Misery Index

Other evictions due to such issues as failing to pay rent would continue, Dart says.

"Those mortgage companies only see pieces of paper, not people, and don't care who's in the building," Dart says.  "They simply want their money and don't care who gets hurt along the way.  On top of it all, they want taxpayers to fund their investigative work for them.  We're not going to do their jobs for them anymore.  We're just not going to evict innocent tenants.  It stops today."

More than 1/3 of all trips by sheriff's eviction teams results in finding nobody home to verify who lives there or finding someone other than the mortgage-holder.

By refusing to do any foreclosure-related evictions, the hope is that banks will change their policies.  Dart acknowledges that he is at risk of violating court orders to evict and could be found in contempt.  But he says he is also responsible for making sure justice is being done. 

"We will no longer be a party to something that's so unjust," he said.

The sheriff's complaint stems from the extra work his office does on behalf of lenders.  Dart says he is tired of his deputies showing up at homes for an eviction and finding tenants who are not on the mortgage.  Taxpayers foot the bill for that work.

Dart said he will resume foreclosure-related evictions when lenders agree to do their own due diligence in figuring out who is living in foreclosed properties.

Cook County Circuit Chief Judge Timothy Evans could not be reached for comment.  Dart planned to meet with judges Thursday.

A spokeswoman for the sheriff said there were more than 500 evictions for foreclosure scheduled over the next six weeks and the office was on pace to conduct 43,000 evictions for the year with 4,500 of them being for foreclosure-related evictions.  About one third of those are rent-paying individuals.

BANKERS AND THE LAW

But bankers say he is breaking the law. IBA said Dart was ignorning the law and was engaging in "vigilantism."

"In announcing his plan, Dart acknowledged that he could be found in contempt of court," the IBA said in a statement, adding that the sheriff's decision "should not be tolerated."

"We don't have the ability to take over collateral upon default, and if we don't have that assurance, or we think evictions won't be made.. we simply won't make the loan," Koch said of the moratorium

Frank Binetti, vice president of the Illinois Mortgage Bankers Association stated

"It would have a significant impact because obviously lenders would be hesitant to lend if they knew that if someone defaulted they wouldn't be able to take the property back. "  "It would create higher risks for lenders and they would have to price that into the loans, if they even chose to lend in Cook County."  "The only thing you have as a lender is the collateral, and if you aren't able to retrieve the collateral, why are you even lending in the first place?"

OTHER OPINIONS

Most officials in surrounding counties, also struggling with unprecedented levels of foreclosures, found the move beyond the scope of a sheriff. 

In Will County, Sheriff Paul Kaupas was apprehensive about halting evictions and suggested the courts should suspend eviction orders.  Pat Berry, spokesman for Kaupas, said "If we disregard the law, what kind of message are we sending?"

Kane County Sheriff Patrick Perez said he understood Dart's motivation, having worked in the civil division dealing with evictions. 

"I saw more misery in those two years than I did in the 14 or 15 years of criminal law enforcement before it," he said.

DID YA KNOW?

Last year, Dart pushed a bill before the Legislature that owuld have required mortgage companies to identify any children or senior citizens living in a unit before requesting an eviction.  Dart hoped to link those vulnerable residents with social service agencies, but banking and real estate industry lobbyists killed the bill, according to the Cook County Sheriff's website.

VIDEO

SOURCES

• Reuters
• Chicago Tribune
• Cook County Sheriff's Office

Christina Pretto of Citigroup says the bank will seek the $60 billion in damages it has claimed from the deal gone sour.  That case will proceed, she says, in New York Supreme Court.  She could not say when hearings might be held on Citigroup's claims.

"We did not seek the Wachovia transaction; Wachovia brought it to us," stated Citi CEO Vikram Pandit in a prepared statement,

However, Citigroup has decided not to ask that the Wells Fargo-Wachovia merger be blocked.

Under the Citigroup's agreement with Wachovia, Citigroup would have absorbed up to $42 billion in losses on a $312 billion pool of loans.  The FDIC would have absorbed losses beyond that.

WACHOVIA

The Wells deal was generally preferred by bank employees and in Charlotte.  Wells said it would keep the bank intact.  Because Wells has few operations on the East Coast, there were likely to be minimal job losses below the corporate level.  And a promise to make Charlotte Wells' headquarters for East Coast operations took some of the sting out of the sale of Wachovia, who is Charlotte based.  The price offered by Wells was also seven times what Citigroup had offered.

Analyst Nancy Bush of NAB Research said the decision was a good deal for Charlotte.

"You guys should be breaking out bottles of champagne," Bush said.  Wells Fargo "will be so much more careful of the corporate culture, of Charlotte, of the customers.  They have more retail experience than Citigroup does."

Bush additionally stated that the fact that Citigroup backed down indicated that criticism from customers and shareholders had grown too much.  Of the legal dispute,

"I'm sure (Citi) will ask for a bazillion dollars, and Wells Fargo will give them something."  "There will be some kind of out-of-court settlement."

GIANT WELLS FARGO

Wells Fargo & Co. confirmed the announcement that it and Citigroup have terminated discussions concerning a possible sale of certain banking assets of Wachova Corp. and reaffirmed that it is proceeding with its merger with Wachovia Corp as a whole company transaction wtih all Wachovia's banking and other operations. The BIG news about this deal, is that it requires no financial assistance from the FDIC or any other Fed agency.

Wells Fargo has submitted its application to the Federal Reserve Board seeking expedited approval of the merger and the share exchange agreement previously entered into between Wachovia and Wells Fargo.  That agreement, which was signed and board-approved given to Wachovia last Thursday, proposed that each share of Wachovia common stock will be exchanged for 0.1991 shares of Wells Fargo common stock, representing a value of $7 per share, based on Wells Fargo's closing stock price on Oct. 2, 2008.

Under the same exchange agreement, Wachovia is issuing Wells Fargo preferred stock that votes as a single class with Wachovia's common stock representing 39.9 percent of Wachovia's voting power.  The acquisition of the non-banking related operations of Wachovia and the share exchange agreement have received early termination from the FTC under the Hart-Scott-Rodino Act.

Wells Fargo will acquire all outstanding shares of common stock in Wachovia in a stock-for-stock transaction.  In the transaction, Wells Fargo will acquire all of Wachovia Corporation and all its business and obligations, including its preferred equity and indebtedness, and all its banking deposits.

Wells Fargo Chairman Dick Dovacevich reiterated that the two companies have a firm, binding merger agreement, are confident the merger will be completed, that it will keep Wachovia intact and create significant value for Wachovia and Wells Fargo shareholders.

In addition, Kovacevich said Wells Fargo is pleased that Citigroup announced that it is no longer seeking that the Wells Fargo - Wachovia merger be enjoined. 

"We believe that that is the correct and right decision for our Country and our citizens and the health of our already stressed financial system, as well as our and Wachovia's respective shareholders and stakeholders, " said Kovacevich.

Wachovia Corp President and CEO Robert K. Steel had the following to say on the matter:

"We are delighted to stride ahead with Wells Fargo in creating a coast-to-coast financial institution -- one of the strongest financial firms in the world," said Wachovia Corporation President and CEO Robert K. Steel.

Kovacevich also address, at least indirectly, press reports Thursday indicating that Wells and Citigroup had both found more problems in Wachovia's mortgage portfolio than expected.

"Credit teams at Wells Fargo have had an opportunity to work with their counterparts at Wachovia," Kovacevich said.  "Given our broad-based operating expertise, and specific understanding of these individual businesses we believe we have adequately evaluated the risks inherent in the portfolios as of time of this merger agreement."

The scary part of all of this is that Wells Fargo and Wachovia will have the largest deposit base in the country, creating a coast-to-coast banking franchise for customers.  The combined company will have $1.42 trillion in assets, $787 billion in deposits, 48 million customers, $258 billion assets under management in mutual funds, 10,761 stores, 12,227 ATMs and 280,000 employees.  In addition, Wachovia will combine with the only AAA-rated financial institution in the United States. 

NUMBERS FOR ALL FOR THE DAY

Citigroup (C:  12.93, -1.47, -10.2%)
Wells Fargo (WFC: 27.25, -4.65, -14.6%)
Wachovia (WB:  3.60, -1.46, -28.8%) - But shares have gained 36% in after-hours trading to $4.89 on Thursday night.

SOURCES:

• Charlotte Business Journal
• Charlotte Business Journal
• Charlotte Business Journal
• The News & Observer

Why have they gone through the first $61 Billion so fast?

Securities lending involves both lending securities and investing collateral for a return.  If the value of the collateral declines, as it has for AIG and many others, the investor needs to make up the difference when the borrower returns the securities.  AIG's securities-lender clients flooded the program for their collateral, creating a "mini-run" on the bank, a chief financial analyst of the Texas Department of Insurance stated.

AIG is increasing borrowing while racing to sell assets to meet massive demands for cash from its trading partners.  The reason they are scrambling for cash is that many of AIG's swap agreements require it to post collateral to the owners of the swaps whenever prices of insured investments fall.  Those amounts over the past few weeks, have grown substantially. 

And why do they need more money?

So they can buy back their securities and give those securities to the Feds to get their additional cash.

A year ago, AIG's stock hit a 52-week intraday high at $70.13.  On September 16th, AIG's stock plummeted to a 52-week low at $1.25  Today, AIG's shares closed down 25% on day at $2.39.  Interest on a $85 Billion loan at today's rates is about 12.82% or a bit over $10 Billion; on $122.8 Billion, the interest is nearly $16 Billion.

Is The Party Really Over?

Bloomberg reported on October 9th that AIG said today it will cancel most of its planned meetings and conferences.  CEO Liddy "ordered the immediate cancellation of all outside meetings, conferences, and recognition events across AIG, except those required by law or that are deemed absolutely critical to sustain our ongoing business needs," spokesman Ashooh said in an email.

St. Regis Resort, Monarch Beach, CA

On September 22nd to September 29th AIG held an "AIG Independent Agency Convention" at the exclusive St. Regis Resort in Monarch Beach, CA to the tune of over $440,000 which included $24,000 in spa fees.

When the Oversight Committee learned about this "Convention", they were outraged.  "This is unbridled greed," said Congress Mark Souder (R-IN), "it's an insensitivity to how people are spending our dollars." "Have you heard of anything more outrageous?" said Rep. Elijah Cummings (D-MD).    Dana Perino, White House spokeswoman stated, "I understand why the American people would be outraged," she said at a White House briefing. "It's pretty despicable, to realize how callous somebody might be."  And the press, media outlets, and bloggers had a field day with it.  You can read my previous posts about it here and here.

Ashooh has stated that we, by not understanding how this system works, have "perception" problems... I kid you not.  Hear it in his own words below.  And remember this is the same guy who stated the following about AIG employees and the bailout,  "It's still painful and it's been very distressing to our employees."  And he also stated in regards to the $440K "Convention" at St. Regis, "It's as basic as salary as a means to reward performance."

On thing I learned about Ashooh, is that he just joined AIG in September 2008 (but perhaps as early as August, but not formally announced based upon some press releases found in August), but not as a simply PR guy,  as Senior Vice President, Communications, who reports directly to AIG President and CEO Sullivan.  His responsibilities include corporation and employee communications, publications, advertising and global branding, medial and public relations, marketing communications and the AIG archives.  He will have management responsibility for communication policies, programs and activities undertaken by AIG subsidiaries domestically and overseas.

Ritz-Carlton, Half Moon Bay, CA

Then it was learned that there was to be another "Convention" at the Ritz-Carlton, Half Moon Bay, CA next week.  An official spokesman for AIG stated "It's very much accepted practice in the insurance business, especially to reward high-performance individual agents."  "It's still painful and it's been very distressing to our employees."  It was estimated that the event, designed to "motivate and educate" about 150 independent agents that sell AIG coverage would include about 50 AIG employees, again all the expenses paid for by AIG.  The meetings purpose was to "introduce new insurance products to salespeople who specialize in wealthy clients."  AIG's Joe Norton, director of public relations, had previously stated, "This is an annual affair.  It's a key meeting."

"I cannot fathom how in the same day - the very same day that AIG asked the government for another $37.8 billion loan, the company would even consider moving forward with plans to host another large conference at another luxury resort," said U.S. Rep Cummings (D-MD) of the Oversight Committee.  You can read a previous post about it here.

The media outlets, bloggers, and taxpayers again had a field day over it however, it seems someone has at least some sense at the top, or either they don't have the money to pay for it, as the event has been canceled.  Or maybe they were afraid half the country would show up at Half Moon Bay protesting.  Officially however, Joe Norton stated the cancellation was done "after a re-evaluation of the costs under the new circumstances."

AIG's spokesperson, Ashooh,  said that the company will have to pay some cancellation fees, but admitted that the era of fancy conferences and $23,000 spa bills seemed to be over.  Ashooh also stated it has instructed its worldwide managers to re-scrutinize how money is being spent.  The company would not specify how much money would be lost in cancellation fees.

"We'll certainly lose some money in cancellation fees, but it's just beyond the point of trying to conduct these meetings given the uncertainty that's taking place," said Ashooh, spokesperson for AIG.  Ashooh added, "We're certainly reviewing all our expenditures in light of financial circumstances and the fact that taxpayer dollars are helping to support AIG as we get through this difficult credit crisis."

At least one member of Congress was pleased at the news:

"I am somewhat relieved to hear that AIG has canceled their Ritz-Carlton conference, which was nothing less than a slap in the face of the American people," said Rep. Elijah Cummings (D-MD).  "I cannot fathom how in the same day - the very same day - that AIG asked for the government for another $37.8 billion loan, the company would even consider moving forward with plans to host another large conference at another luxury resort."

Marriott Marquis, Atlanta, GA

In addition to the two above "Conventions", there was found to be a third event in Atlanta, GA at the Marriott Marquis sponsored by FSC Corp, one of AIG's main securities subsidiaries.  This one was an annual "National Education and Business Conference" where at least 400 stockbrokers and their families were expected to attend the three-day conference, with FSC expected to pick up the tab.  A spokesman for AIG Retirement Services did state however, that attendees are expected to pay a "portion" of their transportation, room and related expenses although it was unclear exactly what the percentages or amounts were.  It is unknown if this event is still on or has been canceled.  You can read a previous post about it here.

Smithsonian, Washington, DC

Now there is a NEW report of an AIG subsidiary partying only days after the bailout.  On September 20th, only FOUR DAYS after the Fed's bailed them out, a subsidiary of AIG International Lease Finance Corp. (ILFC) was celebrating its 35th anniversary at the Smithsonian National Air and Space Museum outside Washington D.C., including 820 guests at the museum's Udvar-Haze Center.

A spokeswoman for the Smithsonian, Claire Brown, stated that ILFC paid the Smithsonian $27,103 just for janitorial and security services.  The amount for catering, food and drink and two night stay hotel bills is unknown.  Apparently Waxman and his Committee on Oversight and Government Reform hasn't heard about this yet.

A few stats about ILFC.  Rumor has it that ILFC has wanted to split away from AIG for sometime, as they were worrying about AIG lowering ILFC's credit rating.

In Other AIG News

Many fingers had been pointing at Joseph Cassano, head of the financial products division of AIG, which trafficked in credit-default swaps, or CDS,  for the downfall of AIG.  According to Rep. Jackie Speier (D-CA), Cassano received more than $280 million over eight years.  After the unit lost $11 billion, Cassano was fired on February 29, 2008, but still received a $34 million bonus.  Another source states that he would "retire" at the end of Marcy, 2008.  He was re-hired as a consultant to AIG, making $1 million a month.

Joseph St. Denis, a former AIG auditor, said in written testimony to the committee that he resigned in protest after financial products head Cassano denied his input on how the firm valued its liabilities.  "I was concerned that you would pollute the process," Cassano told St. Denis, according to Waxman on the Oversight Committee.

The Oversight Committee asked former AIG chief executives Michael Sullivan and Robert Willumstad, if they had exercised their authority to fire Cassano from his consultant's role, given all the damage he had brought to AIG.  "No," they both said.  Waxman (D-CA) asked WHY the didn't fire Cassano.  Sullivan replied they needed to "retain the 20-year knowledge of the transactions" and "it was important to keep the existing employees" in the unit.   Waxman was impressed.  "When I retire I want to come work for you at $1 million a month," he said.  Waxman then rhetorically asked "What would he have had to have done for you to fire him?"

Wednesday this week, Treasury Secretary Henry Paulson terminated Cassano's contract.  [So, the Treasury Secretary CAN fire people who have loans to the Feds, eh?]

"Why they kept him around?  I can only speculate but my guess is he knows where the bodies are buried.  He knows where all these contracts are, what they may be valued at who did them, it's a very unregulated market, "says David Callaway of MarketWatch.

Cassano worked out of the London office.  There were 377 people working under him.  According to AIG files, on average, each person in his unit made more than $1 million a year.  And for every dollar his financial products unit made, 30 cents came back to Cassano and other top execs.

Oh, and I found these little tidbits.

"Five guilty of fraud that led to AIG chief's fall" - Dated February 26, 2008.

AIG is facing probes from the SEC and the Justice Department in the way the firm valued credit-default swaps. 

When Robert Willumstand blamed the problems on financial disclosure laws, Lynn Turner, the former chief accountant at the SEC replied, "That's like blaming the thermometer, folks, for a fever."

RANT ON

Why is AIG's stock plummeting?  No bailout is going to save this company and it will be $85 billion, $122 billion in junkets at the end.  Businesses go bad due to honest mistakes or bad business, but I'm really starting to hate AIG for greed and greed and more greed.  In the corporate world, you don't think of how you hurt people financially or mentally, well.. welcome to the real world AIG, "Main Street" would love to see you hurt financially and live with the guilt for the rest of your lives.  And I believe that all the execs of AIG, with the perhaps exception of Willumstad since he was only at the company since June 2008, should NEVER be allowed to work in a financial field again or as a consultant to a financial institution/bank/investment/life insurance, etc.  And that even means a job as simple as a bank teller.  And as for Willumstad, yes he can work in a financial field again, however, he can never ever receive company stocks are a bonus, incentive, or for any reason.  Actually, I think that's a good idea.  No high-level execs can own stock in their own company UNLESS they started/founded the company.  - Rant Off.

SOURCES:

• OC
• ABC News
• Wall Street Journal
• CNN Money
• Reuters
• Hartford Courant
• KGO-TV, San Francisco, CA
• Times Online
• Bloomberg
• Bloomberg
• Workers Comp Insider

Examples of cuts:

• Public health programs: At least 14 states have implemented or are considering cuts that will affect low-income children’s or families’ eligibility for health insurance or reduce their access to health care services.  For example, Rhode Island has eliminated health coverage for 1,000 low-income parents, and New Jersey has cut funds for charity care in hospitals.  In Tennessee, an estimated 30,000 to 40,000 seriously ill people are expected to lose hospitalization and other medical services provided through TennCare.

• Programs for the elderly and disabled:  At least 11 states are cutting medical, rehabilitative, home care, or other services needed by low-income people who are elderly or have disabilities, or significantly increasing the cost of these services.  For example, Florida has frozen reimbursements to nursing homes and relaxed staffing standards and Rhode Island is requiring low-income elderly people to pay more for adult daycare.  Tennessee has reduced community-based services for people who are mentally retarded.

• K-12 education:  At least 13 states are cutting or proposing to cut K-12 and early education; For example: Florida cut school aid by an estimated $130 per pupil, Nevada eliminated funds for gifted and talented programs, and Rhode Island is eliminating early education funding for 550 children.

• Children's Services:  Illinois has reduced funding for child welfare, mental health, youth services and other programs.

• Colleges and universities: At least 17 states have implemented or proposed cuts to public colleges and universities.  For example, Alabama, Kentucky, and Virginia have all cut university budgets and/or community-college funding, resulting in tuition increases of 5 percent to 14 percent.

• State workforce: At least 19 states have proposed or implemented reductions to their state workforce.  New Jersey is reducing its workforce by 2,000 employees through early retirement, lay-offs and attrition.  In Tennessee, the governor announced the elimination of over 2,000 state positions - about 5 percent of the state workforce.  Some 1,500 employees accepted buy-outs for early retirement.  In Kentucky, the public defender will eliminate 10 percent of positions (54 positions) and decline certain types of cases including family court cases, probation and parole revocations and some types of involuntary commitments and misdemeanors; hiring freezes have been instituted in Arizona, California, Connecticut, Delaware, Georgia, Minnesota,  New Hampshire, Virginia and Washington.

• Raising Taxes and "Sin" Tax:  New York has enacted tax and fee increases.  Large liquor retailers in New Hampshire, will pay more in state taxes along with a tobacco tax increase.  Several states, including Maine, Oklahoma, Rhode Island and Vermont, changed their tax codes to avoid revenue loss that would otherwise have occurred due to the federal economic stimulus legislation enacted earlier this year.

• Various:  New Mexico was forced to put off a $500 million bond sale.  Massachusetts had to pull the plug halfway into a $400 million offering.  Maine is considering canceling road projects that were to be funded with bonds.  South Carolina Governor Sanford said legislators shouldn't be paid to return to Columbia to fix a state budget shortfall because they created the problem, saving taxpayers $50K daily.

In order of budget gap (as a % of the total budget), from lowest to highest of the worst.  (NOTE:  The unemployment rates are the most current state rates available, being August 2008 published on September 16, 2008.  The national unemployment for September, 2008 was 6.1%):

Rhode Island

Budget Gap:  31.1%
Gap:  $430 Million
August Unemployment Rate:  8.8%

Proposed cuts to the public college system and aid for municipalities, as well as tighter limits on welfare benefits are planned.  The state has reduced the maximum income level at which parents can receive public health insurance from 185 percent of the federal poverty line to 175 percent.  This will eliminate coverage for approximately 1,000 parents.  More than 7,800 low-income families will also have to pay higher monthly premiums for public health insurance.

Low-income elderly people now must pay higher rates for subsidized adult daycare.  This is estimated to affect more than 1,200 people with incomes below $20,000.

State aid has been frozen for K-12 education at last year's levels in nominal terms and reduced the number of children who can be served by Head Start and similar services by more than 550.

Fund have been cut for affordable housing, eliminated health insurance for home-based child care providers, restricted TANF cash assistance for children, reduced health insurance for retired state workers and cut support to localities by $10 million.

A reduction in the state workforce by 2,000 or more employees via encouraging early retirement, but has announced that it will lay off workers if needed.

A tax credit for foreign taxes paid was eliminated, a tax credit for motion picture production was capped, a moratorium on new projects qualifying for the historic structure tax credit was placed, and fees were increased.

Connecticut

Budget Gap:  2.6%
Gap:  $450 Million
August Unemployment Rate:  6.4%

In Connecticut, home to many Wall Street employees, the state budget hole has more than doubled in a month to $300 million and now to $450 million.  The governor has ordered budget cuts to programs that help prevent child abuse and provide legal services for foster children.  There is currently a freeze on hiring.

Alabama

Budget Gap:  9.5%
Gap:  $784 MIllion
August Unemployment Rate:  5.3%

Alabama closed some corporate tax loopholes, and made cuts to colleges and universities.  The Department of Human Resources has announced it will end in August home-makers services of approximately 1,100 older adults.  These services often allow people to stay in their own homes and avoid nursing homes.

Minnesota

Budget Gap:  5.4%
Gap:  $935 Million
August Unemployment Rate:  5.8%

Policymakers capped enrollment at current levels for a program that provides expanded health services and care coordination for people with disabilities.

There is currently a freeze on hiring.

Maryland

Budget Gap:  7.2%
Gap:  $1.1 Billion
August Unemployment Rate:  4.5%

Maryland enacted a $1.35 billion tax increase in late 2007, which along with $277 million in budget cuts, is designed to help address the state's deficit.  However, due to the declining economy an additional gap of $270 million has occurred.  This is likely to be addressed by further spending cuts.

Nevada

Budget Gap:  16%
Gap:  $1.2 Billion
August Unemployment Rate:  6.9%

Nevada has the worst foreclosure rate in the nation and its economy has slowed dramatically this year.  Nevada has no state income and derives its income from sales tax and casino tax.  Since people do not have the amount of "extra" money to use on vacations, and since Reno, Las Vegas and most of the rest of the state lives of tourism, income has drastically declined.  The governor capped the state's children's health program and increased children's health-care premiums, and cut funding for K-12 education, higher education and welfare.

The governor has capped the State Children's Health Insurance Program at its approximate current number of enrollees and increased the premiums that families must pay.  As a result, many applicants will be denied coverage, even though the economy is weakening and need consequently is rising.  Health services for some pregnant women have also been eliminated.

The welfare agency will make it harder for low-income families to receive cash assistance and health insurance, for instance by increasing the amount of time before which some families that have lost benefits may reapply.

The governor has ordered various cuts to K-12 education, including delaying an all-day kindergarten expansion, cutting per pupil expenditures by $400 in a pilot program, eliminating funds for gifted and talented programs, eliminating funds for a magnet program for students who are deaf or hard of hearing, and made across-the-board cuts.

Massachusetts

Budget Gap:  4.3 - 4.5%
Gap:  $1.2 - $1.3 billion
August Unemployment Rate:  5.1%

Whenver Administration and Finance (A&F) determines that revenues will be "insufficient to meet all fo the expenditures authorized to be made from any fund, whether by appropriation or distribution," the commissioner must notify the governor and the House and Senate committees on Ways and Means, in writing, and certify the amount of the "probably deficiency."  The governor must act within 15 days of receiving notification.

Governor Patrick is preparing to make budget cuts using the emergency powers granted to him under his section "9C" which refers to a section of the MA General Laws - Chapter 29 - that governs state finances.  Section 9C deals specifically with revenue deficiencies, and what steps the executive branch should take to ensure a balanced budget.

There are some restrictions to the 9C and use, for example, the governor cannot renege on contractual obligations, nor can he cut accounts governing pensions or Medicaid.

Ohio

Budget Gap:  4.5%
Gap:  $1.3 Billion
August Unemployment Rate:  7.1%

Ohio plans to close two mental health facilities.

The governor has announced plans to eliminate as many as 2,700 positions, about 4.5 percent of the state workforce.  The reductions will be achieved through a combination of early retirements, lay-offs, and unfilled vacancies.

Georgia

Budget Gap:  8.7%
Gap:  $1.8 Billion
August Unemployment Rate:  6.4%

The governor has asked state agencies to cut 4% to make up an expected shortfall in the $21 billion budget for the coming fiscal year. 

The Governor has withheld funds from the Homeowners Tax Relief Grant which passes state money to counties sot hat they can provide property tax credits to homeowners, thus casing localities to roll back the credits, or fund them from their own resources.

Six out of seven state run parks lodges are money losers, according to the state.  Toilets at the Amicalola Falls State Park Visitor Centers have been closed due to budget cuts and portable toilets are put in place.  The park doesn't have the money from the state to fix a sewage problem in the bathrooms.  Hours are being reduced at many parks.  One of every eight jobs at state parks remains vacant.  Half a dozen parks and historic sites have been closed for two to four days a week, as fewer staff cover more than one property. 

At Fort Yargo State Park there are only two "badges" on the 1,814 acre park who carry guns, write traffic tickets, and answer the calls for 3am unruly campers.  How they control costs is by leaving one position vacant, and reducing the number of times they patrol the campgrounds.

Arizona

Budget Gap:  19.9%
Gap:  $2 Billion
August Unemployment Rate:  5.8%

The state reduced the Medicade rolls by increasing the frequency with which some adult recipients must reapply for benefits.  Arizona has also cut funding for community health centers and state universities along with vaccines.  They have also put a freeze on hiring.

Eliminated was temporary health insurance for people with disabilities coping with serious medical problems.

New Jersey

Budget Gap:  7.7%
Gap:  $2.5 Billion
August Unemployment Rate:  5.7%

The state legislature passed a $32.8 billion budget that is $600 million less than last year's budget.  New Jersey plans to trim the budget by offering early-retirement incentives for state employees through attrition, or a reduction in number by 2,000 by leaving vacancies and laying off staff.

Property tax rebates for households with incomes over $150,000 are eliminated and reduced for others.  A public utility tax that was scheduled to end in 2010 has been extended to 2013.  A renters' credit for families with incomes under $50,000, previously worth $200 or more per family, has been cut to a maximum $80 per family for non-elderly, non-disabled renters.

Florida

Budget Gap:  19.9%
Gap:  $5.1 Billion
August Unemployment Rate:  6.8%

Florida also has no state income tax.  The $66 billion Florida budget for the coming year is about $6 billion less than the one approved the previous year.  It includes a $332 million reduction in public school spending and cuts to state hospitals, nursing homes, and various social programs.

Aid has been cut to local school districts for the current  year by $130 per pupil.

Nursing homes and other providers will not get scheduled cost-of-living adjustments in their reimbursements and staffing standards will be relaxed for one year in the expectation that the freeze would result in staffing cuts.  Medicade reimbursements to hospitals and community based services for the elderly, such as meals and homemaker services, have also been cut.

New York

Budget Gap:  9.8%
Gap:  $5.5 Billion
August Unemployment Rate:  5.6% (NY State), 5.9% (NYC)

Governor Patterson said the state could face an "economic blood bath" as the budget hold continued to worsen.  "We are in a very serious economic crisis.  There's no way to sugarcoat it," he said in a public meeting last Friday.

The state made cuts to the health insurance program for low-income families, and enacted tax and fee increases.  There is a hiring freeze and further agency reductions of 7 percent, in addition to a 3.35 percent reduction in spending in April.

The budget raises approximately $1.5 billion in revenue through a variety of measures including closing tax loopholes, delaying tax credits, raising cigarette taxes, requiring collection of taxes for more on-line purchases, and increasing various fees.

Paterson said that he will also seek some $2 billion worth of cuts, because of his fears that the state's taxpayers will continue to decline.  And he said he was taking the steps to try to hold off a downgrade in the states credit rating.

California

Budget Gap:  22%
Gap:  $22.2 Billion + $250 million court ordered
August Unemployment Rate:  7.6%

As of today, California sits $1 billion in the red.  Governor Arnie sent a letter  (PDF) last week warning Paulson, the Secretary of the Treasury, this week that the great state of California "might" need to borrow $7 Billion from the Feds, if credit market's don't ease and banks don't start loaning money again, to pay for salaries and other operating costs.    The money needs to be in the state's bank account by October 28th to be able to fund a scheduled $3 billion payment to more than 1,000 school districts.  The state was also thinking about planning a $7 billion bond sale.

The state did however, enact a budget that imposed cuts to the state's health insurance program for the poor and other social service programs.

There is currently a freeze on hiring.

They also reduced the State Children's Health Insurance Program, increasing co-payments and reductions in dental services.  The state will also require more frequent eligibility determinations for Medi-Cal recipients and is cutting payments to health care providers significantly through February of next year.

Cost-of-living adjustments are suspended to cash assistance programs for low-income families and cutting child care subsidies.

Revenues will be increased in the current fiscal year by limiting certain business tax credits and suspending corporate "net operating loss deductions."  Other revenue increases in the current year will come from accelerating tax withholding.

And if all that isn't enough, U.S. District Court Judge Thelton Henderson on Wednesday ordered the state to prepare to turn over $250 million to the federal receiver charged with improving health care in the state's prisons.  Altogether, the receiver is seeking $8 billion.

States Budget Gaps:

FEDERAL BUDGET

If you would like to see what your state receives from the Federal Government, head on over to the White House website for Fiscal Year 2009, State by State, Federal Budget.

RANT ON

So, States are considering going to the Feds for help, with California officially saying that "might" need help.  Now, we've already seen bailouts of banks and various financial institutions, that "officially" are to the tune of $700 Million, but have been estimated to be more than $1.8 Billion by the time it's done and over with.  So how long do you think all this money from the Feds is going to last?  I mean if the states are suffering from lower income tax, isn't the Federal Government going to suffer from the same? - RANT OFF.

SOURCES

• BusinessWeek
• Center on Budget and Policy Priorities
• U.S. Department of Labor
• L.A. Times
• Wall Street Journal
• San Jose Mercury News
• Daily News Transcript
• Maiden Observer
• Atlanta Journal Constitution
• WABC-TV, New York, NY
• Forbes