NY Will Follow Greece; NY Budget Director Reveals NY Can't Finance Budget; Congress Asked for State Bankruptcy Law

  A follow-up letter to Bond Rating Agencies and Congress was faxed/or mailed.
 
Dated 7/26/2011
 To: Michele Bachmann, Ron Paul, Allen West, Thaddeus McCotter, US Representatives;  Rand Paul, David Vitter, Jim DeMint, Senators; Moody's, Fitch and Standard+Poors;
and Harry Reid, Majority Leader; Mitch McConnell, Minority Leader; John A. Boehner, Speaker; Eric Cantor, Majority Leader; Darrell Issa,Chair House Oversight and Government Reform; Lamar Smith, Chair House Judiciary; Patrick J. Leahy, Chair Sen. Judiciary; Charles E. Grassley,Sen. Judiciary; Paul Ryan, Chair House Budget; Harold Rogers,Chair House Appropriations; Kent Conrad, Chair Sen. Budget; Jeff Sessions, Sen. Budget; Daniel K. Inouye,Chair Sen. Appropriations; Thad Cochran,Sen. Appropriations; Tom Harkin, Chair Sen. Health; Michael B. Enzi,Sen. Health; Chris Van Hollen, House Budget; Spencer Bachus,House Financial Services; Barney Frank, House Financial Services; Max Baucus,Sen. Finance;Chuck Grassley, Sen. Finance

Re: Greece in the USA; NY Budget Director can't finance NY budget; bankruptcy law needed

Dear Congressman and Rating Agencies:

       Moody's reports default on Greek debt almost certain.   New York State has the highest debt per person in the USA ($24,195) and the second highest taxes per person ($6,884).  This is a Heads-up call to Rating Agencies and Congress that New York State has run out of money and a Greek-like bail-out request is coming.  Andrew Cuomo's Budget director says, he has no ability to finance spending commitments already.  This was recorded at a 7/20/2011 hearing of Cuomo's Commission on Judicial Compensation: "We don't even have the ability to finance the spending commitment that are already in place, said Robert L. Megna, who was speaking on behalf of Governor Andrew Cuomo, who appointed three of the commission's seven members." You can hear his testimony from 00:32:34 to 00:56:17 at
http://pointers.audiovideoweb.com/stcasx/va91win1520/Judiciary07202011edit.wmv/play.asx


      Andrew Cuomo claims to balance the State Budget and then approves a Commission to raise judges' pay by 61%, when he can't even pay for the items already in his budget.  Sorry, Andrew, if you can't finance your spending commitments, you're broke and will run out of money like Greece.    New York State needs the option to go bankrupt and I've copied a condensed version of my earlier faxed 1/26/2011 letter to Congress, with the simple changes necessary to create a Chapter 10 Bankruptcy for States.  link to 1/26 fax post


[condensed] FAX sent dated: 1/26/2011
 Someone needs to get the bankruptcy ball rolling; so here goes.  A Primer for a State's Bankruptcy:

Why?   New York will go bankrupt because Cuomo is not acting to easily correct $28 Billion dollars Medicaid excesses in NY compared with others States (California).    His proposals to dismiss 12,000 State employees might account for $1.2 billion dollars saved.   That's $1.2 billion out of the $10 billion he claims is the budget deficit.  So, Cuomo runs out of cash.  But, he's not alone, several governors will join him.  They need a cover, who'll stiff the State bondholders and redo employee contractual benefits and pay.  It's not me (your beloved Elected Governor), it's the bankruptcy judge.

Is it Constitutional?  Yes, because the law proposed below was only modified by replacing the words referring to a State's municipality, with the word(s) referring only to a State.   "The first municipal bankruptcy legislation was enacted in 1934.   ..., the Supreme Court held the 1934 Act unconstitutional as an improper interference with the sovereignty of the states. Ashton v.Cameron County Water Improvement District No. 1,  [Then] Congress enacted a revised Municipal Bankruptcy Act in 1937, ... which was upheld by the Supreme Court. United States v. Bekins."

                [note:Chapter 9 is the existing law for municipal bankruptcy]
How?  The proposed Chapter 10 for States has identically to the existing constitutional Chapter 9, no provision for the sale of assets, nor for such to be given to creditors. Just as in Chapter 9, the bankruptcy court cannot actively mange the State's affairs, and can only approve a reorganization plan submitted by the State. And as in Chapter 9,; the State can use the bankruptcy court to enforce court orders and preclude any connected litigation elsewhere and change contractual agreements.

Details In the proposed Chapter 10:
1. The bankruptcy judge is assigned by the Chief Federal Judge of the State;
2. A list of all creditors can be filed after filing bankruptcy petition;
3. Automatic stays of all collections against the State can be stayed; the court can fix time and manner of the filing of all claims against the State;
4. Only the State and not creditors, nor someone appointed by the bankruptcy court can propose a settlement;
5. The State retains its powers to use its property, raise taxes, and make expenditures and change non-debt contractual relationships;
6. The State can reject collective bargaining agreements and retiree benefit plans;
7. Interested parties may be heard, but no one but the State can file a PLAN for resolution of the debts and obligations.

Proposed Chapter 10:
I've copied sections of the Federal Bankruptcy law for Chapter 9 and would remove text in blue and insert the red text.  Other parts of this Chapter 9 would remain unchanged and be renumbered from  §§ 901-946 to §§1001 to 1046

TITLE 11 CHAPTER 9 10
  CHAPTER 9  10—ADJUSTMENT OF DEBTS OF A MUNICIPALITY STATE
SUBCHAPTER I—GENERAL PROVISIONS (§§901-904 1001-1004)
SUBCHAPTER II—ADMINISTRATION (§§921—930  1021-1030)
SUBCHAPTER III—THE PLAN (§§941—946  1041-1046)

903.1003. Reservation of State power to control municipalities Sovereign power

This chapter does not limit or impair the power of a State to control, by legislation or otherwise, a municipality of or in such State in the exercise of the political or governmental powers of such municipality, including expenditures for such exercise, but— such State, a State law prescribing a method of composition of indebtedness of such municipality of such State may not bind any creditor that does not consent to such composition; and (2)a judgment entered under such a law may not bind a creditor that does not consent to such composition.

904. 1004. Limitation on jurisdiction and powers of court
Notwithstanding any power of the court, unless the debtor consents or the plan so provides, the court may not, by any stay, order, or decree, in the case or otherwise, interfere with—any of the political or governmental powers of the debtor State; the debtor’s use or enjoyment of any income-producing property; the sovereign immunity of such debtor State.

921. 1021. Petition and proceedings relating to petition 109(d) and 301 of this title, a case under this chapter concerning an unincorporated tax or special assessment district that does not have such district’s own officials is commenced by the filing under section of this title of a petition under this chapter by such district’s governing authority or the board or body having authority to levy taxes or assessments to meet the obligations of such district.  State.
(b)The chief judge of the court of appeals for the circuit embracing the district State in which the case is commenced shall designate the bankruptcy judge to conduct the case. After any objection to the petition, the court, after notice and a hearing, may dismiss the petition if the debtor did not file the petition in good faith or if the petition does not meet the requirements of this title.
If the petition is not dismissed under subsection (c) of this section, the court shall order relief under this chapter notwithstanding section (b)The court may not, on account of an appeal from an order for relief, delay any proceeding under this chapter in the case in which the appeal is being taken; nor shall any court order a stay of such proceeding pending such appeal. The reversal on appeal of a finding of jurisdiction does not affect the validity of any debt incurred that is authorized by the court under section (c)or (d)

927. 1027. Limitation on recourse
The holder of a claim payable solely from special revenues of the debtor State under applicable non bankruptcy law shall not be treated as having recourse against the debtor on account of such claim pursuant to section (b) of this title.


[January 2011]By Fax to Chairman and ranking Minority Member of Senate and House Judiciary Committees and the Senate Subcommittee on Administrative Oversight and the Courts and the House Subcommittee on Courts, Commercial and Administrative Law
Patrick Leahy (D-VT); Jeff Sessions (R-AL)
Lamar Smith (R-TX); John Conyers, Jr. (D-MI)
Sheldon Whitehouse (D-RI); Howard Coble (R-NC)

[end of 1/26/2011 condensed fax]

         Here are Constitutional Considerations from blog post dated  1/27/2011  In regard the proposed Chapter 10 Bankruptcy for States:
       Why must Bankruptcy for States be different from ordinary bankruptcy? While, Congress has the power to make laws for bankruptcy under Article 1-Section 8 of the US Constitution, the States cannot make their own bankruptcy laws because of Article 1-Section 8 of US Constitution.  Without bankruptcy, States could not void or alter contracts with State employees or bondholders or other contract holders under Article 1-Section 10 of the US Constitution.   States also must honor the judicial acts of other States involving contracts with NY State under Article 4-Section 1 of US Constitution.   And States retain all sovereign powers except those removed by the Constitution based upon Amendment 10.

        The text of relevant sections of US Constitution:

                         Article 1
Section 8. The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
To borrow Money on the credit of the United States;
To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;
To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;
Section 10. No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

                         Article IV
Section 1. Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records, and Proceedings shall be proved, and the Effect thereof.

                  Amendment X
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

    In conclusion, it would be easy to create a Chapter 10 bankruptcy for States.  Bankruptcy would allow New York State to alter its present contracts, change its employment contracts and make changes in NY's bondholder's rights, while still allowing NY State to keep its sovereignty as per US Constitution.  Also, the federal government would not need to bail-out New York State.  The bond rating agencies can update their ratings on New York debt.

Sincerely yours,

CuomoTARP.blogspot.com. [please access web site post dated 7/26/2011 for working links]

New York State Budget Director Reports A $ 2+ Billion Deficit That Must Be Considered Before Judges' Pay Raised 40% Or More

  "All animals are equal, but some animals are more equal than others," or judges deserve wage increases BUT you don't.

Or, New York's headed to default and the Judge's pay increase could be the final straw.

    New York State must learn that the bond market punishes prodigal State spending, whether it's a Country or New York State. "Early on Thursday morning, after seven hours of talks, Germany and France reached a common position on a second bailout of Greece but details of the accord were not revealed."

    While in Albany on 7/20/2011, New York State Budget Director, Robert Megna, told the Commission on Judicial Compensation that New York State has a 2+billion dollar deficit already and although the judges might demand, want or deserve more, New York State has run out of money.  The Commission heard lots of self-serving praise of NYS judges by lawyers and the judges themselves and how they needed or deserved a large raise.  And, the Commission heard of rampant corruption by NYS judges which was ignored both at the Appellate level and in the Court of Appeals and was covered up by the New York Commission Judicial Conduct headed by Robert Tembeckjian.  

     Near the end of Commission testimony, T. Finnan from CuomoTARP told the Commission that the NY State's deficit is more likely to be $5+ billion as a minimum.  With the judges expecting a raise to $194,000 to $220,000, Mr. Finnan pointed out the Governor claims only $170,050.   Mr. Finnan noted the Budget Director's earlier testimony about a $2+ billion deficit was just the beginning of the increasing deficit this year for NYS.  T. Finnan continued his testimony which paralleled his written submission copied below:

Some States have Surpluses While Cuomo Heads to Default With His Commission Considering 61% Raises For NY Judges on 7/20

Remember when, Gov. Cuomo, said he would cut his $179,000 salary by 5% to $170,050 and that he intended to reduce other salaries of the governor's staff, including the governor's secretary, counsel, director of state operations, counselor and chief of staff. Well things have changed and NY judges want $220,836 and Cuomo wants a commission of hacks to decide.
On Wednesday, July 20, 2011, the Commission to raise judges' pay will hold the only hearing.   Here's what they need to hear. Will judicial raises be the straw that breaks the camel's back? Cuomo has created another committee to do the dirty work of giving judicial raises of up to 61%, while Cuomo hides behind them grinning. While some States have budget surpluses, such as Indiana having $1.2 billion dollars, New York has smoke and mirrors hiding default or bankruptcy.  The Cuomo budget revenue predictions were all smoke without any fire and the $4.3 billion dollars expected in increased revenue has vanished with the smoke.
Earlier this year, the Cuomo Medicaid Redesign Team created smoke promising Medicaid savings, when all it did was to replace last year's NY State Medicaid expenditure of $13.8 billion with a cap on this year's expenditure at $15.1 billion, while forgetting that NY won't have the federal stimulus of $5.9 billion received last year.
Meanwhile Cuomo has used mirrors to divert attention from the recommendation of Chief Administrative Judge Ann Pfau to the 2011 Commission on Judicial Compensation to increase judicial pay up to 61%.    Cuomo needed the mirrors to not upset his negotiations with the peons, aka ordinary employees of NY State, to freeze wages for three years in a tentative, five-year contract agreement with Public Employees Federation.    In the Cuomo allegory of Animal Farm, Napolean, aka Andrew, will explain to the other lesser animals that "All animals are equal, but some animals are more equal than others," or judges deserve wage increases BUT you don't.
Judge Pfau goes on to spout about Fairness, Objectivity, Regularity and finally about Institutional Integrity.  But what Judge Pfau forgot was common sense.  New York State has run out of money, people are leaving the State because the taxes are too high and the employment possibilities shrinking.  While President Obama calls for shared sacrifice, NY Judges demand a 61% pay hike.

   The answers to the Judge Pfau's pleadings are:
1. Fairness must extend to all those lesser earning peons who don't want to pay Judges more and receive less for themselves.   Fairness to the People is restitution made to victims of judicial corruption.
2. Objectively, the peons don't trust the courts and its scandals and know why the reported 129,000+  complaints to ExposeCorruptCourts.blogspot.com were ignored.
3. The only Regularity in New York is more taxes, more corruption, more greed, more debt, and more people leaving the State.
4. The NY Court Institution is a joke.  The Chief Judge is charged with crimes.  The Center for Judicial Accountability documents the huge New York Judicial Corruption and says,“[no] mechanisms are in place and functioning to remove judges who deliberately pervert the rule of law and any semblance of justice and whose decisions are nothing short of ‘judicial perjuries’, being knowingly false and fabricated.  Such judges, willfully destroying the lives of countless New Yorkers, the wellbeing of our state, and our democracy as a whole, are unworthy of their current salaries and benefits – being paid by hardworking New Yorkers.”

   This Commission on Judicial Compensation is just another Cuomo "slight of hand" to divert blame from him and legislators.  What should the commission do about judicial raises in New York?   Don't give any raises.  New York Debt per person including local debt is $24,195. For a family of four that is about $97,000. link    The State will run out of money this year. Borrowing will become impossibly expensive.  Cuomo claims he should get only $170,050 to be Governor.

Greece is the harbinger of New York State to come.  The anger of the People will turn on the greedy Judges and their enablers, including this commission.   There is no money to pay these raises.  Only fools or scoundrels reward failure and wastefully spend other people's money.    For the sake and safety of the judges and yourselves, say, "judges, share the sacrifice; New York State is broke; the NY debt is already the largest in the USA; no raises, because the people and the ordinary NY State worker are not getting raises."
This Commission on Judicial Compensation is just another Cuomo "slight of hand" to divert blame from him and legislators.  What should the commission do about judicial raises in New York?   Don't give any raises. New York Debt per person including local debt is $24,195. For a family of four that is about $97,000. link    The State will run out of money this year.   Borrowing will become impossibly expensive.  Cuomo claims he should get only $170,050 to be Governor.

      Greece is the harbinger of New York State to come.  The anger of the People will turn on the greedy Judges and their enablers, including this commission.   There is no money to pay these raises.  Only fools or scoundrels reward failure and wastefully spend other people's money.    For the sake and safety of the judges and yourselves, say,"judges, share the sacrifice; New York State is broke; the NY debt is already the largest in the USA; no raises, because the people and the ordinary NY State worker are not getting raises."