Important News - Dec. 14

• 1) Congress Sends Obama Measure With 12% Average Budget Increases

“Dec. 14 (Bloomberg) — Congress gave final approval to a $450 billion spending bill for government agencies providing an average 12 percent budget increase for many programs amid what polls show is mounting public concern over federal deficits. ”

• 2) Fastest Food Inflation Since Riots Means Milk Up 39%

“Global food costs jumped 7 percent in November, the most since February 2008, four months before reaching a record, according to the United Nations Food and Agriculture Organization.

Farm prices this year lagged behind copper futures that doubled and oil’s 57 percent increase. A recovery from the worst recession since World War II would spur food demand and boost costs for buyers of commodities including milk processor Dean Foods Co. while increasing the number of hungry people that the UN says now exceeds 1 billion.”

• 3) N.Y. Governor Delays $750 Million of Local Aid to Conserve Cash

“Dec. 14 (Bloomberg) — New York Governor David Paterson said he is ordering $750 million withheld from aid payments this month to schools, local governments and health insurers to avert a cash squeeze after the Legislature in the third-most populous U.S. state didn’t cut spending as much as he wanted.

Lawmakers’ $2.77 billion plan for reduced outlays and generating additional revenue approved earlier this month isn’t enough to ease the state’s December fiscal bind or close an estimated $3.2 billion deficit for the year ending March 31, Paterson said at a news conference yesterday in New York City.

“Because of the inaction of the Legislature,” the state’s cash “may be temporarily exhausted” leaving it with insufficient resources to pay bills on time, Paterson said. He said he directed the Division of Budget to not provide certifications for payments, following through on a plan he announced Dec. 2. “I won’t let the state run out of money on my watch.””

……………..3A) Here is the latest New York news from The Associated Press

“Gov. David Paterson is ordering that 10 percent of state aid payments to schools and local governments be delayed. He says the state is $1 billion short of its obligations due Tuesday.”

…………….3B) Paterson Delays Payments to Avoid Default

“ALBANY (wned) - Governor Paterson has ordered the state budget office to withhold nearly $750 million in scheduled payments to school districts and local governments.

“This state is projected to be insolvent by the end of the month,” said Paterson during his Sunday announcement.

“Because of the certifications that we are making today, that will not happen. I will not let this state run out of money on my watch!”

• 4) Germany Plans Big Increase in Borrowing

“New debt will next year reach a “level not seen in the history of the Federal Republic of Germany,” the government’s draft 2010 budget bill said. “However: In the present situation, there’s no reasonable alternative to an expansiv budget and fiscal policy. We will only be able to overcome the crisis sustainably and then return to a fiscal stabile path if we are successful in supporting the still fragile growth dynamic.”"

…………….4A) Germany to Boost 2010 Bond Sales in ‘Worst’ Budget Since WWII

“Dec. 13 (Bloomberg) — Germany plans to sell a record amount of debt next year as weak tax revenue coupled with rising unemployment costs create what a government official said is the bleakest budget outlook since World War II.”

• 5) Debt-ridden Greece ‘in vital need of loans’

“At this moment, loans are a matter of life and death for the Greek economy,” government vice president Theodore Pangalos told Ta Nea daily hours before a scheduled speech by Prime Minister George Papandreou on the country’s gaping 300-billion-euro (442-billion-dollar) debt.

“Our debt must be stabilised before it can begin to retreat,” Pangalos said, adding: “I’ve never seen such a situation in my 29 years in parliament.”

• 6) French big loan to promote education, investment

“France’s debt is projected to climb from 77.1 percent of gross domestic product this year to a record 91 percent in 2013, with the budget deficit forecast to come in above 8 percent in both 2009 and 2010.”

• 7) Why Japanese Bonds Yielding 1.3% Offer Highest

“Japanese bond bears say the ballooning deficit will hurt returns. The nation’s debt, currently $11.8 trillion and equivalent to about 219 percent of GDP, will approach 250 percent of the economy in 2014, based on figures from the International Monetary Fund in Washington.”

• 8) Britain’s deficit ‘almost certain’ to pass £100bn mark

“Britain’s gathering debt crisis is set to pass another alarming milestone this week when government borrowing smashes the £100billion mark for the first time in a single year.”

• 9) Bobb says he will bankrupt the schools if teachers don’t bargain (Detroit)

“DETROIT — For the second time Detroit Public Schools Financial Manager Robert Bobb has threatened to bankrupt the school system.

Bobb wants school teachers to agree to a Termination Incentive Plan (TIP) which says each teacher must loan the district $10,000 a year from pre-tax earnings to help eliminate the schools’ deficit.

DFT President Keith Johnson says if teachers do not agree to the union-generated plan, they face a 10 percent pay cut for five years widening the wage gap between city and suburban teachers. Additionally, teachers may face bankruptcy proceedings that could make a teachers’ contract void. Many teachers have said they believe Bobb is bluffing.”

• 10) Calpers unfunded liabilities were $35 billion before last year’s 24% loss

“Calpers is trying to reduce its unfunded liabilities, or the difference between assets and obligations, which were $35 billion before the 24% investment loss last year. Yet many California municipalities are struggling with their own budget pressures and didn’t welcome higher contributions.”

• 11) Council to vote on retirement system (Huntington, WV)

“The Legislature addressed the issue primarily because of Huntington’s worsening financial condition. More than 20 percent, or $8.8 million, of the city’s $42 million budget is going to pension costs this year. Under the current funding method, those costs are scheduled to rise to $12.4 million a year by 2015 and not reach their ceiling until they hit approximately $21.2 million in 2023, according to an actuarial report prepared for Huntington earlier this year.”

• 12)  ‘06 law at core of tumult over W.Va. retiree costs

“The Governmental Accounting Standards Board called on public employers in 2004 to calculate and disclose gaps between on-hand assets and non-pension retirement benefits like health coverage that they’ve promised to workers.

This bid at increased transparency caused major ripples among state, county and local government employers. Federal officials estimated last year that the unfunded liabilities of these “other post-employment benefits,” or OPEB, totaled between $600 billion and $1.6 trillion.”…..

“It is those provisions, and the debate over whether the state alone should shoulder these costs, that has spurred at least 49 of West Virginia’s 55 county school boards to vow to sue state officials.

Richard Olcott, president of the Wood County school board, said its lawyer will send Manchin the required 30-day advance notice of a lawsuit this week. Some of the remaining school boards may join in the meantime, he added.

This threatened action follows the pair of lawsuits filed earlier by each of the state’s teachers’ unions. Those groups oppose the insurance agency’s decision to stop subsidizing retiree health premiums. Agency officials plan to start with July 2010 hires. They defend the move as one way to attack the state’s liability, recently estimated at $7.8 billion.”