Madison: Breaking the bank

Most Madison residents are unaware of the financial crisis that is mounting and which the City of Madison will soon face, but significantly increasing levels of spending and borrowing may bankrupt the city in a few short years.

The city’s debt burden is skyrocketing due to excessive spending. The city’s capital budget for 2011 is almost $250 million, versus $213 million in 2008. As a result, annual debt service is expected to soar to $52 million a year in 2015, which compares to only $21 million a year in 2008, thereby eating up a massive percentage of city tax revenue.

As a result, there is a high probability that the city’s bond rating will be downgraded as a consequence of taking on too much debt, thereby adding to the city’s cost of borrowing. (Remember, Dane County already had its bond rating downgraded.)

Another telling trend, according to confidential sources, is that the city is hiding more and more operating costs in the capital budget, a very disturbing trend and a violation of Generally Accepted Accounting Rules.

In addition, the city is experiencing a relative decline in the value of its private property vis-a-vis the county, and the city’s share of property value has dropped to 43% from 46% in recent years. Not surprisingly, the poverty level in the city is also pushing upward, demonstrating that wealth is fleeing Madison for the surrounding communities. Median income in the city is now 34% below that of the rest of the county.

As I have mentioned before, by my own count, the city has delayed or rejected over $1 billion in new economic development, which would have expanded the tax base and created thousands of jobs during the recession. To keep pace with other communities and the growing needs of the community in terms of services demanded, the city needs to approve approximately $1.5 billion of new economic development each year. Each year!

These are unprecedented statistics that show an overall decline in the financial health of the city, taking Madison down the same economic decline that Milwaukee suffered for many decades before finally turning things around in recent years.

We can’t let the city continue to borrow from our children’s future; we must make a stand now, before it’s too late.

Dateline Egypt

Demographics + technology + knowledge = revolution. Once you realize that 66% of Egyptians are under 30, you begin to understand the demonstrations. Young people are always the revolutionaries. (Interestingly, one statistic reported estimates that 70% of Iranians are also under 30.) When youth combines with the knowledge of freedom and democracy elsewhere in the world, the young are not going to wait. And why use guns and ammunition to win liberty when the Internet, Twitter, and Facebook are more powerful weapons?

There’s no turning back the clock on change in this region. The Middle East, just like Eastern Europe in the late 1980s, will demand freedom. Sidebar opinion: One ABC reporter referred to Egyptian President for Life Mubarak’s monopoly on power as “62 years of public service.” Since when is a three decades’-long dictatorship (the length of Mubarak’s reign as president) considered “public service”? Talk about an insult to true public servants.

Footnote: City data were provided by trusted city sources, but I would welcome an “open records” debate if disputed.

Clarification: In my last column, I said that once a resident moves his or her residency out of state, the state can’t tax his or her income anymore. One reader correctly pointed out that if you still earn income in Wisconsin, the state can tax your income even if you live out of state. I was referring to moving both your residency – and later your investments – out of state.

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