Richard Ravitch and GAAP accounting

[BankruptcyGuy]

"Cities and states have to stop borrowing to balance their expense budgets," he said. "It's not sustainable. It is coming to a crashing halt in more and more places."
If every local jurisdiction would match recurring expenses with recurring revenue, "you wouldn't have a growth in the number of cities that ultimately are going to face the default on their obligations."

Detroit, under the oversight committee and thereafter, will be required to report under GAAP accounting, which does not allow either funds from borrowing or funds from asset sales to be included in "revenue" for the purposes of balanced budgets. If this is enforced, Detroit will be at the leading edge of improving its fiscal health, as compared to most major cities in the country.

Ravitch said in his testimony that NYC is going through a real test this year: NYC is rolling out expensive new programs and retroactive wage increases. They have included borrowing to balance the budget, and some people have gone to the state to ask that their oversight committee [[which still exists) take action.

http://www.cnbc.com/id/101698390

[Hypestyles]

regarding shortfalls in revenue...so when will most tax loopholes be closed for corporations and high-income brackets?

[Wesley Mouch]

regarding shortfalls in revenue...so when will most tax loopholes be closed for corporations and high-income brackets?

This surely does need to be done, but it won't really help Detroit. Few high-income earners and corporations are left. And they aren't mostly loopholes but just frankly bad design. Why on earth do we grant a mortgage interest deduction?

GAAP can't come fast enough for municipalities -- especially NYC.

[MikeyinBrooklyn]

I don't agree with Mr. Ravitch on much, but he is telling a glaringly obvious truth that relying on debt for regular operations is constructing a budgetary house of cards.

NYC's current mayor is an avowed leftist who envisions a much larger, more active government [[that is not me ranting, he is pretty open about it). There is no possibility that he can raise taxes enough to meet his spending goals, which will require "creative" financing, including issuing billions in city bonds. That creates a huge problem years from now. You would think Detroits level of borrowing would be a lesson.

[antongast]

NYC's current mayor is an avowed leftist who envisions a much larger, more active government [[that is not me ranting, he is pretty open about it).

Ain't no shame in that. Shit, I might start saying this when people ask me to describe my politics. I, antongast, am an avowed leftist who envisions a much larger, more active government.

[EastsideAl]

Yeah, really. Should he hide that out of shame that he wants a government that actually does something for people? Horrors! He wants a government like the rest of the modern industrialized world has! How insane!

[DetroiterOnTheWestCoast]

MikeyInBrooklyn, an "avowed homosexual", doesn't like progressive politicians.

[BankruptcyGuy]

Yeah, really. Should he hide that out of shame that he wants a government that actually does something for people? Horrors! He wants a government like the rest of the modern industrialized world has! How insane!

Unfortunately for Mr. DeBlasio, NYC can't raise its own taxes. He has asked Albany for a tax increase, and they declined.

The problem is he can't pay for the promises he made.

[BankruptcyGuy]

regarding shortfalls in revenue...so when will most tax loopholes be closed for corporations and high-income brackets?

not sure of the connection

[MikeyinBrooklyn]

Ain't no shame in that. Shit, I might start saying this when people ask me to describe my politics. I, antongast, am an avowed leftist who envisions a much larger, more active government.

I wasn't taking a stand on my observation about Mayor DeBlasio's politics [[although, of course, as an avowed rightist, he and I would be on different pages). I was only mentioning that Mr. Ravitch's observations about NYC's budget are spot on: the mayor's spending and funding wishes don't square with either reality or responsible long-term budgeting. Also remember that Mr. Ravitch is a very, very liberal gentleman. Having been through 2 rounds of near bankruptcy in New York, he just is a little skeptical about not paying as you go.

[Wesley Mouch]

not sure of the connection

"regarding shortfalls in revenue...so when will most tax loopholes be closed for corporations and high-income brackets?"

Many here believe we don't have a spending problem. We have a revenue problem caused by banks, 1%ers, racists, suburbanites, Snyder, et. al. Thus, we can only solve our problems by restoring all revenue sources to their 1950s levels.

They do have a point, but when its used as an excuse it is harmful to progress.

[MikeyinBrooklyn]

MikeyInBrooklyn, an "avowed homosexual", doesn't like progressive politicians.

Why the quotes around avowed homosexual? Many things about me can be disputed; that I prefer men certainly isn't one of them. Also, it's not that I dislike the aforementioned politicians personally. I disagree with people who attempt to use the state to run other people's lives. And, for the record, I dislike it just as much when people on the right do it as well.

[jackie5275]

Detroit, under the oversight committee and thereafter, will be required to report under GAAP accounting, which does not allow either funds from borrowing or funds from asset sales to be included in "revenue" for the purposes of balanced budgets.

And GASB does allow for this?