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Manhattan Institute’s Nicole Gelinas on Miami’s pensions and financial situation.
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Now Miami.
That is the newest addition to -- list of cities only financial brink.
The matter is considering a declaration of financial emergency.
Is asking unions for forty million dollars worth of concessions.
The city recently kicked in a 132 million for new stadium for the Miami -- hoping the stadium would help the team become a success hasn't looked apparently.
That's not all the SEC's investigating possible false disclosures by city officials.
I joining us now is -- mid -- and the call in July us with the math.
Called welcome in the program -- -- for having -- act is Miami a -- of what's happening in Richmond Richmond ten.
Was Richmond -- talk -- on Stockton California and the other thing is going bankrupt.
Yes all of these cities have a few things in common.
They've made three sets of promises to public pensioners so their retirees once they've stopped working for the city.
Health care benefits to the -- people.
And debts and and promises they've made to bond holders and all three of these things are taking over local budgets which means they're cutting off.
Cutting firefighters cutting police cutting schools cutting today's services because they're paying for things that they did in the past -- something has to get.
Get clinic yet at the moment though they are having to pay to commit money that they promise to pay in the past.
And essentially that's promises to pay retirees their health and pension benefits and to keep on paying them.
They've got to cut back on services now.
That's accurate yes.
If it bit how bad of the cuts going to be in a place like Miami.
The problem is -- when you talk about -- gimmicky things like.
-- today's current contracts of things like wage freezes paying workers minimum wage like they're viewing -- Harrisburg Pennsylvania.
These don't impact the long term problems it's just like if you say.
I've got a big -- on not gonna buy food today that doesn't really help you very much.
You have to look at these long term problems and eventually we're gonna see good double digit 25% cutbacks in things like pensions health.
In the bond holders will bonds in different cities are have different covenants and so forth.
Bond holder should read prospectuses very carefully.
Understand what kind of security what I -- -- what listen I have taken up on his 125% cut in pension yet -- Right and you know it's interesting Miami I think 25% of its operating budget goes to pensions for our workers.
Here's the issue to.
Miami gets two and a half times more in the way of Medicare payments for its citizens in this city vs somebody in many Minneapolis.
Is that part of the problem to that Miami just sat back on its heels so all this revenue coming in from places like Medicare from the government and didn't do enough.
To restructure its finances.
I'm glad you brought that up because it reminds me of the 2009 stimulus you a lot of people don't think that.
13 of the stimulus to good 200 billion dollars went to U states cities and counties in instead of saying.
Look we know you need money but you've got to do something about these long term obligations in order to get the money.
The Obama administration just its sent the cities and states the money.
Only did it was spend -- -- -- -- -- -- -- have added they had a couple years to add to the problem not fix the problems another problem is worse than it was three years ago in the stimulus money has run -- so when you hear the president -- Give the congress has to give us 35 billion more dollars or we're gonna have layoffs.
It's the states in the CDs that have to do something themselves to prevent these layoffs Washington can't really help them with more money it's extraordinary it's like bush and 25 hasn't come back some payments like -- pensions gap to exist involves not raise we up there how is that in some cities are -- you -- -- would come through yet.
The -- we thank you very much and he's joining us.
