Day: June 23, 2014

Chapter 9 Bankruptcy: A primer for the Citizens of Bay St Louis

The notion that the City of Bay St Louis was experiencing financial problems is not by any means new. Just over a year ago the citizenry heard lots on the topic during the municipal election with Mayor Fillingame unequivocally proclaiming the City was in good shape financially. The irony is by that time, the City was already using its trade vendors as its financier. You see folks, when the bills don’t get paid the trade vendors become an unofficial bank. Even worse, it is the kind of unofficial bank that must make forced loans that bear no interest. It was a sign of things to come in a fools game where the passage of time is the ultimate enemy.

The warning signs were literally everywhere and yet for month after precious month the City Council did nothing. Worse, it appears certain members of the Council were simply going along with the Mayor because it was easy. Last October the City Council, at the request of the administration, finally took action on utility rates to fix the problems the administration identified in the Water and Sewer operations. The increase was targeted at high volume water users which it turns out was the very segment of the City’s customer base that was in decline. Now the Administration claims the rate increase was insufficient.

Last January Slabbed published a detailed analysis of the irresponsible budget practices that lay at the heart of the City’s financial decline. Since then the City has spent money it was legally required to set aside for debt service on municipal operations. Broke, the city made a loan with a local bank that it lacked statutory authority to make.  The proceeds of that loan, mistakenly called “a line of credit” by the Mayor and Council, was split between the water and sewer fund and the general fund. Despite being at every meeting the City Attorney was evidently checked out MIA allowing the Mayor and City Council to step out making what Councilman Lonnie Falgout now terms an illegal loan. I fear it’s gonna take the elected officials here to have to pay big dollars out of their own pockets before they’ll learn the value of operating within the law.

Unable to make the scheduled debt payment on Water and Sewer debt due in July 2014, the City Council again kicked the can, refinancing debt dating from the 1990s that had already previously been refinanced.  The City, caught in a downward financial spiral incurred hundreds of thousands of dollars of debt issuance costs that could have been used to pay for City operations.  From a financial management standpoint, the performance of the City’s elected officials really can’t be much worse. Continue reading “Chapter 9 Bankruptcy: A primer for the Citizens of Bay St Louis”

And here they come again down the stretch!

When I think of the tomorrow’s primary election, I’m viewing it through a longer term lens:

Not that long ago I wrote that the Occupy movement and the TEA Party had far more in common with each other than they ever will with the politicians that purport to represent them.

Before those of you on the political right go into raging denial consider this from one of the smartest guys in the room that hails from the left about Eric Cantor’s crushing primary defeat:

For the time being, though, Tea Party populism is boxed in in such a way that it only further serves the establishment cause. But, unlike the perpetually moribund and bought off left, the populists on the right are the only players with even a slight chance of shaking things up. In many ways that’s a frightening prospect but it might also be the closest thing to a hopeful prospect one can imagine right now.

Jeffrey equates Bobby Jindal with the TEA Party and while I think it is true Jindal panders to the TEA Party he is not one of them. Same for Steven Palazzo.  As for Cantor’s crushing primary election loss a couple of days ago The Economist had an interesting take:

Most GOP members have more to fear from their primary voters than from the general election in November. The Cook Political Report and RealClearPolitics, two political augurs, agree that there are only 17 competitive House races out of 435, so for most Republican congressmen the risk of suffering the same fate as Mr Cantor feels like the bigger threat to their jobs.

And what does this have to do with the commonalities I detect between the political left and right? Its that P word again, Populism. The folks at The Economist detect the intersection of right and left in just the right spot in corporate welfare: Continue reading “And here they come again down the stretch!”