• 1) U.S. Foreclosures to Reach 3.9 Million in Second Record Year

“Dec. 10 (Bloomberg) — Foreclosure filings in the U.S. will reach a record for the second consecutive year with 3.9 million notices sent to homeowners in default, RealtyTrac Inc. said.

This year’s filings will surpass 2008’s total of 3.2 million as record unemployment and price erosion batter the housing market, the Irvine, California-based company said.

“We are a long way from a recovery,” John Quigley, economics professor at the University of California, Berkeley, said in an interview. “You can’t start to see improvement in the housing market until after unemployment peaks.” ”

• 2) Sen Conrad: $1.5 Trillion Increase In Debt Limit Needed To Meet US Borrowing Through 2010

“WASHINGTON -(Dow Jones)- Congress must increase the U.S. debt limit by around $1.5 trillion to ensure the federal government’s borrowing needs are met through 2010, the chairman of the Senate Budget Committee said Wednesday.

Sen. Kent Conrad (D., N.D.) said in order to ensure that the debt ceiling wouldn’t be breached in the next 12 months, the limit on how much the federal government can borrow would need to be increased to around $13.6 trillion.”

• 3) Senator in Australia worries about  potential U.S. default on sovereign debt

“In an interview with The Age, Senator Joyce said he did not want to alarm the public, but there needed to be a debate about Australia’s ”contingency plan” for a sovereign debt default by the US or even by an Australian state government.

”A default by the US means complete economic collapse around the world and the question we have got to ask ourselves is where are we in that?” he said.”

“”The worse scenario is where the United States doesn’t repay their debt - the $US2 trillion in debt they owe to the Chinese, the $US1 trillion in debt they have to the Japanese and the $US1 trillion in debt to others - and then we are really nailed.” That would result in a shift from the US dollar to the yuan, ”and China becomes an immensely powerful player overnight”.”

• 4) San Bernardino ‘under financial duress’

“SAN BERNARDINO – The city’s budget deficit for the rest of the fiscal year has nearly doubled and is growing.

A report presented Wednesday to a Ways and Means Committee put the shortfall at $4.9 million or $2.2 million above an initial estimate last month. Property tax valuations are down and there have been increased losses in sales tax and business registration. City Finance Director Barbara Pachon says the city “is under financial duress”.”

• 5) 10%-15% cuts loom as legislators work to wipe out $851M deficit (Ohio schools)

“COLUMBUS - A dark cloud hangs over Ohio’s 613 school districts as a Statehouse showdown over how to plug an $851 million hole in education funding drags on.

“We’re in our ninth year as an excellent district with distinction. We’ve done what we thought the Department of Education and Ohio wanted, but that’s slowly being dismantled because of funding issues,” Perrysburg School District Treasurer Matt Feasel said.

Gov. Ted Strickland’s administration has estimated that a worst-case scenario could result in cuts of 10 percent this school year and 15 percent in the next.”

• 6) Lawrence Facing Budget Crisis (Deficit Of About $17 Million )

“BOSTON — The city of Lawrence is facing a financial crisis that could bankrupt it by early next year. Angry city workers fear massive layoffs and the superintendent could be fired soon from the city’s troubled school district.”

• 7) Special meeting set for Vermilion health agency’s future (Illinois….state “on verge of bankruptcy”)

“DANVILLE – Later this month, Vermilion County Board members will decide whether to close the county health department or drastically scale back its services and personnel and cover its monthly deficit until the state comes through with the money it owes the department.

County board members had many questions at Tuesday night’s meeting about the health department’s current fiscal crisis, created by the state’s failure to pay $800,000 it owes the health department, which in turn, does not have enough cash to make this month’s two payrolls totaling more than $180,000.

State Rep. Bill Black attended the meeting and told the board that the state owes billions of dollars to thousands of entities and is on the verge of bankruptcy. ”

• Lawmakers paint bleak state business picture (Maryland)

“Wineholt said he believes the state’s Unemployment Insurance Trust Fund, which had a balance of more than $800 million in November 2008 and about $220 million in November 2009, will be bankrupt by March. The rate hike will help the state replenish the fund with about $300 million in new money, Wineholt said, but “of course, it couldn’t come at a worse time.””

• 9) Gregoire’s budget offers no easy way out of deficit (Washington)

“OLYMPIA — Gov. Chris Gregoire on Wednesday proposed a state budget she said she’d never sign and talked about something she’s said she wouldn’t do — raise taxes.

The plan put forth by the second-term Democrat erases much of a $2.6 billion deficit by ending major programs serving the state’s poorest and most vulnerable residents and slashing funds for public schools and college students.

It eliminates the Basic Health Plan, a state subsidized health insurance program for 65,000 low-income individuals, and the General Assistance-Unemployable program which provides cash grants and medical care for some of the state’s most destitute.”

• 10) state deficit next year has risen to $9 billion (New York Governor: “New York is now at a breaking point,”)

“The latest action, announced earlier this month, is that Paterson will withhold and delay payments to local governments and schools this month, stashing enough cash to keep the state solvent.

“I’ll probably be sued for this, but I will not let New York state run out of money,” Paterson said.

The state is on track to have a $1.4 billion deficit in its primary bank account at month’s end, if it makes all its payments on-time. It would be the first time in history the state would end a month with a negative balance in its main operating account.

Meanwhile, the projected deficit for the state’s next fiscal year is at least $9 billion, and climbing, said Lt. Gov. Richard Ravitch. That is more than $2 billion above previous estimates.

Paterson, Ravitch and state budget director Robert Megna rattled off a series of statistics showing how much the recession has depleted state resources. For instance:

• collections of personal income taxes, the largest tax in New York, were down 17 percent from April to November this year, compared with the same time a year ago. That’s a difference of $4 billion

• real estate taxes, including assessments on transfers of land, are down $430 million from a year ago—a drop of more than 50 percent

• an income tax hike to raise revenue in this year’s state budget has fallen 15 percent short of its intended target

“New York is now at a breaking point,” Paterson said. “We are hanging on by a thread. We are about to cross the financial Rubicon into fiscal disaster.””

…………..10A) Citing $1B shortfall, Gov. warns schools

“New York state’s main operating fund will have a negative balance of $1 billion by the end of this month, even if the state exhausts its reserves, officials announced Wednesday.

State Budget Director Robert Megna revealed the shortfall as he introduced Gov. David Paterson, who delivered a speech renewing his call for the Legislature to make additional spending cuts. Mr. Megna said even if the state empties its $1.5 billion rainy day fund and delays a $1 billion payment to the state pension fund, its general fund would still end the month $1 billion short.”

……………10B) In ‘Quagmire,’ NY Delays Debt Payments

• 11) State Capitol: 300 People Speak Against Rell’s Proposed Budget Cuts (Connecticut)

“From nursing home operators to the mentally ill, more than 300 people spoke at the state Capitol complex on a snowy Wednesday to protest Republican Gov. M. Jodi Rell’s proposed budget cuts to a wide variety of services.

The crowd was so large that the budget-writing appropriations committee took the rare step of dividing the hearing into two separate rooms in order to hear testimony simultaneously. The diverse crowd ranged from those represented by high-powered lobbyists to unemployed citizens who were afraid that cuts could lead to the loss of their medication.”

“In addition, state budget analysts are closely watching the Christmas shopping season, as the state relies heavily on the sales tax to generate about $3.2 billion per year. Last year’s Christmas season was the worst in decades, and some economists say that this year should be the second-worst.

The budget deficit is currently projected by the state comptroller at nearly $550 million, but that number can change through the year with the ups and downs of Wall Street and changes in the unemployment rate.”

• 12) State’s revenue outlook gloomy, may require another proration, Knight says (Alabama)

“He said revenue projections are below original expectations and he would advise Riley to declare proration as soon as possible. Knight, D-Montgomery, said he did not want to project revenues but that they will likely be below $1.7 billion.

“This is the toughest I have ever seen,” he said.

The governor decides when to declare proration, which forces across-the-board cuts at agencies and departments funded through that budget.”

• 13) State, University employees could end up with IOUs in paycheck in 2010 (Arizona)

“PHOENIX — State and university employees could wind up with IOUs in their pay envelopes instead of checks in February if the planned sale of state buildings hits a snag, state Treasurer Dean Martin warned Monday.

And that could leave worker with a piece of paper that won’t help them buy food for their families, pay the mortgage or heat their homes.

Martin told legislators that by the end of January the state will have borrowed about $1.1 billion to pay its bills. The total amount Martin has available, both internally and from Bank of America, is $1.2 billion.

But the state is obligated to make a payment of about $325 million to public schools on Feb. 1.”

• 14) Geithner Says Treasury Faces Long-Term Losses From Autos, AIG

““There is a significant likelihood we will not be repaid from our investments in AIG, GM and Chrysler,” Geithner said.

The Government Accountability Office yesterday said that U.S. taxpayers will lose $30.4 billion from the auto-industry bailout, down from a prior estimate of $43.7 billion. The GAO report predicted a similar loss of $30.4 billion in AIG, down from a previous estimate of $31.5 billion.”