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's Hope For Increased Tax Revenues Was False And He'll Run Out Of Cash

     Student's letter to Mommy and Daddy: I was very careful with my budgeted money for the year and only bought things which my friends approved and now I'm broke.  Please send more.

       Cuomo's Executive Budget's great hope is that fantasy tax revenue predictions will come true.  We look at Cuomo's budget as analyzed by Comptroller Dinapoli  below. 

The Fantasy numbers are in blue and [Reality is in red]
Report on the State Fiscal Year 2011-12 Executive Budget by Comptroller DiNapoli is the text that follows:
    The Executive Budget estimates that total All Funds receipts will decline in SFY 2011-12 by $1.7 billion, or 1.3 percent, over SFY 2010-11 to $132.9 billion.  The decline can be attributed to the loss of federal stimulus funds receipts, which are expected to fall $5.8 billion, or 11.6 percent.  This loss will be partially offset by growth in All Funds tax receipts, which are estimated to increase $4 billion, or 6.6 percent, to $64.8 billion.  This increase is attributable to the economic recovery, the revenue actions passed last year and those proposed with the SFY 2011-12 Budget.  Finally, All Funds miscellaneous receipts basically remain unchanged, growing by $80 million, or 0.3 percent.

Personal Income Tax
For SFY 2011-12, All Funds PIT  receipts are forecast to increase by $2.6 billion, or 7.4 percent, over the prior year.  The increase is attributable to the improving economy, higher refunds in SFY 2010-11, and the voluntary compliance initiative in the Executive Budget.  Base tax receipts, which net out the $500 million in additional refunds in SFY 2010-11 and the elimination of the high income  tax provisions in the fourth quarter of SFY 2011-12, are projected to grow by 11.4 percent.  [More unemployed people mean less personal income taxes paid.  Cuomo needs to borrow way in excess of another $3.6 billion dollars  just to replace delusional tax revenue increases in the budget.]

User Taxes and Fees
For SFY 2011-12, All Funds consumption tax receipts are forecast to increase by $627 million, or 4.4 percent, over the prior year.  The increase is mainly due to growth in the sales tax as well as cigarette and tobacco taxes.  The sales tax is expected to increase by $437 million, or 3.8 percent, as the economy continues to improve, offset by the partial return of the clothing exemption.  Cigarette taxes are forecast to increase by $165 million, or 10.2 percent, as the Executive expects to collect cigarette taxes sold on Indian reservations to non-Native Americans ($130 million). [Unemployed and under-employed have less money to spend and sales tax revenues may not rise.   Black-Market Cigarettes - with higher cigarette taxes mean smuggling expected to increase and tax revenues actually go down.  And Indians may win in their law suit for sovereign status.]
 
Business Taxes
For SFY 2011-12, All Funds business tax receipts are forecast to increase by $705 million, or 9.2 percent.  The increase is attributable to the improving economy and an expected increase in corporate profits of 6.2 percent.  All of the business taxes are forecast to increase in SFY 2011-12.  [Larger unemployment reduces workers and earnings from businesses - see  Personal Income Taxes above.]

Other Taxes
All Funds other tax receipts  in SFY 2010-11, including the payroll tax, are forecast to increase $432 million, or 16.6 percent, over the prior year.  This increase is attributable to growth in receipts from the estate tax ($216 million, or 25 percent), the payroll tax ($144.3 million, or 11.8 percent) and the real estate transfer tax ($73 million, or 14.8 percent).  [Employment declines noted above will reduce payroll tax. Property sales prices are falling and this reduces real estate transfer tax.   Estate tax revenues will decrease because investment portfolios values are decreasing and the values of real estate transferred by estates will also decline.] 

   When will Andrew Cuomo wake up and see his predicted budget revenues are daydreams?

       P.S. Alert on a developing problem: Medicaid disaster looms as Obamacare will increase number of New York Medicaid recipients by 1,750,000 according to Comptroller DiNapoli in his above report.

Four States, Maine, New Jersey, Tennessee and Ohio have obtained Medicaid waivers.
Representative Anthony Weiner who wants to run for Mayor saw the light and maybe asking for a Obamacare waiver.

When will Andrew Cuomo wake up and see that same light on Obamacare?

Cuomo's Support Ads Will Backfire When Public Holds Him Responsible His Budget's Gigantic Deficit

      Andrew Cuomo has promised Hope and Change with his budget proposal promising not to raise taxes.   Meanwhile the Cost of Living hits a record and "[other] states will be cutting back services drastically this year at the very same time they are raising taxes in order to close enormous budget deficits and avoid a muni-bond defaults crisis."   
     And so, Andrew Cuomo is going to own his budget as his supporters outspend the opposition.   Cuomo's media shill, Fred Dicker, expects that Cuomo will win with short extender budgets while blaming a government shutdown on Sheldon Silver and the Legislature.  But Cuomo's and Dicker's $10 billion dollar projected deficit is just a gross underestimation.   More and more NY layoffs will continue to increase NY unemployment from the 9% reported in blog post below and Cuomo's fantasy revenue predictions will not materialize.
  

Recent News Reports are a sample of New York layoffs:
GM has more layoffs in NY.
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
Does Cuomo really believe voters who now have the highest Cost of Living ever are in the mode to locally vote to increase taxes to prevent school layoffs or that School Districts are awash in cash?

      Cuomo's problem, which Fred Dicker may not comprehend, is that tax revenues are going down and the $1 billion in the red already reported by Comptroller DiNapoli from this year has to be borrowed and all new layoffs further decrease his income tax revenues.  Also, tax revenues decrease on businesses producing less with less workers.  And Cuomo's fantasy prediction of the budget growth in tax revenues of $2.6 Billion dollars will disappear and have to be funded by more borrowing.   New York will just run out of cash to pay bills and allocate funds.  
See California I.O.U. link  and  a California I.O.U. below

See Cuomo's Credit Card Taken Away.

Cuomo's Budget Becomes A Joke As At Least $3.6 Billion Dollars Is Deducted From Illusional Tax Revenues As New York Unemployment Climbs In Every New York Metro District

    Bureau of Labor Statistics show unemployment rising in every New York Metro district.    Cuomo's budget, the Senate's budget and the Assembly budget will all require extensive deficit borrowing, because they used fantasy employment numbers to estimate revenue from business activity and employees of such businesses.  These higher unemployment numbers will be increased even above these levels in 2011 by more layoffs at local government/school levels to accommodate increased local costs and, also, layoffs by NY State of State employees, yet to be announced.

     How much more will NY need to borrow to pay (deficit spending) for Unemployment Insurance Payments for these newly unemployed workers?  What businesses will be attracted with these added costs to fund New York's unemployment insurance costs?

      Large unplanned deficits were already expected by the NY Comptroller even before these latest unemployment numbers were released.   DiNapoli "warned that estimates about the amount of personal income tax that will flow into state coffers may not be reliable. He noted that the current fiscal year's budget was overly optimistic about job growth and ended up over $1 billion short in anticipated tax revenue".   Or over $1 billion dollars is carried over to Cuomo's new budget as an expense.

   Here's what Comproller DiNapoli says in his report on expected personal income tax revenues for Cuomo's budget:
"Personal Income Tax
 For SFY 2011-12, All Funds PIT  receipts are forecast to increase by $2.6 billion, or 7.4 percent, over the prior year.  The increase is attributable to the improving economy, higher refunds in SFY 2010-11, and the voluntary compliance initiative in the Executive Budget.  Base tax receipts, which net out the $500 million in additional refunds in SFY 2010-11 and the elimination of the high income  tax provisions in the fourth quarter of SFY 2011-12, are projected to grow by 11.4 percent.for these proposed budgets."

    The FACTS:
1. With higher unemployment, personal income tax receipts would not increase by $2.6 Billion as Cuomo promised, but rather decrease in Cuomo's new budget and $1 billion is carried over from prior year.
2. These unemployment revenue losses are accumulating now and will further increase the missing money, even before the budget year begins.
3. New York unemployment will further increase with school, local government and State employee layoffs resulting from budget cuts at all levels.
4.  Or Cuomo needs to borrow way in excess of another $3.6 billion dollars (2.6+1.0=3.6) just to replace delusional tax revenue increases in the budget.


  Default, bankruptcy are more likely.  But luckily for NY's Cuomo, California's Brown may be first to go down as Brown caves to Union demands.


   More Facts:
  Here are the latest metropolitan unemployment rates just released last week that show that in every NY metro area unemployment increased.  The data below is from the Press Release of Bureau of Labor Statistics

     Location                                                                %Dec2010    %Jan2011

New York as Whole Total................ 8.0      9.0  
  Albany-Schenectady-Troy.............. 7.1      8.2  
  Binghamton........................... 8.5      9.6  
  Buffalo-Niagara Falls................ 8.1      9.1  
  Elmira............................... 8.0      8.8  
  Glens Falls.......................... 8.5      9.9  
  Ithaca............................... 5.6      6.6  
  Kingston............................. 8.0      9.2  
  NY-Northern New Jersey-Long Island... 8.1      9.0  
     New York City..................... 8.6      9.4  
  Poughkeepsie-Newburgh-Middletown..... 7.6      8.6  
  Rochester............................ 7.8      8.7  
  Syracuse............................. 8.3      9.3  
  Utica-Rome........................... 8.1      9.3

The talk was cheap  

Andrew Cuomo's Ad Promises Hope In Albany Budgeting, But Taxpayers' Hope Dims As Lobbyist Spending Reaches New High

  
Hope is for sale: make your best offer.

     According to lobbying data obtained from the Commission on Public Integrity, a record-shattering $210,664,067 was spent lobbying in New York State in 2010. ..an increase of 6.5%, ...Political parties and the governor received the most money in campaign donations from the top 25 interests.

  The Committee to Save New York, the monied, pro-Cuomo coalition is coming to Andrew Cuomo's rescue and in support of his budget plan with ads, which include his continued opposition to renewing an income tax surcharge on New Yorkers earning more than $200,000 and no new taxes.  The Committee to Save New York says, “but there’s hope, Governor Cuomo’s plan closes the budget gap without raising taxes.”


     The previous blog post here reported that in Cuomo's budget plan the Albany Lobbyist/insiders won all the first ten rounds of Budget battles, such as:
1. A cap was to be placed on local taxes, but Medicaid which is the largest budget item for Counties is up 9.4%
2. No new taxes were promised, but a surcharge on medical procedures tax will raise $100 million dollars.  The Employer Alliance for Affordable Health Care called the measures "nothing more than a hidden tax on New York's small business community."
3. "In the past week, health-care advocates brought in to advise Mr. Cuomo on Medicaid said he blind-sided them with back-room deals with the hospital industry and union workers."
4. "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." 
 
The Committee to Save New York's ad below has Andrew Cuomo offering Hope.  No price was mentioned, so contact the lobbyist nearest you.




Balance the budget when,  New York's Budgeted Medicaid Expenses To Rise to $15.1 Billion from this year's $13.851 billion?
Will Cuomo's new hidden taxes drive more people, business and jobs away? 


P.S.  Looking past the smoke, mirrors and illusions about the budget, the real world, past and present, is closing in. (the latest news)
1. Cuomo was tough on crime?  Still no Jail sentence for Hevesi, as the Judge in Alan Hevesi pension fund pay-to-play case is changed.   See Andrew Cuomo hopes to fool NY Sheeple

2.  The Chinese and other foreigners are closing in on US and State's debts, as the crisis in the Middle East has worsened, the latest exchange data show that traders are selling “short” the currency.   See Fiscal Disaster As Andrew Cuomo And His M.O. Are Slapped Down By Chinese Economic Reality Checks

The Albany Budget Insiders Have A Large Lead, But Hope Remains As The Mighty Andrew Cuomo Comes To Bat

It's how the game is played.

The Albany Budget Preliminary Score Card:
  People of New York = P  versus Albany Insiders = A
first ten rounds
P-0; A-1   1. Medicaid Redesign Team was cutting the budget, but the Medicaid budget is up 9.4%
P-0; A-2   2. A cap was to be placed on local taxes, but Medicaid which is the largest budget item for Counties is up 9.4%
P-0; A-3   3. No new taxes promised, but a surcharge on medical procedures tax will raise $100 million dollars
P-0; A-4   4. The court budget was to be reduced by 10%, but a 27% increase in courts budget is likely.
P-0; A-5   5.  Lobbyists were to be removed, but Jeffrey Sachs, Cuomo confidant and lobbyist, leads Medicaid Redesign Team's recommendations and then is absent on the day the previously written report is presented.
P-0; A-6   6.  Cuomo promises to clean out Albany swamp and then is MIA when the Chief Judge Lippman is accused of $40 million dollar crime.
P-0; A-7   7. Proposed cap on Medical malpractice is promised, but will likely be blocked by Sheldon Silver in NY Assembly. (This is the old Albany Follies sideshow, where one part proposes and other part rejects and nothing happenings.)
P-0; A-8   8. "In the past week, health-care advocates brought in to advise Mr. Cuomo on Medicaid said he blind-sided them with back-room deals with the hospital industry and union workers."
P-0; A-9   9. "Mayor Bloomberg slammed Gov. Cuomo yesterday for unveiling a stricter teacher-evaluation plan that keeps intact the "last in, first out" law requiring that layoffs be based on seniority rather than merit.... But, if it doesn't repeal LIFO as the law of the land, it simply kicks the can down the road."
P-0; A-10  10. "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."

Score for first ten rounds:
People of NY = 0

Albany Insiders = 10

But Hope is here:

Then from 5,000 throats and more there rose a lusty yell;

It rumbled through the valley, it rattled in the dell;

It knocked upon the mountain and recoiled upon the flat,

For Cuomo, mighty Cuomo, was advancing to the bat.

There was ease in Cuomo's manner as he stepped into his place;

There was pride in Cuomo's bearing and a smile on Cuomo's face.

And when, responding to the cheers, he lightly doffed his hat,

No stranger in the crowd could doubt 'twas Cuomo at the bat.

Cuomo's Court Budget Heads For 27 % Increase Added To Medicaid Budget's 9.4% Increase

The talk was cheap, but the bill steep.

    So far, Cuomo's budget is increasing Medicaid expenditures by 9.4%.    Now, the focus moves to the Court Budget, where Chief Judge Lippman wanted a $50 million dollar increase over this year's $2.7 billion dollar budget.    But Lippman relented and has proposed a $100 million dollar decrease.

    That sounded good, but it is only a 3.7% decrease and Cuomo wanted 10% decrease.
But wait, 1. Lippman expects a Commission to give raises to the 1,300 Judges, with raises for Supreme Court Judges rising from $136,700 to more than $179,000 or 31% increase or $48 million dollars in judicial salaries to added to Lippman's budget.
.   2. The Judges are suing for $780 million in back pay to be added to Lippman's budget.

So the revised real budget arithmetic is:   $2.7 billion this year; minus -$100 million proposed by Lippman; plus +$48 million in judicial salary increases; plus +$780 billion in back pay; or court budget increases by +$728 million dollars or  a 27% increase.

   Cuomo's To-do or not do List includes criminal charges against Chief Judge Lippman

    Question? When will Cuomo chuck his no tax increase pledge (not with just some hidden taxes in his Medicaid  reform)  and add some real tax increases as Governor Brown is asking the voters to do in California for a $25.4  billion dollar gap?

It was do or not do and Andrew Cuomo tried ~ Yoda (revised NY version)

New York's Budgeted Medicaid Expenses To Rise to $15.1 Billion, While Cuomo And Medicaid Redesign Team Claim Cuts.

  Did the illusion of budget cutting by the NY State Medicaid Redesign Team work?   (The budget numbers reported below are just what NY pays out of its own pocket, other budget numbers report what New York State pays out in total and include New York's share and the federal funds passed through New York State for Medicaid expenses. See below*)


     "Governor Andrew M. Cuomo today accepted a report from the Medicaid Redesign Team which meets the Governor’s Medicaid spending target contained in his 2011-2012 budget by introducing a global cap on State Medicaid expenditures of $15.109 billion."


        $13.851 billion dollars was New York State Medicaid expenditures for the present year's budget (ends June 2011) as reported in New York Division of Budget Mid-year(December) report in Table 1,
but this was reduced by Federal Stimulus money received for this year's budget, which was
Approximately $5.9 billion of New York’s ARRA funding is projected to be used for General Fund budget balance in SFY 2010-11, with an additional $4.6 billion being passed through to local governments.


     Were you deceived by the illusion of Medicaid budget cuts?

1. This year, the NY State Medicaid expenditure was $13.8 billion and the cap on next year's expenditure will be $15.1 Billion?

2. Where is the missing federal stimulus $5.9 billion going to be conjured up from?

3. Is illusionary money able to balance a budget? 

4. What are the Counties going to do about their missing Federal $4.6 billion dollars and their increased $15.1 billion share that Cuomo's budget sends them?

*Notes on Medicaid Funding method in New York:
1. Medicaid is a joint federal-state program that provides health care to the poor. The feds split the Medicaid bill with the states, paying 50 percent of the program’s cost in richer states like New York and a larger fraction in poorer ones. Spending is open-ended: the more money states spend on Medicaid, the more money Washington sends them as its match. Crucially, though federal regulators set minimum requirements for who’s eligible and what services they receive, states can offer a range of additional services (prescription drugs, say), for which the feds nevertheless have to chip in. These federal dollars are a huge incentive for states to expand their health-care initiatives
2. For Medicaid, the Federal government pays 50%, New York State pays 25% and the counties, with no input pay, 25%
3. Some New York Medicaid facts:
    With 6.4 percent of the nation's population and 8.7 percent of all Medicaid enrollment, New York accounted for 14 percent of all Medicaid spending.
    New York's Medicaid program, including the local government share, was larger than the total budgets of 42 states.
    New York spent 25 percent more than California, whose Medicaid program covered twice as many people.
    New York's federal, state and local Medicaid spending exceeded the Medicaid budgets of Florida, Texas and North Carolina combined.

Cuomo Needs Borrow An Unbudgeted Additional $807 Per Taxpaying Person And Each Of Their Dependents

 The People's piggy bank is empty, Andrew.

The Grim Debt Economic Reaper will cut down Cuomo's Budget Fantasy.

The daunting tower of national, state and local debt in the United States will reach a level this year unmatched just after World War II and already exceeds the size of the entire economy, according to government estimates.    And research shows all Cuomo's estimates of growth in the New York Economy are shown as fantasy by "Rogoff and Carmen M. Reinhart, a University of Maryland economics professor, have done research showing that once government debt surpasses 90 percent of GDP, average growth rates slide 4 percent."


    The debt as reported on this blog in  No Whining, No Federal Bailout; You Made Your Bed Of Debt, Lie In It, New York
 
NY+USA Debt per person:
1. Total USA public debt outstanding Dec. 20 $13,868,461,000,000
2. nation's population on April 1 was 308,745,538 
3. USA debt per person $44,805   The federal Government can't bailout New York; it's sinking itself. 
4. New York debt per person: State-funded debt was $3,105 per person and in 2009, NY was the second most indebted State behind California.
5. This New York debt doesn't include the Pension liabilities from the present phony estimated safe return on pension investments of  7.5%, when the New York fund earned 1.1% over five years and New York State’s $132.6 billion pension fund is the nation’s third-largest.
   If we correct the pension liabilities optimistically with a 3.1% return, we get another $9,664 additional debt per person.   Making $12,769 debt per person as a better debt estimate in New York.   But now look at the 4.52 million people on Medicaid in NY (who don't pay taxes) out of a NY population of 19,541,453  which raises the New York debt per taxpaying person and each of their dependents to $16,600.


And Cuomo's budget has a real deficit of $22.1 Billion and not Cuomo's assumed $10 billion dollars with impossibly optimistic expected tax receipts and ignored other multi-billion dollar expenditures.

       Doing the arithmetic for Andrew Cuomo, we discover Cuomo needs to borrow just for the coming year an additional $12.1 billion to his already budgeted borrowing or $807 dollars  per taxpaying person and each of their dependents.

Who'll lend us this money which we can't pay back, Andrew? 

Fox News Confirms CuomoTARP's Report That New York State Must Repay Feds $3.3 Billion Dollars With Tax Hike Likely

Andrew Cuomo's budget is a joke; he forgot the $3.3 billion he owed: He must repay the Federal Piper.

      Fox just reported, "States That Ignored Warnings on Unemployment Insurance Face Reckoning"  "States must find the money to pay interest on the loans. Generally, that involves a special tax on businesses until the loan is repaid. Some states could tap general revenues, making it harder to pay for schools, roads and other state services.
In the long term, state will have to their replenish unemployment insurance programs. That typically leads to higher payroll taxes, leaving companies with less money to invest."

This blog reported  Andrew Cuomo's Business Friendly Puff Pieces Fizzle As Reality Closes In

     As of January 21, 2011, New York State, one of 30 States, borrowed $3,343,758,375.70 (to be repaid) from the federal government for paying Unemployment Insurance.  Six States, Maryland, New Hampshire, South Dakota, Tennessee and Texas, have repaid their loans in full.    And since Cuomo didn't budget for this in his budget, he must be planning to pass it through to NY businesses at an average $478 TAX per worker.

Oh wait, Andrew Cuomo promised not to raise taxes.  What are we to believe?

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

Default Closing In On Andrew Cuomo As Bond Rates Rise And Bonds Are Dumped

Prodigal, adjective: recklessly wasteful. from Latin, prodigus ~ sqander

      Mario's prodigal son will soon be banging his silver spoon and demanding his credit card debt be paid and that he needs to borrow to get more spending cash.   Meanwhile, default, bankruptcy, budget gimmick failures, real World accounting, and the ridiculous 7.5% "safe return" on pension investments are all closing in on "The Son of Mario."

    Andrew Cuomo's budget is a farce.  NY General Obligation Bond latest sales (at 9AM, 2/4/11) were at 5.00% to Investors and instead of the lower 3.357% which gave Cuomo's budget $5.6 Billion in borrowing costs.  Cuomo's budget seriously underestimated borrowing costs by over $2 billion dollars.


In the news:

1. "Congressman Patrick McHenry, R-NC, has launched a broad investigation into the struggling market for debt issued by states."
2. "House Speaker Newt Gingrich and former Florida Gov. Jeb Bush ... promoting a plan to enable near-insolvent states such as California and Illinois to go bankrupt as well."
3. Cuomo's deceit that he'll collect taxes from Indian Reservations on cigarettes, ignores the obvious that if Indian cigarettes include the tax, the reservations would lose all most all sales and thus a $130 million dollar lie.
4. Cuomo is still puffing up as he readies to run for President in 2016.
5. Cuomo wastes money on attracting business while ignoring repaying the Unemployment Insurance: State Trust Fund Loans of a growing $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.
5a.  The Delusional Cuomo, like Stalin, Mao and Fidel, thinks he and his committees can evaluate, "based on your ideas and what you bring to the table."  Poor Andrew doesn't know Mao, Stalin, and Fidel's economic plans all failed even with their committees.
6. "[Investors] in November and December pulled a record $21 billion from funds that invest in municipal bonds — twice as much as they did at the depths of the 2008 credit crisis."

7. "Investors pulled money from U.S. municipal-bond mutual funds for the 12th consecutive week ... Muni-bond funds had net redemptions of $2.7 billion in the week ended Jan. 26, the Investment Company Institute said today ...   The withdrawals,.... total $33.5 billion over the 12-week stretch."

 
   What will happen is Cuomo will run out of cash.   He can try I.O.U's, like California, ($3 Cuomo's backed by the full faith and credit of NY and Cuomo).  And/or, just not pay some bills.  And/or moan and whine to the President and Congress.   And/or pray for a Bankruptcy Chapter 10 for States.

P.S. Proposed Chapter 10 Bankruptcy along with above post will be sent to Newt Ginrich, Jeb Bush, Ron Paul and Rand Paul and faxed to the Representatives below on McHenry's House Committee on Oversight and Government Reform
Patrick McHenry 202-225-0316; Frank C. Guinta 202-225-5822
Ann Marie Buerkle 202-225-4042;Justin A. Amash 202-225-5144
Patrick Meehan 202-226-0280; Joe Walsh 202-225-7830
Trey Gowdy 202-226-1177; Dennis Ross 202-226-0585
Mike Quigley 202-225-5603; Carolyn B. Maloney 202-225-4709
Peter Welch 202-225-6790; John Yarmuth 202-225-5776
Jackie Speier 202-226-4183; Jim Cooper 202-226-1035

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. 

Will Andrew Cuomo Use Proven Medicaid Savings Plans Or Will Lobbyists Win

"Meetings are a symptom of bad organization. The fewer meetings the better." ~Peter F. Drucker

Dear Governor Cuomo:
      Send your Medicaid Redesign Team (committee) packing and preparing for their new diet.  It's reported, "Every year it's the 800-pound gorilla of the state budget, soaking up money that could be used for tax cuts to make our economy competitive, or for expanding health-care coverage, or for improving education—or for all that, and more. Medicaid is also the major component in county property taxes—and New York's excess property tax burden, now about 62 percent above the national average per capita."
        I've copied a comparison of various State's Medicaid Expenditures per person served for 2008.  The present numbers are much higher, but the comparison remains.  Note that very progressive States with large urban centers have much lower per person expenses.  Read the data and then the solution which follows.

Medicaid Cost Per Person Served, 1998
(Red States less than half New York's cost)
New York ~  $8,961

California $2,386,
Washington $2,563
Oregon $3,652
Virginia $3,740
Florida $3,607
Texas $4,419
Illinois $4,435
Delaware $4,440
Michigan $4,494
Ohio $5,346
Massachusetts $6,870
Wisconsin $5,457
Pennsylvania $5,808
New Jersey $6,856
Rhode Island $6,603


      Is there less compassion for the poor in California, Illinois, Michigan, Oregon, Wisconsin, Pennsylvania, or Washington?  No need to reinvent the wheel or waste time drafting new laws and regulations, just copy them from California or Illinois or Michigan or Oregon or Virginia or even, Texas.   Watch the Medicaid costs be cut in half, local property taxes fall and state budget be easier to balance.

Cuomo's choice: "Do or not do There is no try" ~ Yoda
or "Politicians are people who, when they see light at the end of the tunnel, go out and buy some more tunnel." ~John Quinton

Andrew Cuomo Recovered 0.6% Of Medicaid Budget

   Unquestionably, there is progress. The average American now pays out twice as much in taxes as he formerly got in wages.~ H. L. Mencken

       Luckily for federal taxpayers, the federal government will be prosecuting NY Medicaid fraud, because Andrew Cuomo dropped the ball on such prosecutions while he was Attorney General.  And, although NYC is named in this federal complaint, NY State had to pay it's larger share of this fraud. U.S. Attorney Preet Bharara said in a statement, "The City's alleged conduct has resulted in patients receiving more services through the program than necessary or warranted by their condition, resulting in substantial additional costs to taxpayers," 

How much of this Medicaid Fraud will NY State have to refund to the US Government?

    Cuomo was aware of many other Medicaid frauds while Attorney General as reported on this blog and NY State will have to pay the piper (US government) with refunds (at least $1.6 billion are reported on this blog) which Cuomo has ignored in his budgeting.

     Cuomo had lots of publicity for his efforts, "Cuomo, Investigating Medicaid Fraud, Issues Subpoenas to 59 Home Care Agencies," but Cuomo reported, "Cuomo Recovers Over $660 Million in Taxpayer Funds in First Three Years as Attorney General." 


     Now, do the arithmetic, NY's $38 Billion dollar budget is "more than twice the national average on Medicaid on a per capita basis," and Cuomo has recovered $660 million in three years or $220 million per year. Or if you take 1/2 of $38 billion or $19 billion dollars as excessive Medicaid in NY, Cuomo has recovered $220 million dollars out of $19 billion dollars or 1.2% of excessive Medicaid in NY or a measly 0.6% of the total NY Medicaid budget. 
  

        "Illinois lawmakers approved a 66 percent increase to the personal income tax overnight, and soon, your paycheck will be shrinking."    Illinois "tried" and didn't find enough budget cuts.   Andrew Cuomo and his committees headed nowhere "tried."

       Remember the promised 5% cuts for Cuomo's staff.   That didn't apply for, "Richard Bamberger, who has served as director of communications for Andrew Cuomo. According to state payroll records, Bamberger was paid $140,000 in the office of attorney general, and is now up to $169,100 working for the governor’s office."
     It's coming: "I'll explain everything; it's isn't my fault; I tried; more taxes is the responsible thing."

What are the odds, now, for a unpromised tax increase?
       

No Whining, No Federal Bailout; You Made Your Bed Of Debt, Lie In It, New York

From Arithmetic for the Economically Challenged Idiots 


For the USA:
1. Total public debt outstanding Dec. 20 $13,868,461,000,000
2. nation's population on April 1 was 308,745,538 
3. USA debt per person $44,805
     And just today, "The U.S. government fell deeper into the red in fiscal 2010 with net liabilities swelling more than $2 trillion as commitments on government debt and federal benefits rose, a U.S. Treasury report showed on Tuesday."

    The federal Government can't bailout New York; it's sinking itself.  You're on your own, New York. 


    New York State reports State-funded debt was $60.5 billion or $3,105 per person and in 2009, NY was the second most indebted State behind California.

    BUT, this debt doesn't include the Pension liabilities from the present phony estimated safe return on pension investments of  7.5%, when the New York fund earned annualized returns of 3.1 percent for the 10 years ended in March 2009, and 1.1 percent over five years and New York state’s $132.6 billion pension fund is the nation’s third-largest. 

   So we need to correct the pension liabilities optimistically with a 3.1% return, or a pessimistically with a 1.1% return.  Doing the arithmetic optimistically, we have 7.5/3.1 x $132.6 billion = $321 billion,  which should be in pension fund, when only $132.6 billion is, or NY has net debt burden owed the pension fund of optimistically $321 billion - $132.6 billion = $188.3 billion or another $9,664 additional debt per person, which should be added to $3,105 per person above.   Making $12,769 debt per person as a better debt estimate in New York.   But now look at the 4.52 million people on Medicaid in NY (don't pay taxes) out of a NY population of 19,541,453  which raises the debt per taxpaying person and each of their dependents to $16,600 each.

The party's over; the hand writing is on the wall and on the paper; the accounting's been done; the prophet heard; the piper must be paid.

The words, Mene, Mene, Tekel, u-Pharsin, written by a God of Justice Disrupt the Albany Victory Celebration (King Cuomo, Paterson, Silver and Sampson in their blue uniforms with their new committees behind them)

Andrew Cuomo; A Drag Queen; And Dragging New York State Bankruptcy And NY Bond Devaluation Out Of The Closet

In God's schekels we trust, all others' schekels we weigh.  From a sign in an ancient Babylon Bazaar

   Welcome to the NY Finance Bazaar 

 This is your self check-out page where you weigh the future value of NY Bonds.   Will NY go bankrupt? You check which way the balance tips. 


     We'll take NY bondholders and NY residents to some of the stalls in the NY Finance Bazaar.

      Stall 1. The Supreme Court stall.  You may have thought bondholders were protected under US Law and Constitution?   But the US Supreme Court refused to follow the Constitution for Bondholders in these two recent offerings:

a. Supreme Court refused to hear a plea from bondholders and Indiana pension funds, representing $42.5 million of Chrysler's $6.9 billion in secured debt, who contended that their compensation was unfair at just 29 cents on every dollar of their bond value.
b .General Motors' (GM) bondholders asked to take 30 cents on the dollar in new bonds and GM shares in exchange for the their cash or their bonds lost 70% of their dollar value.

      Stall 2. The Illinois stall,  where, Illinois comptroller, Daniel W. Hynes, faces a figure in red of $5.01 billion.   “This is not some esoteric budget issue; we are not paying bills for absolutely essential services,” he says.  Illinois' dysfunctional political class refuses to pay the state’s bills of at least $12 billion (compare this to NY's $18 Billion projected deficit in NY).  There's a spectacularly underfunded Illinois pension system (compare this to NY's Comptroller claiming a unrealistic 7.5% Safe Pension Return on Investments),

      In re: Illinois; "States cannot go bankrupt, technically.  Legislators left the capital this month without deciding how to pay 26 percent of the state budget.  The governor proposes to borrow $3.5 billion to cover a year’s worth of pension payments, a step that would cost about $1 billion in interest."  We can see the future for NY in Illinois.

      Stall 3.  Historical bond trends are for sale:
"For two centuries, the bond market has reminded states that interest rates rise when they, like the  Greeks, the Spanish, and the Italians, spend many more dollars than they collect in tax revenues."
   If NY bond interest rates rise, the added yearly due interest will deplete NY's spending ability.

     Stall 4.  All the sackcloth and ashes you'll need:   Four states are likely to go bankrupt: California, New York, Illinois and Michigan

     Stall 5.  A Prophet is offering: Although there is no mechanism for states to go bankrupt, Congress could change that: This means we can expect a major push for federal funds to prop up insolvent state governments in 2011. This is where a legal mechanism for a State's bankruptcy needs to be created by Congress.

     Stall 6. Throw the ball in the right hole and win a prize:  Where will the new Republican House in the US Congress throw the ball?
 Hole a. Bailout four states to begin with,
or Hole b. Pass the bankruptcy law suggested in the article above in Stall 5?

     Stall 7. The Hope and More Hope stall with hallucinogenics for sale:  Do you believe Comptroller DiNapoli can get 7.5% Safe Return on NY pension investments?  (or Madoff has a bridge for Sale)

     Stall 8. Here are foreign bonds available with great yields:   The average yield for 10-year debt from Greece, Ireland, Portugal, Spain and Italy reached 7.57 percent today and that's for debt backed by Germany and not Geithner/Obama deficit spending.

     Stall 9.  Another Branch of the Hope and More Hope stall with stronger hallucinogenics for sale: Do you think NY's interest rate on bond offerings will stay at 3.357%?

     Stall 10. Strong espresso coffee served with tough love talk:  Knowing what the US Supreme Court did with GM bondholders, do you believe the Supreme Court will force NY to honor NY bonds at their full value or force NY State to honor pledges to pay certain bondholders before using the money for other purposes, or just offer pennies on the dollar value of existing NY bonds?  We can read the analysis of the NY Budget and Bond offering.

      Stall 11. This stall has snake-oil for sale and a "sexy" snake-charmer with a drag queen: 
The drag queen wasn't there, but her "sexiest male" snake-charmer, Andrew Cuomo, was.
"We like to imagine this is sort of how it happened with Andrew Cuomo. We've always imagined he was a, uh, dance man." 
  Well the dance man, Andrew, was still promising to charm at least one snake out of the Albany basket.
   Maybe, if we drop a schekel in his pot, at least one snake will come out of the basket.  Or maybe,  the basket is a closet and we ought check the sexual orientation of the snakes. (read the reports of Andrew's prior M.O. and snake-oil sales)

  Leaving the stink of the snake oil behind, we find the balance scale to check the weight of the schekels NY State is offering. 
Does the scale balance or tip?

      NY goes bankrupt?(Y)(N)

      NY Bondholders will lose over 50% of their bond value? (Y)(N)
      NY Pension Funds can earn 7.5% Safe return on their investments? (Y)(N) 
      Will Andrew Cuomo's "charm" fix NY Finances? (Y)(N)
      How will Fitch's, Moody's and Standard & Poor's finally valuate NY Bonds?

Junk?(Y)(N) or _____? 

Cuomo Loads Up His Band Wagon With Committees And the Fed Greases The Brakes For The Downhill Race With California

"Jump on the Cuomo Band Wagon and we'll beat California downhill to the Finish!"

With bluster and blandishment,  two large diverse transition committees were announced by Andrew Cuomo.   Then more committees, the Local Government Reform Committee and the Public Safety Committee, allowed more blandishing of more egos.  And Andrew blunted Al Sharpton's, and the NY Times' concerns and filled the committees with women and blacks.
Equal Opportunity responsibility now and Equal Opportunity blame later.
  
    "People who enjoy meetings should not be in charge of anything" ~Thomas Sowell

        Do the committee members believe their input matters?    Wake up.    Cuomo's M.O. requires a someone to switch the blame to when the inevitable failure comes.

Meetings are a symptom of bad organization. The fewer meetings the better. - Peter F. Drucker


      Questions for committee members: You'll have input?  Did it feel good to be appointed?   Are you also on the Cuomo Central Committee? Would Andrew switch blame to you?  Have you read Cuomo's Budget Makes New York The Favorite Over California For "First State Bankrupt" Prize? Do you believe Cuomo's and DiNapoli's lie about getting a 7.5% Safe return on pension investments?

      Hear into the future as Andrew says: "I picked the best people, all vetted by [insert committee member's name]   It's not my fault, the best and brightest, including [insert name]on my committee approved my choices."

The latest news: The Fed greases the bandwagon's brakes, "Federal Reserve will slash its growth forecasts and predict higher unemployment when it releases updated economic projections this week."

Imagine, willfully going on the Titanic, or joining a committee on the overloaded Cuomo Bandwagon with the Fed's greased brakes racing downhill.