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“Municide” not so sure its out of the question
photo by www.artchick.biz
“Municide” not so sure its out of the question
July 14,2012
James Foytlin
Ridgewood NJ, On Tuesday San Bernardino became the third California city in less than a month to seek bankruptcy protection, with officials saying the financial situation had become so dire that it could not cover payroll through the summer and the city is facing a $46-million deficit.
So this begs the question with residential real estate at decade low valuations and commercial real estate still falling it seems only a matter of time before the dominoes begin to fall.
Ridgewood itself is experiencing a massive amount of tax appeals which some question whether the Village is underestimating our liability.
While vested interests and Muni Market promoters attacked Meredith Whitney for most of 2011 because of her ill timed call as to what some have called “Municide”, where she dared to predict that catastrophic muni default rates were in the cards.
Many argue that the size ,depth and variety of the muni bond market as well as the lack of institutional players coupled with insurance and the states infinite ability to tax makes a massive muni default or “Municide ” highly unlikely ,even sighting the lack of defaults during the Great Depression as proof.
The current low interest rate environment has done much to prop up muni prices. but with the print your way out of trouble attitude coming from Washington logic suggests it only a matter of time before price inflation begins to spiral and the breaks will have to be applied by ratcheting up interest rates.
Low valuations of residential property are pressuring property tax revenues ,with massive unemployment the states ability to continue to raise taxes seems to be challenged by a the law of diminishing returns . Add to that a fleeing population to lower tax destinations leaving an ever larger tax burden for those left behind .
Now add to this scenario the new willingness of towns, cities and county’s to seek bankruptcy protection and I am not so sure a “Municide” is out of the question ?
As a former resident I would never wish “Municide” on my old hometown. Though unless the Village starts looking at new forms of revenue this would not come as a surprise. In particular, solar panels paid for by utilities, cell phone towers which offer recurring revenue, and tasteful advertising to subsidize the annual losses at Graydon. “Tasteful” could use as a touchstone the same types of advertising found on little league baseball uniforms.
I’m not in favor of sacrificing the town’s character or visual appeal. I am in favor of avoiding casting the local unions and teachers as the cause of Ridgewood’s inevitable fiscal cliff. Teachers, Police, and Fire salaries and pensions are not the problem. The Village has to realize that a massive number of real estate tax appeals and people moving to lower tax municipalities are the problems and that these are being ignored.
Ridgewood needs some creative types to work on raising revenues and not taxes.