legislation beyond what we may be able to prepare. In the past, you can see how well legislation by council is written when it is written without adequate experience. It hasn't always been the best.
The administration has the staff. But,
Meanwhile, we wait on those topics -- a fully formulated community policing policy, housing policy, community development policy, rental policy, human relations policy, zoning policy, economic development policy, etc, etc, etc. Usually, we are not allowed in the discussions on these topics. Should we be? I think so, but it does not always happens.
The first real fiscal policy opportunity for the newcomers occurs with the budget cycle.
We saved citizens $650,000 earlier this year because of identifying an opportunity to refinance bonds at a lower rate. A couple of other smaller issues also have been resolved.
And still, not enough has been done. Pam's comment about ideas and solutions originating in coucnil are well taken. Looking back over the 9 months at my blog and comments found elsewhere in the blogosphere, there seems to be an attempt both by me and other contributers to raise ideas. Believe me, many of these have been raised on the 5th floor.
I am sorry if things do not move exactly as some would like. However, I am totally aware of the major issues that face this city, and there are items on the agenda that will get the strongest attention over the next several months.
Not one person has to vote for me at the end of 4 years. That is for each and every one of you to decide. Listening and acting on what residents of this city need while challenging the status quo and moving to put policies in place will be what I care about during that time. The discussion that have occured behind the scenes have been quite interesting. Sometimes with lots of fireworks.
Perhaps legislation hasn't been put forward as quickly as you would like, but anyone who knows about policy should also know that much of it is supposed to occur without additional legislation. Public administration is as important as public policy legislation.
That is a political process that usually moves at a snail's pace.
Finally, I can take any amount of criticism that people decide to throw at me. It is there perogative. However, at the same time, it would be good if those who are critics would take the time to learn something about the political and public administration process. No matter Democratic or Repubican party influence, the result is the same, it never goes precisely as we want.
Sincerely,
Michael Donovan
ps...to anon 10:26am
I guess I don't understand what "listening" is all about. We have had a conversation. Do you mean "listening" is immediately accepting and acting on what someone has to say? What if the listener disagrees or does not have sufficient information other than someone's opinion or ideology?
There is more to making a city successful than reacting to an opinion. "Listening" means assessing lots of opinions, comparing against the facts, and considering the relevant knowledge. "Listening" means suspending judgment and not critiquing back but merely having a give and take. "Listening" means asking questions for clarification.
I'm sorry if my definition of listening is not yours.
I'm simply sorry and continue to do the best I can.
Michael Donovan wrote:
"Often and unfortunately, however, we have been told that we are to wait for legislation on which to vote. We are not supposed to "set policy." Yes, that is the truth. I've been told that several times."
This is the problem! You are being told that by the administration and the shills for the administration. Council is separately elected for a reason.
Perhaps if council would stand up and stop rubber-stamping everything the Mayor throws at them, the Administration would get the point that Council is a separately-elected body that SHOULD BE responsive to the citizens of Allentown.
Pam have you given up your blog to Donovan. I realize that you don't control comments, like some bloggers do, but for heavens sake he has a blog so why doesn't he write there? Just tired of hearing from him.
Bob
Sorry I'm slow in my thinking. Michael writes in your blog because nobody reads his blog. Again Pam, sorry I am so slow.
Bob
Bob,
I haven't given up the blog...to Michael Donovan or anyone else. Although I admit it's been longer than usual in between posts.
As much as I love this blog, it is a hobby/passion...not a job. So my income producing activities have to take precedence.
I expect to have a very interesting new post up tonight or tomorrow morning.
As for Mr. Donovan posting here...he is always welcome, as are you Bob, along with anyone else who wants to discuss the issues without personal attacks.
It is amazing that Councilman Donovan doesn't realize his function as a legislator.
Legilative bodies all have one purpose. To initiate legislation and to act as a check on the Executive authority.
Does Harrisburg sit back and wait for the Governor to initiate legislation and set policy?
Does the US Congress?
Sorry, but such an attitude by our City Council explains a lot about why Allentown has all the problems it has.
I am curious. If Heydt had won (or a Republican wins in the future) will Councilman Donovan accept such a meek stance?
Joe,
As I have stated on this blog numerous times before, it continues to surprise and disappoint me that city council is not more pro-active in their legislative role.
Corporate and government cultures don't change overnight. I have hope that this council will find its footing and provide more leadership.
Hello,
Of course, the legislature is supposed to be a strong part of government.
The tricks, folks (and Joe Hilliard), is how you do it, and when you do it. Look at the year's legislation, it has been mostly grant pass throughs. If you listen to the council minutes, you will hear for my call to have holistic legislation submitted.
The budget is the first real chance this council will have to define policy.
Be a fly on the wall, Joe, and you might see some of your claims differently. Don't ever think you can question my knowledge about how government and policy is achieved. Don't ever think you can question my commitment to the residents of Allentown, including you.
Thank you Pam for letting me respond to your original post. My original comment was to the point. After that, I'm not really sure was the conversation was about.
Best regards,
Michael Donovan
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