The Prodigal Cuomo Is Broke And Temporarily Survives By Not Paying Bills

The poor is hated even by his own neighbor, but the rich hath many friends.~ Proverbs 14:20.

       The Prodigal Cuomo's spending has the State finances on a razor edge according to Comptroller DiNapoli.  But the reality for Cuomo and DiNapoli is the State is already in the red.  The gimmicks, fantasy revenue expectations and unpaid delayed bills do not balance a budget.  Specifically,
1. There are $500 million in delayed personal income tax refunds.
2. Franklin County County Manager and Budget Officer Thomas Leitz said the state owes the county reimbursements for services it has already provided through its Department of Social Services, its Nursing Home and the Public Nursing Services... as of last Thursday, it is owed $3.8 million from Albany.
3. Clinton County is owed about $6.1 million, according to the County Treasurer's Office.
4. There are 40+ other counties owed money by NY State.
5. The State budget expected a growth in income tax revenues to follow from National growth and that fantasy is now devastated as Billionaire investor George Soros said he believed the United States was already experiencing the pain of a double dip recession.
6.  NYS Income tax revenues from NYC financial businesses are a major source of NYS revenues, but how do they earn money if investors are dumping everything.
7. Expected increases in Sales tax revenue is another budget pipe dream as "Consumers earned less and spent less ... The government data shows how Americans are struggling after the worst recession since the Great Depression.The Labor Department says in its annual survey of consumer behavior that spending fell 2 percent last year."

    Comptroller Dinapoli had said, "Still, the Blue Chip consensus economic forecasts for growth continue to be revised downward, raising concerns for the remainder of the fiscal year.”
     Will Comptroller DiNapoli have this honest talk with the Prodigal Cuomo?

"The State's in the red.  We're not paying our bills.  Our hoped for income tax revenue increases have become decreases.     And sales taxes going up?"

Then when Prodigal Cuomo finishes crying, DiNapoli must continue with,  "You felt great as the Big Man who spent lots of money after Hurricane Irene. Now it has to be paid for and FEMA local and state grants require a 25% contribution.   The Big Man has to come up with the money, too"

Will the People still love you, Andrew, when they have to pay the bills? 

P.S.  We can't borrow more.  New York Debt per person including local debt is $24,195. For a family of four that is about $97,000. (New York leads California in official debt per person by 29% and the debt is greater than the average for all States by 73%.)

 

Andrew Cuomo needs lots of "Ron Pauls"

Humpty Dumpty sat on the wall

Humpty Dumpty took a great fall

  Up to the mythical bar in the Sky strutted Andrew Cuomo, the big man in New York.  He tamed the State's budget crisis.  He appointed committees to fix everything.   He rebuilt the infrastructure damaged by Irene and prepared for his ascension to president.    But like all prodigal sons, the end was unexpected.  Will his friends who he bought drinks for at the bar love him when he asks them for money?
     Back on Earth, Comptroller DiNapoli at Cuomo's "Ministry of Finance and Hope" has shown his "prodigal prudence" by lowering his estimate of safe Pension fund returns from 8% to 7.5%.   Will DiNapoli be able to get Madoff freed from jail to help obtain this 7.5% safe return.    There are lies, damn lies and finance weasel's doublespeak.  The following words of DiNapoli were issued from the "Ministry of Finance and Hope:" 
   "DiNapoli: State’s finances on a ‘razor-thin’ margin"
1. “Revenue collections, as anticipated, have grown from last year,” 
2. “Still, the Blue Chip consensus economic forecasts for growth continue to be revised downward, raising concerns for the remainder of the fiscal year. We should be prepared for the possibility that revenue growth may falter, requiring downward adjustments to the Financial Plan.”
3. The General Fund ended August with a balance of $1.6 billion, $0.7 million lower than projected in the Financial Plan updated August 2.  Receipts, including transfers, grew $3.1 billion over last year primarily because of higher personal income tax (PIT) collections in April and $500 million in delayed refunds that lowered last year’s revenue. PIT collections ended the month $45.2 million lower than the latest projections. Spending, including transfers, increased $1.2 billion (5.5 percent) from the same period last year and was $77.4 million below projections, primarily because of local assistance and transfers to other funds.
   Or translating from Weasel, the budget isn't getting the expected revenues; we booked $500 million in delayed tax refunds as revenue when it is an unpaid expense (luckily no jail, like in private business); and we didn't transfer money we were supposed to to other accounts.

     Meanwhile back at the mythical bar, Cuomo and DiNapoli ordered two stiff drinks and discussed the news on Earth:
1. In Rhode Island, General Treasurer Gina Raimondo is calling the state's underfunded pension system a "death spiral"   and the State of RI went to court and lost when, "A Rhode Island judge has ruled in favor of state employee labor unions in the first round of a major legal challenge to state pension reform."

DiNapoli: "They used 8% and I'm using 7.5%. Hick"

Cuomo: "In NY, unions needn't go to court because pensions are protected in our NY Constitution.  What's a death spiral?"

2.  "The president urged Congress to pony up roughly $200 billion in taxpayer money to "provide more jobs for teachers [and] more jobs for construction workers" and more money to carry out other state and local activities. 
These vast contributions to the coffers of state and local governments, though pitched as a jobs bill, are in reality the latest in a series of bailouts for debt-ridden state and local governments. They are of special benefit to states in the blue regions of the country where the president's most fervent supporters reside."
DiNapoli: We need that money or we're broke. Give me another shot.
Cuomo: [animated] They'll never cut me off I'm Andrew, Son of Mario, future President, New World Order Leader.

3. "Stock futures are plummeting after the Federal Reserve indicated the U.S. economic slump could last for years.

The Fed took steps to stimulate the economy Wednesday that had largely been expected. But investors were troubled because the central bank's statement showed it expected a deep and persistent downturn."

Dinpoli: We needed a recovery; we needed growth; we needed their money.  [Orders a double}
Cuomo: {gulping down his drink] The world will change.  My daddy told me I'll rule.  Let them work harder.  The world and I need their money. 

4. "Call it the recession's lost generation.  In record-setting numbers, young adults struggling to find work are shunning long-distance moves to live with Mom and Dad, delaying marriage and buying fewer homes, ... They suffer from the highest unemployment since World War II and risk living in poverty more than others - nearly 1 in 5.   ...  recent college grads now getting by with waitressing, bartending and odd jobs, they will have to compete with new graduates for entry-level career positions when the job market eventually does improve."

DiNapoli: I want to cry at home.  The retirees are fleeing NY.  The young have no hope. Who's going to pay our bills?  

Cuomo; They're not a lost generation; they have me!

Bartender hands check to the Big Man

Cuomo; Don't give me the bill; give it to him.
DiNapoli: What do you mean, no IOU's and you'll only take a Ron Paul? link

New York Taxpayers Find The Local Tax Cap And Balanced Budget Were Only To Fool The Suckers

Didn't Cuomo promise local taxes would be capped at 2%?
Did Cuomo insert a weasel clause in his tax cap?
What balanced budget?  Will more taxpayers flee? 

Weasel ~ n. 2. a treacherous or sneaky person. 
Weasel out ~v. to back out of a situation in a sneaky or cowardly manner

       The pension funding tax increases faced by schools due to Comptroller DiNapoli's decrees that were reported previously on this blog in Smoke And Mirrors As DiNapoli And Cuomo Hide Pension Costs While Schools Will Need Contribute 54% Of Salary To Pension Funds, are now being reported for municipalities.   New York State Comptroller Thomas DiNapoli decrees state and local governments will cough up more money for their workers' pensions.  The average contribution rate to the state pension fund for public workers will rise from 16.3 percent of salaries to 18.9 percent. The average for the police and fire retirement system will rise from 21.6 percent to 25.8 percent.  The Comptroller admitted that "the Common Retirement Fund has had two consecutive years of strong investment returns.  However, we are still incorporating the market loss of 2008-09 into our employer contribution rates."    The Comptroller continued with, "It's true the contribution rates are going up and that's a consequence of the severe market decline in 2008 and 2009, but the good news is that we're on the road to recovery, and if you look at the long history of the fund, we've always weathered difficult economic times — we'll get through this tough time as well,"

      Local taxpayers discover Cuomo inserted weasel clauses in his local property cap so that schools and "municipalities could pass some of the higher pension costs on to property taxpayers because the state's new property tax cap has an exclusion for part of the pension hikes."  And so Cuomo has an excuse which he forgot to mention when he was prancing about congratulating himself on not raising taxes.   "The Cuomo administration argued the exemption balances out the damage done by the 2008 financial crisis, which made less pension fund money available. With less money from the fund, localities are forced to fill the gap."

     Now, hold your wallet really tightly
   Cuomo forgot to include in his NY State budget increasing state worker pension contributions by 3.6%.  Now, add this to the judges' raises Cuomo's committee will add today at their final meeting.
[Link to judges' salary and Cuomo.]

       When will Comptroller DiNapoli and Cuomo tell us that NY State, its schools and local governments need to fund their retiree health benefits of $56.3 Billion In Presently Unfunded Liabilities.   Bye, bye, Cuomo's balanced New York State budget.
 
       If you think this local tax increase is bad, wait till you discover that these increases are based upon Comptroller DiNapoli's lowering the promised safe rate of return on pension investments from 8.0% to 7.5%.    Luckily, DiNapoli and Cuomo are running public pension plans where the federal law allows an assumption of an 8.0% or 7.5% return on investments without criminal penalties and joining Madoff in prison does not result.   A real safe yield rate for private pensions would be the US Treasury 10 year rate of 1.99% to 2.16%.  Such a safe rate would mean the increases in pension contributions required could be calculated from DiNapoli's present increase based upon a rate reduction from 8.0%-7.5%=0.5% to a true safe rate reduction of 8.0% -2.0% = 6.0%.     Since 6.0% is 12 times 0.5%, the required pension contributions should be 12 times DiNapoli's present increases.  Or, 59.5% of salary for public workers and 72.0% of salary for police and fire.

   The taxpayer wagon trains will be forming in your community soon.  Texas, Florida or Wisconsin or bust.   


See New York Exodus As Tax Payers Flee At The Highest Rate In USA

New York State Rating Downgrade: Who'll Repay The Bonds As Taxpayers Flee?

NY Like NJ Forgot To Fund Retiree Health Benefits And NY Adds $56.3 Billion To Its Unfunded Liabilities

   The Ithaca Journal falsely reports,"New York's [pension]plans aren't underfunded."   They must be comparing with the pending NJ disaster of a $120 billion dollar pension shortfall.  But NY pensions assume a 7.5% return on pension assets when they only earned 1.1%.  NY's unfunded pension debt is estimated at $143 billion dollars.   When NJ defaults, NY would soon follow.

     But what about funding retiree health benefits liability.  Pew reports, "States had only about $31 billion, or 5 percent, saved toward their obligations for retiree health care benefits."    NY had $56.3 billion dollars in retiree health benefits unfunded and according to Pew had 0.0% in its retiree health benefits funding account.   While NJ had $66.7 billion in retiree health benefits, also funded at 0.0%.

     New Yorkers now have another $56.3 billion dollars divided by 19.4 million NY population = $2,902 debt per person to add to the already calculated $24,195 State and local debt per person (link). We have a new higher total of $27,097 State and local debt per person or $108,388 for a family of four.

      Is the NY pot blacker than the NJ kettle?   Will investors want NY bonds or NJ bonds?  Neither NJ or NY can't withdraw from the USA like Greece and issue their own worthless currency to pay off its bondholders. 
  
      But in Albany, the thinking is, "What debt crisis?  Our pensions are 100% funded, aren't they?  We can fund retiree health benefits next year, right?  Andrew Cuomo has brought Hope and Change and balanced the budget, right?" Although, Andrew Cuomo had promised to throttle lobbyists in NY, "Spending on lobbying in New York tops $200 million in 2010."   And lobbyists are controlling his committees. 

  Meanwhile out in the cruel dark financial world outside Albany, China is reducing its holding of US debt.  link to China and NY debt      link to NY bondholders lose big in NY bankruptcy/default

And now the Chinese Debt Master holds the ball, and now he lets it go,

And now the air is shattered by the force of Cuomo's blow.

Oh, somewhere in our favored land the sun is shining bright;

The band is playing somewhere, and somewhere hearts are light,

And somewhere men are laughing, and somewhere children shout;

But there is default in Albany,  the mighty Cuomo has struck out.


link to poem

Pension Debts And Warren Buffet Sink New York's Budget Into Huge Debt

The chickens come home to roost

    New York's "Madoff-like" promised 7.5% safe return on pension investments chickens are headed home to roost.   Warren Buffet says 6.0% would be a better rate.    It is reported as  "The State Pension Time Bomb" where,  "Poor accounting rules and flagrant irresponsibility have sped up the states’ day of reckoning."  This blog previously in November 2010 reported:   link

      Madoff had promised safe returns of 10% before the economic recession began.  The SEC warns in its Ponzi Schemes – Frequently Asked Questions that Ponzi schemes share common characteristics:
          High investment returns with little or no risk
          Overly consistent returns.
  Comptroller Di Napoli has reduced his hope to earn 8% percent a year to 7.5%.  Except for Madoff, who guarantees a 7.5 percent safe rate of return?  Or 7 percent?  Or 6 percent?  No junk bonds allowed.   NY's real rate of return was less than 4% for ten years.
Even worse, NY's return for past 5 years was 01.1%.   Link.

A report in the August issue of Governing, called New York State, the nationwide pension leader with Pension liability: $141 billion.    The NY Times, agrees and had  "How to Cheat a Retirement Fund", an "approach that assumes, as economists generally do, that even corporate accounting standards in this area are too lenient, public pension underfunding is about $3.5 trillion, or one-quarter of gross domestic product."

  "Private pension plans must discount their liabilities based on a market rate—typically, a corporate or U.S. government bond rate—which is often much lower than the plans’ projected returns." 
*Return US Treasury: 10-MONTH NOTE 10-15-2010 2.475%
  There appears to be a large difference between 2.475% and 7.5% and DiNapoli's assumed drop from 8% to 7.5%.

Bottom line: New York's balance sheet is tipped by an unfunded pension liability of up to $143 billion dollars.  Already, the New York Debt per person including local debt is $24,195. (For a family of four that is about $97,000.)
Now add another $143 Billion divided by 19.4 million (NY Population) to add another $ 7,341 to that $24,195.

NY State and local debt per person $24,195
NY unfunded pension debt per person $7,341

NY total debt per person $31,536 

USA debt per person $44,805 (Dec 2010)    
Who would lend money to such a debtor?

Sheldon Silver OutFoxes Cuomo And Sticks Cuomo With The Future Blame For Revenue Shortfalls And Default/Bankruptcy

  
New York's budget is a fool's delight.

   The Cuomo Budget process and its Committees and teams were all a big farce, because Cuomo operatives prepared the outcomes and the committees were left with a rubber stamp. "Add Common Cause to the list of organizations unhappy with the about-to-be-completed 2011-12 budget. Rather than the cuts, they are upset about the level of secrecy involved in crafting the spending plan, which appears to be a replay of the time-tested “three men in a (closed door) room” method.
      "Localities were quick to knock the first report ... from Mandate Relief Redesign Team, saying it falls short of the reforms needed. ...Gov. Andrew Cuomo ... is seeking to cap the growth in property taxes to 2 percent a year. Governments and schools said they would be hard-pressed to abide by the cap without having some state requirements removed."   "What irked some on the 23-member panel was that while they had discussions with Cuomo's staff about the final version of the report, they only saw it minutes before it was released publicly."  Suffolk County's Steve Levy said Cuomo's team report was 78 pages of nothing.

        This was a temporary victory for Cuomo, but disaster is ahead, because the revenue side of the budget is a farce.   "The new governor holds the commanding heights,” said Robert B. Ward, deputy director of the Rockefeller Institute, a research center. “The role for the Legislature often is to wait out a governor — and certainly the speaker has proven he’s a master of that."    Was Assembly Speaker Sheldon a sly fox who knew Cuomo now had responsibility for the budget and the phony revenue predictions?   "Mr. Silver [had]explained, it would be the widely reviled Legislature — not the popular governor — that would be blamed [if a budget wasn't passed]."   Didn't Silver responsibly want more taxes?

     Local schools are announcing layoffs in response to budget cuts.  A sample of schools follow.
Beekmantown School layoffs
Saranac Central School District has no reserves and layoffs needed
Ausable Central School district has low reserves and layoffs will be needed
Cohoes City school district proposes layoffs
       And these unemployed workers won't pay State income taxes (reduces Income Tax revenues) and also drains State coffers (unbudgeted expenditures for benefits), because NY State can't borrow its share of unemployment expenses from the federal government as it did in 2010. Worse still many local districts have to layoff more workers because they don't save the entire cost of wages paid, because many must still pay the full cost of unemployment benefits, because they use the benefit reimbursement plan instead of making regular unemployment contributions (in other words, they paid nothing until a worker is laid off and then they pay the full benefits)
"The Benefit Reimbursement program lets employers reimburse the Unemployment Insurance Fund for benefits paid to their former employees in place of paying on a tax rated basis.  The following groups that are tax exempt under Section 501 (c) (3) of the Internal Revenue Code qualify for this option:    Nonprofit organizations organized and run only for:  religious, charitable, scientific,  literary or educational purposes and Government entities."
This same unemployment benefit (unbudgeted expenditure) payment will affect any New York State layoffs Cuomo plans, because the promised savings will have to be reduced by the full cost of all unemployment benefits paid.

   And NY Counties will follow with more layoffs because of Cuomo's pass down of a 9.4% increase in Medicaid County expense which is the largest expenditure for Counties and the failure of his Mandate Relief Team.   Things get worse because a Pension Tsunami is going to hit California and New York.  New York State has an absurd assumption that it earns 7.5% on its pension funds when the real rate was 1.1% for the past five years.     This will effect New York's credit rating and lending rates.

Meanwhile, as inflation threatens and gas and fuel prices rise 100%,  will Cuomo get more money by borrowing when New York is all ready the most indebted per person with $97,000 for a family of four?

The US Treasury can run out of cash, as can a State.

The Clever Fox Award goes to Sheldon Silver and the booby prize to?

Andrew Cuomo Faces Steep Interest Rates Or Default With Highest State/Local Debt Per Person Or About $97,000 Per Family Of Four

What is the Credit Rating for New York's indebtedness?

    Let's look at New York's outstanding debt, which will affect New York's ability to borrow more money when Andrew Cuomo's Budget fails to produce desired revenue.  (See blog post below or link)   New York leads California in official debt per person by 29% and greater than the average for all States by 73%.    The grim numbers are below.

        From governmentspending.com
State   Gross Local and State Debt    Population  Debt per person
                      in billions                           millions        dollars
California       371.2                                 32.8          $11,317
New York      281.9                                 19.4          $14,531
Florida            128.4                                19.3          $ 6,653      
Michigan          72.2                                10.0          $ 7,220
Texas               210.6                                25.4          $ 8,291
All States    2,617.4                            311.4          $ 8,405

     But, New York State's Pension Plans use a fraudulent Madoff like safe return of 7.5% to calculate Pension reserves.  (The actual rate of return for the past 5 years was 1.1%).   If we correct the pension liabilities optimistically with a 3.1% return, instead of the 7.5% fraudulent rate we find another $9,664 additional debt per person, raising the New York Debt per person including local debt to $24,195.  For a family of four that is about $97,000.

    The USA and its States will face borrowing problems, as reality sinks in:
US finances near worst in World
Moody's cracks the whip on Britain
The exact cost of bad decisions by government bodies, whether they be the U.S. Congress, state legislatures or local city councils, is often hard to quantify.
Now, the simple questions, if you wanted to invest in State Bonds?
1. Which State is most heavily in debt per person?  NY
2. Which State balanced their budgets? not NY
3. Which made outlandish predictions of revenue and now wants to borrow to finance their spending excesses? NY
3. Would you demand a large premium in interest rates to lead to New York over other States?  Yes

How many ads will be needed to be purchased in the future to convince you Cuomo's promised good intentions excuse his failures? 

Fitch Downgrade Adds $2.99 Billion in Deficit To Andrew Cuomo's Budget Farce

      The downgrading begins as Fitch begins CYA.  Fitch has announced, "In valuing pension liabilities in its credit analysis of states and local governments, the rating agency will now assume a return on assets of 7 percent, lower than the average return of 8 percent used by most pension plans. That translates to an increase in the average plan liability of 11 percent."
       This throws Cuomo's budget into the trash.  After Madoff, only a fool would accept even a 7% "safe" rate of return on investments as sensible.  NY State uses a 7.5% 'safe return on its pension investments.    But, NY's real rate of return was less than 4% for ten years.  Even worse, NY's return for past 5 years was 01.1%.   Link.

       New York's pension fund as of March 31 was nearly $56 billion below the level it would have attained if it had achieved its 8 percent target rate of return for the past five years.

     When Thomas DiNapoli lowered [from 8% to 7.5%] the expected rate of return for the state's $125 billion pension fund, ...[the State] contributed 88% of the $3.4 billion invested in employee pensions last year, according to the fiscally conservative Citizens Budget Commission.  So assuming another drop from 7.5% to 7.0% would require the State to contribute the same 88% of $3.4 billion, or Cuomo's budget just added another $2.99 billion in deficit.

The Hand Writing was on the Wall

Fiscal Conservative Andrew Cuomo's Shell Game Is Borrowing From The Pension Fund To Contribute To Pension Fund

 "I am not a crook!" ~ Richard Nixon

Shell game scam alert: Will there be something left for the bond holders, or the pensioners, or any taxpayers capable of paying for it?  Or nothing left anywhere?

     What's Andrew Cuomo or Comptroller DiNapoli doing about borrowing from the pension fund to pay contributions to the pension fund in 2011?  Nothing, it's not so described in his budget or in his announced agenda. 


      Amortized means payments are extended over future years.

  From Empire Center for New York Policy, "Starting in fiscal 2011-12, the contribution rates used to calculate the state’s pension bill will be allowed to increase by only one percentage point a year, starting at this year’s capped level. Billed contributions above that amount in any given year can be spread, or amortized, over 10 years, payable to the pension fund at a rate pegged to interest on taxable bonds, generally in the neighborhood of 5 percent. As part of the deal, the minimum contribution level is permanently fixed at 4 percent. Local governments have been given the option of joining this “rate mitigation program,” and many are already choosing to do so."

This is the applicable law: NY State Law RSS - Retirement and Social Security
Title 2 - ESTABLISHMENT, MANAGEMENT, SUPERVISION AND FINANCING
19-A - Employer contributions for the two thousand ten - two thousand eleven fiscal year and subsequent fiscal years. (allowing amortization or paying in this year's contribution over many years)

     Pension Plan or Ponzi Scheme?  "Now there is a new claimant to the title of Ponzi Perfection — The State of New York.…Another oddity of the plan is that the pension fund, which assumes its assets will earn [7.5%] percent a year, would accept interest payments from the state that would probably be 4.5 percent to 5.5 percent."   "'Mr. DiNapoli, the comptroller, said: “We would view it more as an extended-payment plan.” 

       This NY State Shell Game also allows Municipalities to Borrow from Pension Fund to make Required Pension Fund Contributions

      Is this Fiscal Insanity by the Fiscally Conservative Andrew Cuomo, or a scam?   This is another reason why New York will default or go bankrupt.   If this was a private company, they'd all be headed to jail, or, for the insane, to the asylum.

New York Bonds Are Down Rated Based On Cuomo's Executive Budget

Rating the Cuomo Executive Budget for Bond Purchasers

  The Cuomo 2011-2012 Executive Budget is like fancy curtains placed in the window hiding a burnt out interior in the house.   First,  there is the new folly presented by Cuomo:
1. Cuomo expects government bureaucrats and committees could design programs to save money. (SAGE Spending and Government Efficiency, Medicaid Redesign Team, 10 regional Economic Development Councils, Right-sized Youth Detention into community-based programs, Mandate Relief Resign Team) Link to Committees.  Grade D

2. Cuomo in his first sentence proposes to "eliminate a $10 billion dollar deficit without raising taxes or borrowing" and then he is borrowing $5.6 Billion dollars.    Grade F

3. Cuomo says, "New York is number one in education spending and number 34 in results and number one in healthcare spending and number 21 in results."  Cuomo expects the same State workers running these programs will change their stripes, now that Cuomo is Governor?    Grade -Delusional/Incomplete

4. Cuomo has a creative "funds shift [that] would result in the use of state bond proceeds for payment of a portion of debt service on MTA revenue bonds."   Grade F

Then there is the Cuomo folly reported yesterday on this blog:

 5. Cuomo's budget will fail to deal with the elephant in the room and will not follow eight other State's models for laws and regulations which could produce at least  $29 billion in savings per year.  And Cuomo and his Medicaid Redesign Team  is filled with trough feeders.  Grade-Delusional/Incomplete

6. Cuomo's budget  used the "Madoff-like" pension assumptions of 7.5% safe return on pension investments. and continue to allow borrowing to fund contributions.     Grade F
 
7. Cuomo will fail to budget in the required repaying of the federal government for Medicaid frauds tolerated by New York.  This is minimally estimated at $6.4 billion needed to added to deficit or be funded.    Grade F

8. Cuomo reducing Medicaid waste and fraud is a joke, since Cuomo recovered only 0.6% of medicaid fraud while he was Attorney General.    Grade -Delusional/Incomplete

9. Cuomo forgot what happens when New York's bond rate rises?  and NY's borrowing costs will move up from $5.6 Billion to $18.8 Billion.       Grade D

10. 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.     Grade F

11. Cuomo claims a $10 billion dollar deficit, when if he could add correctly he'd get $22.1 billion deficit,  without even counting the pension shortfall from the phony 7.5% safe return and the "Build America" funding losses.     Grade F


New York State Bonds will be rated overall Grade D- and the multiple delusional/incompletes show an impossibility of improvement.

     The good News is Moody's acts slowly on bonds.  Their downgrade of Egyptian Bonds reported on Monday, many days after any sane person would have.

      In further regard of Bond Rating Firms:  The Financial Crisis Inquiry Commission established  by Congress and signed by the President Obama in May 2009 reported on page 25: "We conclude the failures of credit rating agencies were essential cogs in the wheel of financial destruction. The three credit rating agencies were key enablers of the financial meltdown. The mortgage-related securities at the heart of the crisis could not have been marketed and sold without their seal of approval. Investors relied on them, often blindly. In some cases, they were obligated to use them, or regulatory capital standards were hinged on them. This crisis could not have happened without the rating agencies." [link to full report 600+ pages]
You still have time to sell your New York Bonds before they are devalued.  Or, you can hold on to your bonds and then later join the class action suit against rating agencies to recover losses. 

While New York Pension Books Cook ,The Finger Points At New Jersey

NY's Warlocks Cooking the books in NY:
Double, double toil and trouble
Fire burn, and cauldron bubble. ~Shakespeare's MacBeth

 NY Comptroller, DiNapoli said, "Unlike New Jersey, we don’t ignore our pension fund obligations. While New York still faces significant fiscal challenges, our management of the pension fund has left us in a much better position than other states that have continuously neglected their pension fund obligations."

The Good News:   "Moody’s found that the states with the biggest total indebtedness included Connecticut, Hawaii, Illinois, Kentucky, Massachusetts, Mississippi, New Jersey and Rhode Island."  "Other big states that have had trouble balancing their budgets lately, like New York and California, tended to fare better in the new rankings. That is because Moody’s counted only the unfunded portion of states’ pension obligations. New York and California have tended to put more money into their state pension funds over the years, so they have somewhat smaller shortfalls."

Now, the but:  "Pensions were considered “soft debt” and were considered separately from the bonds, using a different method.  'A more standard analysis would view both of these as liabilities that need to be paid and put stress on your operating budgets,' said Robert Kurtter, managing director for public finance at Moody’s."

Now, more buts and oh, gee:  "Moody’s is using the pension values reported by the states. The shortfalls reported by the states greatly understate the scale of the problem... The government method allows public pension funds to credit themselves for the investment income, and the contributions, that they expect to receive in the future. It has come under intense criticism since 2008 because the expected investment returns have not materialized."

Now, from this blog in November 2010: 

From Ponzi to Madoff to Hevesi to DiNapoli; New York Learns Anew About Bond Losses And A Phony Safe 7.5% Pension Return

      Madoff had promised safe returns of 10% before the economic recession began.
The SEC warns in its Ponzi Schemes – Frequently Asked Questions that Ponzi schemes share common characteristics:
          High investment returns with little or no risk
          Overly consistent returns.
    Link for Comptroller Di Napoli will reduce his hope to earn 8% percent a year to 7.5%.  Except for Madoff, who guarantees a 7.5 percent safe rate of return?  Or 7 percent?  Or 6 percent?  No junk bonds allowed.   NY's real rate of return was less than 4% for ten years.
Even worse, NY's return for past 5 years was 01.1%.   Link.

  Now more wild accounting:  Comptroller Thomas DiNapoli proposes for the state government and local governments a  pension “amortization” (i.e., borrowing) plan where the 7.5% rate won’t necessarily affect annual pension fund contributions, because they can borrow their higher payments from the pension fund. Only the Government could imagine being able to use your credit card to charge your credit card payment.
     And it gets better, "after a decade in which the New York State pension fund’s annual return on assets averaged less than half its [8%]target rate, the fund will need to jack up its taxpayer-funded contribution rates next year, Comptroller Thomas DiNapoli announced today."
That's you, the taxpayer, paying a 42% rise in your share (11.5% to 16.3%) 

Now what do you think Moody's reevaluation of NY debt will be when real world accounting is used?

Thank to Bernie Madoff for the recipes to cook the books.

Thanks for showing us how garbage budget data in means garbage budget data out.

The True Believers Chorus is readying its refrain, "If only Andrew Cuomo knew."

 C.C. Moody's, Fitch's, Standard & Poors

Cuomo Can Solve New York Budget Woes Without Dismissing Any State Workers With Just Medicaid Reform Using California Model

If you do what you've always done, you'll get what you've always gotten. ~ Russian proverb

    Cuomo and DiNapoli claim a budget deficit of $10 Billion dollars and New York's Medicaid costs are purportedly $58 Billion dollars.   This blog pointed out how Cuomo could reduce Medicaid in half buy adopting California's Medicaid laws and regulations.   That's $29 Billion dollars saved and would protect the Counties, who must match that amount, and their employees from cost cutting dismissals and, also NY State workers facing layoffs.
   This blog has reported the absurd amount of money, $4,556 per day spent on care for the mentally retarded in Poughkeepsie area.   Think how much it would cost to have aides at $10 an hour for 24 hours a day and a rented room with meals delivered  for $200 a day and then ask where the other $4,116 per day went.  The Federal Government saw improper billing and is demanding NY reimburse Medicaid $1.2 Billion dollars for just one year of this fraud/scam and that's just for 2006, and NY will owe the same for all the years till 2011 and this is for Poughkeepsie area only.

       This money is not going to the poor indigent needy nor the workers at the bottom doing the routine care, it's going into the mouths of the Swine, who fed at the New York Medicaid trough in their suits and pants-suits with lipstick.

Here she is.  Primed and ready to begin to run a New York Medicaid program and begin to feed at the New York Medicaid trough.    And, if things go wrong this pig can be wrapped in a CuomoTARP blanket and avoid jail, just like those in the $1.2 Billion  per year scam reported above.

It's time for Andrew Cuomo to do or not do.
 and use the rest of the Medicaid savings to deal with Pension shortfall as reported and DiNapoli's  absurd Madoff-like  assumption of a safe 7.5% return on investments.
 Failure is not falling down, but refusing to get up ~  Chinese proverb
More in earlier posts below