| Houston is "Financially Broke" |
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| by Tom McGregor | Thu, Oct 29, 2009, 11:58 AM |
 Some well-known retired accountants have made a shocking discovery that Houston is bankrupt. These findings have been uncovered by Bob Lemer, CPA, Retired Partner at Ernst & Young; Aubrey M. Farb, CPA, Retired Partner at Grant Thornton; and Tom Tom Roberts, CPA, Retired Partner at Fitts Roberts. These illustrious accountants had submitted its financial assessment of the City to the "incumbent mayor, city controller and city council members," as well as other leading figures of the City.
The beginning of the letter reads as followed: "the City of Houston is financially broke and it appears that the mayor who takes office in January 2010 may have to captain the City through bankruptcy procedures. The City's unrestricted assets were $1.2 billion short of the already recorded corresponding liabilities these assets were needed to pay as of fiscal year end June 30, 2008, according to the City's latest publicly available audited Comprehensive Annual Financial Report (CAFR). The $1.2 billion shortfall was a result of operating losses totalling $1.5 billion for fiscal years 2004-2008, applying to ful accrual basis of accounting used in the private sector." Apparently, Mayor Bill White (A Democrat who is running for a Senate seat) and his cohorts on the city council did not appear to know what "transpired financially since June 30, 2008 or will transpire this fiscal year ending June 30, 2010." Presently, Houston faces a dire predicament since "its total spending since fiscal year 2003 has drastically outstripped its total revenues in that period." Meanwhile, the rate of growth in Houston's total spending since 2003 has significantly outstripped the City's rate of population growth and inflation. According to the bankruptcy letter, "thus the City's problems are a result of greatly overspending and not a result of insufficient revenues. All of this occured before the curent severe recession. Now the City has the added burden of the recession." Perhaps, Mayor Bill White is anxiously awaiting some bailout funds from President Barack Obama while he campaigns to be the next senator of Texas. To read the entire bankruptcy letter posted on Mish's Global Economic Trend Analysis website, link here: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it 
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Comments (4)
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written by Ken Dickson , October 30, 2009 As usual the Dems expect Obama to give them money where all of us have to pay the tab!...& Mayor White wants to represent Texas? What a boob!
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written by Jd , October 31, 2009 Wont be long till Dallas is in the same position and leppert is off to higher office.
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written by Tom Pauken , November 01, 2009 Cities like Dallas and Houston went on a spending spree when times were good and they were able to push property taxes continuously higher. Now that we are in the midst of a severe national recession, the Appraisal Districts can't keep pushing the envelope and raise property taxes even higher. In addition, sales tax revenues are down statewide by double digit percentages. The chickens are coming home to roost.
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written by furrpiece , November 01, 2009 With the advent of single-member districts, and runaway social spending by cities (in addition to runaway social spending by counties), municipal coffers became earmarking victims for every annual budget, bond campaign, street repair project, and every other kind of capital improvement. Unnecessary spending shot off the charts! In fact, cities like Dallas and Houston began the unthinkable, addressing routine maintenance in capital improvement programs - the bane of municipal financing. Although a wealthier city than most, Dallas now has among the worst street conditions in the country, an aging plant that has long suffered from deferred maintenance because of social spending, and a council-manager system that has fallen victim to ward politics and the corruption it produces. Runaway spending and draconian increases in taxes at the federal level will further impact in a very negative way the creation of jobs, and the ability of people to pay higher local taxes. It's Economics 101 that continuation of these policies with no substantial changes and cuts in spending will result in financial disaster. Write comment
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