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Junk Fees and Debt: The Funding Template For American Cities

Tyler Durden's picture




 

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Look for a variation of this in your mailbox next year, and every year after 2016. 

As many of us have observed over the past few years, local governments in America are caught in the pincers of rapidly rising pension and healthcare costs and stagnant tax revenues. The only "fixes" that don't alienate vested interests or tax-burdened voters are dramatic increases in junk fees, i.e. "fees for use," and borrowing money by selling bonds.
 
I've prepared a template that will fit virtually any American city and county in the decade ahead. Larger cities will need to add a zero or two, smaller towns may need to remove a zero. But the template is truly one size fits all as the funding problems of local government are systemic: unsustainable promises of hefty pensions and healthcare benefits have been issued to municipal, county and state employees that cannot possibly be paid in a stagnant zero-yield economy that has stripmined the middle class and small business.
 
Here's the template:
 
Dear Resident:
 
As you may have read, the costs of fulfilling our pension and healthcare promises to our retired and current employees have soared. As a result, pensions, healthcare and the annual interest due on city bonds (money we borrowed in the past) now consume all tax revenues.
 
Without additional funding, we will have to lay off all current employees and close City Hall, the libraries, the fire and police departments, parks and recreation, and the rest of the city departments.
 
To avoid this, we are asking you to approve increases in fees for use and the sale of new bonds to raise desperately needed funding.
 
The proposed fees for use:
 
1. A 50% annual increase in city garbage collection fees for the next decade, after which we anticipate an annual increase of 45% until 2096.
 
2. Building permits for any project under $5,000 will cost a minimum of $5,000. Fees for larger projects will start at $10,000 and rise on a sliding scale based on the value of the project.
 
3. Homeowners and contractors caught attempting to evade the building permit process will be fined a minimum of $5,000 or 200% of the estimated cost of their project, whichever is higher.
 
4. All street parking in the city will require an annual parking permit of $1,200 per vehicle per year.
 
5. Day use of all city parks will now cost $10 per family per day. Reserving BBQ grills and tables will cost $100.
 
6. Internet and wifi service in the city will be taxed $1,000 annually per household.
 
7. Residents will be taxed $100 each annually, payable on the first of January, for consuming the city's air.
 
8. Parking violations will be increased from $35 per violation to $500 per violation.
 
9. Asking city staff for information about city regulations will cost $10, payable before the question is asked.
 
10. All residents will pay a sidewalk usage fee of $100 annually.
 
11. A hotel tax of 100% of the cost the room will be imposed from January 1, 2016, including private AirBnB rentals of rooms and apartments.
 
12. Every home-based business must obtain a city business license annually for a sliding-scale fee that starts at $1,000. Anyone caught evading this tax will be jailed as a financial terrorist bent on depriving city employees of their livelihoods.
 
Residents who cannot afford the new fees can deed their homes to the city, and pay rent to live in the home they once owned.
 
Unfortunately, the new fees for use will only pay a fraction of the salaries of our employees and managers, and so we also need your approval of new bonds:
 
BOND A: $30 million to keep the libraries open for two years.
 
BOND B: $30 million to keep City Hall open for two years.
 
BOND C: $30 million to fill the gargantuan potholes in city streets for two years.
 
BOND D: $30 million to keep the city parks open for two years.
 
BOND E: $30 million to keep the city Public Affairs department funded for two years, so they can continue explaining why the city is broke and why it's such a great place to live.
 
BOND F: $30 million to hire retired employees pulling down $8,000 a month in pensions and benefits for $100,000 per year salaries as "consultants."
 
BOND G: $30 million to fund a public-relations campaign for two years extolling the city's "green initiatives" and selling the city's potential to global corporations.
 
BOND H: $30 million to fund tax breaks for global corporations that open an office in the city.
 
BOND I: $30 million to fund studies on how to raise more revenues from fees for use.
 
BOND J: $30 million to fund more appeals like this for increased fees for use and the issuance of more bonds to fund everyday city functions.
 
BOND K: $30 million to purchase a surplus M1 Abrams tank for crowd control and to root out financial terrorists depriving the city of the revenue it deserves.
 
With your support, the city managers expect revenues to cover expenses by 2096, assuming the city's functions have been fully automated and there are only 12 employees left managing the servers. Until then, please support our efforts to grow the city out of its budgetary hole.
 
Look for a variation of this in your mailbox next year, and every year after 2016 until the whole corrupt contraption collapses into a rank rubble of insolvency, bankruptcy and write-offs.
 

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Thu, 06/11/2015 - 12:14 | 6186619 p00k1e
p00k1e's picture

Wow!

 

Yesterday in my area -

 

"A one-time tax on Wayne County property owners will take effect this summer after the chairman of the County Commission decided against trying to override County Executive Warren Evans’ veto of a resolution aimed at avoiding the levy.

Commissioners had voted 9-5 last week to tap the county’s Delinquent Revolving Tax Fund to pay a $49 million legal judgment in favor of a county retiree fund."

 

http://www.detroitnews.com/story/news/local/wayne-county/2015/06/10/wayn...

Thu, 06/11/2015 - 12:19 | 6186630 knukles
knukles's picture

Talking about Dearborn (hah!) didju all know that MERS (Middle East Respiratory Syndrome) originated in camel's butts?  (I did not make that up, but read it somewhere.  Thank God for the Internet.)

Thu, 06/11/2015 - 12:22 | 6186641 Lady Jessica
Lady Jessica's picture

But Mossad told me it came from Hillary's camel toe.

Thu, 06/11/2015 - 12:22 | 6186642 El Vaquero
El Vaquero's picture

There is a "self employment" tax in my state now. 

Thu, 06/11/2015 - 12:24 | 6186649 de3de8
de3de8's picture

Don't forget the septic tax and rain tax we have in MD (California east)

Thu, 06/11/2015 - 12:27 | 6186666 El Vaquero
El Vaquero's picture

There's a reason that I didn't pull a permit for my irrigation well and instead drove it myself;)

Thu, 06/11/2015 - 17:23 | 6187922 Anusocracy
Anusocracy's picture

Isn't Charles Hugh-Smith a government lover?

Thu, 06/11/2015 - 12:28 | 6186672 eatthebanksters
eatthebanksters's picture

I guess there's a risk using camel asshole grease for lip balm...

Thu, 06/11/2015 - 16:56 | 6187792 Sages wife
Sages wife's picture

Filed under "Things you might have mentioned before my trip to Tunis last week."

Thu, 06/11/2015 - 12:31 | 6186682 pods
pods's picture

Yeah, the spread is due to all the traffic jams.  Kills you quicker than automobile exhaust.

pods

Thu, 06/11/2015 - 14:30 | 6187196 RockRiver
RockRiver's picture

Building permits for any project under $5,000 will cost a minimum of $5,000. Fees for larger projects will start at $10,000 and rise on a sliding scale based on the value of the project.

 

Bullshit.

No one is going to pay 5 grand for a permit to build a two car garage in my location.....

 

Thu, 06/11/2015 - 15:58 | 6187542 g speed
g speed's picture

guess again--permit exemptions good for 5 yrs allowance for not pulling a city improvement permit will run $5000 ----pull a permit or buy an exemption--lol

Thu, 06/11/2015 - 12:28 | 6186623 JustObserving
JustObserving's picture

That's what happens when hospitals bill $800 for a $1 bag of saline water, or $20 for a 1 cent aspirin made in India - healthcare costs skyrocket and budgets get shattered.  

Nobody really believes that US debt and unfunded liabilities are at least $1,400,000 per taxpayer and risng at $70,000 per taxpayer per year - it seems like a bad dream but it is reality.

Someone will have to pay for this thievery and it's you.

All of America is the new Detroit - starting with Chicago.

Welcome to the land of the fee and the home of the slave.

Thu, 06/11/2015 - 12:28 | 6186670 KnuckleDragger-X
KnuckleDragger-X's picture

The road goes on forever and the party never ends......

Thu, 06/11/2015 - 14:06 | 6187086 Doubleguns
Doubleguns's picture

Great song you should have put the link.

 

https://www.youtube.com/watch?v=dj6HfWp-eh0

Thu, 06/11/2015 - 15:07 | 6187321 marathonman
marathonman's picture

The Robert Earl Keen version is much better

https://www.youtube.com/watch?v=oMjWV2lqlqQ

Thu, 06/11/2015 - 14:21 | 6187156 Thisson
Thisson's picture

No, it could be defaulted upon as odious debt.

Thu, 06/11/2015 - 12:19 | 6186633 Philo Beddoe
Philo Beddoe's picture

Dear City:

Fuck you. 

Sincerely, 

Tapped out resident. 

Thu, 06/11/2015 - 12:25 | 6186653 p00k1e
p00k1e's picture

Eh, the city will slap a lean on the house and then take the place after three years.

We have no options – except for wholesale euthanization of pensioners and Debt Jubilee. 

Thu, 06/11/2015 - 12:46 | 6186762 RafterManFMJ
RafterManFMJ's picture

I predict there will many mysterious fires that prevent the city from profiting from their thievery.  And who the hell dumped all this dioxin and asbestos on the burned out foundation? Mysteries within mysteries.

Thu, 06/11/2015 - 14:27 | 6187185 TheEndIsNear
TheEndIsNear's picture

lien

Thu, 06/11/2015 - 12:26 | 6186659 Groundhog Day
Groundhog Day's picture

Dear resident,

 

were going to raise your property taxes by another 20%, if you refuse to pay, the sherrif will be over to seize the property...  

 

I so wish i was a renter instead of the idiot who paid off his mortgage in 12 years and saw his property tax bill go from 4700 to 9900 while the value of my house pop from 300 to 500 and back to 375 (

Thu, 06/11/2015 - 12:33 | 6186689 El Vaquero
El Vaquero's picture

Allodial title FTW!

Thu, 06/11/2015 - 17:18 | 6187901 Anusocracy
Anusocracy's picture

Buy a low mileage motorhome and live at Walmarts.

Thu, 06/11/2015 - 17:27 | 6187937 PTR
PTR's picture

IT'S A GREAT TIME TO BUY A HOME!

(Brought to you by the batshit-delusional members of the National Association of Realtors.)

 

(My apologies to the regular ZH readers who are realtors.)

Thu, 06/11/2015 - 12:52 | 6186788 silverer
silverer's picture

The only solution: get a job with the city.  I mean, WTF.  But either way you'll lose.

Thu, 06/11/2015 - 12:20 | 6186635 Dragon HAwk
Dragon HAwk's picture

So if i sell everything while i can, put a pack on my back and just walk around America and tell everybody i am on vacation. How long will it take for my identification to run out and they throw me in Jail as a vagrant..

Thu, 06/11/2015 - 12:25 | 6186652 pods
pods's picture

That might depend on how much melanin you are starting with.

pods

Thu, 06/11/2015 - 12:26 | 6186660 El Vaquero
El Vaquero's picture

You'll have to research the vagrancy laws for that, and avoid regions that are worse than others.  I bet if you did that, you could last until vagrancy laws are flat out unenforcable. 

Thu, 06/11/2015 - 17:22 | 6187915 Anusocracy
Anusocracy's picture

There's an urban outdoorsman camp about two miles away.

The city doesn't bother it.

Thu, 06/11/2015 - 12:24 | 6186648 pods
pods's picture

How the bankers view each and every town in Amerika:

"This is paradise, I'm tellin' ya. This town like a great big pussy just waiting to get fucked."

-Tony Montana

pods

Thu, 06/11/2015 - 12:29 | 6186673 Philo Beddoe
Philo Beddoe's picture

I actually spit my coffee reading that. 

Bravo! 

Thu, 06/11/2015 - 12:26 | 6186662 I woke up
I woke up's picture

Can't get blood from a stone.  Increasing fees only accelerates the problem and throws the anchor out on the economy whether it be local or national. Happening already with Obamacare and it's just a year in.

Pensioners are going to take a hit

Thu, 06/11/2015 - 13:32 | 6186815 NihilistZero
NihilistZero's picture

Fuck the pensioners.

Those babyboomer fucks are the most culpable for creating this mess, or at least voting in the ones that did. It's similar to the one point the Troika has over Greece that I agree with, in guaranteed pensions. Not a single social service should be cut until ALL pensions are voided! Same goes for the USA. Sorry you were to stupid to see things going to shit and didn't realize your pension was part of a Ponzi scheme, but it isn't the young's duty to live on ramen in a permanently fucked economy so you can sit at home and watch game shows.

In the words you likely told a beggar once or twice in your life: "Why don't you get a job?"

Thu, 06/11/2015 - 20:43 | 6188523 Mr. Ed
Mr. Ed's picture

Amen to that.  We just need a legal doctrine to undo the effects of past insane behavoir because the pension and pay packages that counties and municipalites have been giving out have been truly insane.

Thu, 06/11/2015 - 12:26 | 6186663 VWAndy
VWAndy's picture

Everybody want thier piece of the pie. It only matters to the one they stole it from. Its all about the greater good you see.

 I see a lot of support for reality at zero pies.

Thu, 06/11/2015 - 12:26 | 6186664 The Delicate Genius
The Delicate Genius's picture

I presume a 'free speech tax' will be applied soon enough - certainly to the interwebs.

Not paying your free speech tax?

- that's a paddlin'....

Thu, 06/11/2015 - 12:31 | 6186679 VWAndy
VWAndy's picture

Somehow I doubt it will be a fine.

Thu, 06/11/2015 - 12:31 | 6186684 Philo Beddoe
Philo Beddoe's picture

The comment section on ZH rarely dissapoints. 

Banner day today. 

Thu, 06/11/2015 - 12:33 | 6186692 ChanceIs
ChanceIs's picture

One can argue about the roots of civilzation.  Was it the Samaritans the Egyptians, the Chinese, or......the Greeks.  Let's just say it is the Greeks.  How ironic that we have followed their trajectory to a T.

Camden, NJ has basically gotten rid of its police force.  Hussein Obama went there and proclaimed the glory of its hope and change.  I bet that the population is way down and will continue in that trajectory.  Just look at Baltimore after the pol;ice went into soft wenforcemnt mode.  Just don't fund the police and watch all of those pension worries dissapear.

Thu, 06/11/2015 - 13:05 | 6186847 NihilistZero
NihilistZero's picture

A world without police sounds pretty good to me. A neighborhood watch made up of you and your appropriately armed neighbors. Decentralization at it's finest. Plus no motivation to combat victim less crimes.

Thu, 06/11/2015 - 12:34 | 6186694 kchrisc
kchrisc's picture

Dear states and locales, we, Uncle Scam and I, your auntie Zion, will gladly get you off the hook if you turn over the rest of your sovereignty to us.

Don't worry, like we have with the economy, we'll take good care with your sovereignties.

Sincerely,

Do as we say and we'll let you live in our mine.

Liberty is a demand. Tyranny is submission..

Thu, 06/11/2015 - 14:24 | 6187165 Thisson
Thisson's picture

There you go, interjecting your bullshit Zion crap into everything all over again, you cunt.  Is Jamie Dimon a Zionist?  Go fuck off with your bigotry, asshole.

Thu, 06/11/2015 - 15:55 | 6187523 BeagleOne
BeagleOne's picture

JD IS MARRIED TO A J AND HAS RAISED ALL OF HIS CHILDREN IN THE J FAITH...

Thu, 06/11/2015 - 12:36 | 6186705 bigrooster
bigrooster's picture

Starting in 2016?  It has already started.  I have property in a small town in AZ and the school tax portion of the property tax went up 20% in one year!

Thu, 06/11/2015 - 12:41 | 6186730 foodstampbarry
foodstampbarry's picture

Of course! Husseins illegals have a right to your edumacation system. What are you raycis or something?

Thu, 06/11/2015 - 14:33 | 6187206 Thisson
Thisson's picture

But it's for the children! /sarcasm

Thu, 06/11/2015 - 12:39 | 6186717 Lugnut
Lugnut's picture

$10 to use the parks is generous. Cost me $20 to get on Sandy Hook in season.

 

Try and get on a municipal beach in NJ and you'll be spending at least that much (after paying for parking).

Thu, 06/11/2015 - 12:48 | 6186772 RafterManFMJ
RafterManFMJ's picture

FNJ.

Thu, 06/11/2015 - 12:50 | 6186783 silverer
silverer's picture

New Jersey: A good place to be from.

Thu, 06/11/2015 - 12:41 | 6186728 B2u
B2u's picture

Dear City and State,

Too bad I left and now live in the tropics.  I am enjoying my wealth, free from your grasp.  Oh....just before I went to the airpost my dogs took a dump on your  sidewalk....and  I saw someone step on it....

Thu, 06/11/2015 - 12:42 | 6186735 ydderf1950
ydderf1950's picture

fulton co said my home is worth 271k up from 184k. tax is now 3.1k was 2.1k

Thu, 06/11/2015 - 12:49 | 6186778 silverer
silverer's picture

Tell them you'll sell it to them for 225K, they can roll it over for a profit.

Thu, 06/11/2015 - 13:25 | 6186928 Atomizer
Atomizer's picture

Yep, my home in Marco Island was purchased @ 256k during housing down turn. It's valued at 599k now. When Greenspan was running the Federal Reserve, this house was valued at 1.8 million. 

Same stupid idiots running the same scam. 

Thu, 06/11/2015 - 12:42 | 6186737 Atomizer
Atomizer's picture

House hunter scams will resurface as in 2005. Selling land/homes without deeds. Ask Janet Yellen about this hidden inventory of homes under MBS bond purchases. 

Thu, 06/11/2015 - 12:49 | 6186774 VWAndy
VWAndy's picture

Ask any of them where the deeds actually went. They sure as shit wasent lost.

Thu, 06/11/2015 - 12:48 | 6186767 silverer
silverer's picture

Wow!  This isn't as bad as I thought it would be!  We're getting off cheap!

Thu, 06/11/2015 - 13:12 | 6186882 Atomizer
Atomizer's picture

Depends if you're a squatter looking for a house default obligation pass, like student loan forgiveness. 

Sorry, we check background information prior to bringing you on as a tenant for $250k - $1M dollar rentals.

Stick with section 8 affordable housing. If your income can't support monthly rental payment, good luck on your discrimination lawsuit. Start saving in on the Newport cigarette reward points. Maybe you can stay at a Motel 8 for free. 

;)

Thu, 06/11/2015 - 12:53 | 6186797 earleflorida
earleflorida's picture

moar H & I Bonds, please

just can't stop laughing CHS... well done

Thu, 06/11/2015 - 13:31 | 6186952 rejected
rejected's picture

Exactly what Detroit did,,, then turned around after ripping off said pensions and put up hundreds of millions for a new ........ sports stadium!

Now I have no dog in this,,, do not live in or near Detroit,,, but other local broke governments will follow the lead.

The crooks are everywhere. The only way to get money in Merika is to steal it illegally or 'legally'.

Of course the lawyers make out,,, which is why you see their smug faces on most of the billboards.

Amerikans doing what Amerikans do best......... Screwing other Amerikans!

Thu, 06/11/2015 - 14:36 | 6187216 Thisson
Thisson's picture

I guess you don't read the papers much.  Lawyers aint exactly 'killin it' these days.

Thu, 06/11/2015 - 13:42 | 6186999 stonehands
stonehands's picture

Amerikans embrace the hedonistic lifestyle.

Who on this site is sober?

Who fasts-not to be sexy-but to honor God?

Who is truly thankful to God for the food he eats each meal, not just on phony Thanksgiving?

This .gov is the manifestation of idol worship-SPOORTZ AND BEER

He that won't be governed by God, will be ruled by tyrants.

Thu, 06/11/2015 - 13:46 | 6187019 Atomizer
Atomizer's picture

I'll tell you a secret. If you want to avoid property taxes. Using Marco Island as example. Rip up your single level home and build up to a second level. Your neighbor who just built a new home on purchased land property will shell out $11,000-$15,000 in property taxes/yr. I haven't done this, my SQ FT is large enough. My good friend in Marco Island gave me the tip. 

Thu, 06/11/2015 - 13:51 | 6187028 exartizo
exartizo's picture

True Life Story;

A friend of mine was stopped in Richmond, Texas ( a podunk backwater sw of Houston). He ran a red light.

He was honest with the police officer and admitted to running the red light. he was polite and courteous to the police offiver and old him he was sorry but that he was just in a hurry to get somewhere.

The police officer wrote him FOUR citations totalling almost $1000 in fines instead of just the ticket for running the red light.

My friend is a good driver with a clean record.

He  hired an attorney who got rid of the other three citations. Altogther, the attorney cost him $250, the ticket cost him $250 and it goes on his driving record. Even though he was eligible to take defensive driving the court refused to allow him to take it for the ticket.

If that isn't stopgap municipal city funding, I don't know what is.

 

COMING TO A PODUNCK BACKWATER NEAR YOU.

 

Thu, 06/11/2015 - 14:00 | 6187068 Atomizer
Atomizer's picture

Clear your cashe. Do the same double posting on a rare occasion myself. 

Thu, 06/11/2015 - 13:53 | 6187029 exartizo
exartizo's picture

True Life Story;

A friend of mine was stopped in Richmond, Texas ( a podunk backwater sw of Houston). He ran a red light.

He was honest with the police officer and admitted to running the red light. he was polite and courteous to the police offiver and old him he was sorry but that he was just in a hurry to get somewhere.

The police officer wrote him FOUR citations totalling almost $1000 in fines instead of just the ticket for running the red light.

My friend is a good driver with a clean record.

He  hired an attorney who got rid of the other three citations. Altogther, the attorney cost him $250, the ticket cost him $250 and it goes on his driving record. Even though he was eligible to take defensive driving the court refused to allow him to take it for the ticket.

If that isn't stopgap municipal city funding, I don't know what is.

 

COMING TO A PODUNCK BACKWATER NEAR YOU.

 

 

Thu, 06/11/2015 - 14:47 | 6187250 SmittyinLA
SmittyinLA's picture
hmm, State funded fascism AASHTO Transportation Finance Clearinghouse—Transportation Funding & Financing—Bonding and Debt Instruments
One of the most recent developments in transit finance is the ability to promise* the use of future Federal transit formula grants as partial security for the leases underlying COPs.

They're borrowing based on the assumption of political control* in addition to bogus revenue projections.  So who is Assto?   govt appointees: http://www.transportation.org/Pages/Organization.aspx The Soviets and NAZI could do that shit as long as they won wars and took more territory. 
Thu, 06/11/2015 - 14:47 | 6187251 Rusty Nayle
Rusty Nayle's picture

Detroit did institute a $300 garbage collection fee before it went bankrupt...

Thu, 06/11/2015 - 16:20 | 6187643 gcjohns1971
gcjohns1971's picture

When Rome went through a similar crisis, the population shrank dramatically until public buildings could no longer be maintained.

So, people removed the beautifully quarried and masoned stone from the unused public buildings and used it in new construction.

Now the public buildings are built largely of non-reusable, perishable components.  So, such efficient recycling cannot be accomplished.

Creative destruction indeed.  Paul Krugman approves.

Thus are the wages of progress.

Thu, 06/11/2015 - 17:44 | 6187993 teslaberry
teslaberry's picture

i would have summarized the whole thing with bond J . 

 

> recursive. 

> works well 

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