Letter by registered mail: CuomoTARP.blogspot.com
April 19, 2011
175 Federal Street, Suite 501, Boston, MA 02110
Standard & Poors
55 Water Street New York, New York 10041
One State Street Plaza, New York, NY 10004
Re: protecting buyers of NY bonds and your potential liability.
You have been sent a copy of Three Billion Dollar Medicaid Fraud By New York State dated April 13, 2011. The Financial Crisis Inquiry Commission established by Congress reported on page 25: "We conclude the failures of credit rating agencies were essential cogs in the wheel of financial destruction." You realize your potential liability, if this occurs with NY State Bonds.
Standard+Poor’s lowered its outlook for U.S. debt to “negative” from “stable,” and woke up Washington. NY debt must follow. Comptroller DiNapoli's cash report for end of March reported, "All Funds tax collections were $926.3 million below initial projections included in the SFY 2010-11 Enacted State Budget, but slightly above projections made March 3." This is double talk, which means he knew on March 3, 2011 that the revenue predicted in our budget wasn't coming, so we revised our figures lower, so he could report we received more than expected.
The rating agencies must properly rate NY bonds based on the above mentioned letter and
1. Cuomo's budget expects more money in cigarette taxes, but that is dashed by expected crime wave of smuggled cigarettes. link 1 link 2
2. The World new economic reality is reported in Andrew Cuomo; A State Bankruptcy And NY Bond Devaluation where factors outside of NY control the bond market for NY bonds.
3. New York Pension Books are Cooked
4. New York Bonds Are Down Rated Based On Cuomo's Budget because
a. The Cuomo 2011-2012 Budget proposes to "eliminate a $10 billion dollar deficit without raising taxes or borrowing" and then is borrowing $5.6 Billion dollars.
b. Cuomo has a "funds shift [that] would result in the use of state bond proceeds for payment of a portion of debt service on MTA revenue bonds."
c. Cuomo's budget used the "Madoff-like" assumption of a 7.5% safe return on pension investments. and continues to allow borrowing to fund contributions.
d. Cuomo failed to budget in the required repaying of the federal government for Medicaid frauds. This is minimally estimated at $6.4 billion.
e. Cuomo forgot what happens when New York's bond rate rises and NY's borrowing costs will move up from $5.6 Billion $18.8 Billion.
e. Cuomo forgot about repaying the Unemployment Insurance: State Trust Fund Loans of $3.1 billion. Cuomo must pass this on in higher unemployment contributions by New York Employers and watch the Cuomo Business Friendly New York fizzle.
f. Fitch Downgrade Added $2.99 Billion in Deficit To Andrew Cuomo's Budget Farce
g.New York has the highest State+local debt per person in USA at a total debt per person of $31,536 compared to USA debt per person of $44,805.
h. Andrew Cuomo's Hope For Increased Tax Revenues Was False because he hasn't budgeted the State's payment of the entire unemployment and extended unemployment benefits of laid off workers, such as the 500 court employees which are just a beginning of NY State layoffs. These unemployed will reduce Personal Income Tax receipts,User Taxes and Fees, and Business Taxes (larger unemployment reduces earnings from businesses)
i. New Yorkers paid $48 billion in property taxes in 2010 with the highest local property taxes in USA, 74% above national average.
Bob Brinker recommends seniors leave the high tax States. New York has the highest taxes. Andrew Cuomo's Business Friendly Puff Pieces will Fizzle As Reality And Medicaid Block Grants Close In.
Who'll be left to repay the bonds? Please do your duty and protect buyers of New York Bonds with up-to-date ratings.
Note: all links are available on the CuomoTARP.blogspot.com website where a copy of this letter is posted.
Attached: Three Billion Dollar Medicaid Fraud By New York State In Cuomo Budget Sent To Congress For Oversight dated April 13, 2011