We, collectively can save the city..

Do not throw away the keys to your city

by Nick Ashton, Founder, CEO, Tracometry.

Fox News reports that the Baltimore city government is on a path to financial ruin and must enact major reforms to stave off bankruptcy, according to a 10-year forecast the city commissioned from an outside firm.

The forecast, ahead of its release to the public and the City Council on Wednesday, shows that the city will accumulate $745 million in budget deficits over the next decade because of a widening gap between projected revenues and expenditures.

If the city's infrastructure needs and its liability for retiree health care benefits are included, the total shortfall reaches $2 billion over 10 years, the report found. Baltimore's annual operating budget is $2.2 billion.

The forecast will provide the basis for financial reforms that Mayor Stephanie Rawlings-Blake plans to propose next week. The city has dealt with budget deficits for the past several years, closing a $121 million gap in 2010. But those deficits have been addressed with one-time fixes that haven't addressed the long-term structural imbalance.

STOP THE PRESSES!

Tracometry Group of Companies states:

"It is time to work from within in a very stable, logical precise manner!

Whose city is it?  Not the governments, councillors, Mayor or any other dignitary who sits on a committee or council.  It is "of the people"!

The money owed by local business, citizens in ordinance fines, fees and permits is more money than you need to pay the ongoing bills and beyond."  

Pay it!  Pay it now!  

"Or be taxed to your dying day in ways that are objectionable but will slow change the social structure of your city in ways you do not want to know about.

This is where you were born and raised, the city worked with you and for you, gave life to many, many thousands of people.  It is from the heart and innovation from within that will bring the city back to life.  Do not pull the plug and kill what you and your family worked for.  There is more that will be done with all your help, sweat and previous toil."

"When you have budget after budget and you know that there are systemic problems, I felt an obligation to do more than what we have done in the past," Rawlings-Blake told the AP. The forecast, she said, shows that the city needs to address its financial woes "before it's too late, and somebody is coming in and making these choices for us."

That's what happened to the District of Columbia, 38 miles to the south, in 1995 after the city reported a budget deficit of $700 million. Congress created a financial control board that instituted tight spending controls and ultimately took over all hiring and firing in nine city agencies. The spending cuts, combined with a robust regional and national economy, drove the nation's capital back into the black.

Not all municipalities have been so fortunate. In late 2011, Jefferson County, Ala., filed the nation's largest-ever local government bankruptcy, citing $4.15 billion in debt, and last year, Stockton, Calif., became the largest American city to declare bankruptcy.

In Baltimore, the erosion of the tax base is easy to see. The city's population has dropped from a peak of 950,000 in 1950 to 619,000 today, and while the decline has slowed, there have been few signs of the trend reversing. The median income is $40,000, and 22 percent of the city's residents live in poverty, according to Census data. The city also has 16,000 vacant properties.

Baltimore already has the highest property taxes in Maryland -- twice as high as in neighboring Baltimore County. The city's local income taxes are the highest allowed under state law. While the city enacted some new taxes to deal with the 2010 deficit -- including taxes on bottled beverages and higher hotel and parking levies -- city officials say they can't tax their way out of the problem without driving away residents and businesses.

"We've got to go from a vicious cycle to a virtuous cycle. That starts with a good, stable fiscal foundation for the city government," said Andrew Kleine, the city's budget director. "When you've lost so much population and the tax base has shrunk, it's very difficult to deal with."

If the city chose to use its reserve fund to cover the deficits, the fund would be empty in three years, the report found.

"Quite simply, a status quo approach is not financially sustainable," the report says.

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In 2010, the mayor's office released a "doomsday" budget that would have meant firing police officers and closing seven fire stations, among other cuts, and some criticized the move as a tactic intended to soften up the City Council to approve tax increases.

But officials say the new forecast doesn't envision a worst-case scenario. It assumes modest economic growth nationwide over the next decade, said Michael Nadol, a management director at PFM and a lead author of the report.

Rawlings-Blake said the report was intended to be an honest assessment.

"It's not like we've had rosy budgets over the past five years, and now we're screaming that the sky is falling," she said.

Health care benefits for retired city workers will be a major drag on city finances in the future, according to the forecasts. The city still faces increasing pension costs despite a recent restructuring of the pension plans for police officers and firefighters.

Like many cities, Baltimore doesn't factor the escalating future costs of retiree health care into its annual budgets, and if that doesn't change, the city will be on the hook for another $300 million in 10 years, the report found.

"Most government budget practices are for one single time, working on year-by-year financial affairs and this will change with a proven virtuous financial circle of stability", states Nick Ashton, Founder, CEO, Tracometry.

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