October 30, 2011 More Canaries – Cities Mortgage Buildings Cities and states have been laying off workers and raising taxes and fees to balance their books. But for some of the shakiest cities, those moves are not enough. Some cities have been taking out mortgages on their public buildings and using the proceeds to plug their budget shortfalls. Harrisburg, Pennsylvania filed for Chapter 9 bankruptcy protection and is planning a citywide yard sale including leasing local parking garages. Earlier this year, Illinois borrowed $3.7 billion to make its annual contribution to the state pension plan. Providence, Rhode Island handed over three buildings, including City Hall, to the city’s Public Building Authority, which then sold a $35 million bond using the city’s buildings as collateral. $5 million of the proceeds will be used for energy efficient upgrades and the remaining $30 million went to help cover the budget deficit. Newark, New Jersey handed over 16 city buildings, including police and fire headquarters and Symphony Hall, to the Essex County Improvement Authority, which then issued $73 million of bonds. $22 million was used for energy improvements and the remaining $51 million was used for the city’s operating expenses and to pay down some debt. Last year Arizona sold $735 million of state legislative buildings and leased them back for 20 years. Pontiac, Michigan sold the Silverdome, former home of the Detroit Lions for $583,000. Wall Street Journal 9/9/11 p. C1. Wall Street Journal 10/28/11 p. A1. First, the municipalities try to raise revenue. After the taxpayers balk, the assets are sold off or mortgaged. Only after the locality is out of more palatable options is the eventuality of bankruptcy broached. Blue Haze Sellers of medical marijuana have an income tax problem. The IRS has privately ruled that they cannot deduct any of their costs even though they live in a state where it is legal to grow and sell marijuana. The tax law bars deductions for sellers of illegal controlled substances. Similarly, those who use marijuana for health reasons cannot claim the cost as a medical expense. The growers and users will have to convince congress to change the law. In the meantime, the growers will pay tax on their gross income. Kiplinger Tax Letter 9/16/11. His Excellency George Washington With all the hooplah about the presidential race, I decided to read about George Washington to find out what he was really like and why he has been called the Father of Our Country and First in War, First in Peace, First in the Hearts of His Countrymen. So I read His Excellency George Washington by Joseph Ellis because another history loving client gave me a gift of Pulitzer Award Winning Book, Founding Brothers, by the same author. So, having had the book on my reading list for a while, I moved it to the front of the reading list since the author has credentials. I had read books before about aspects of Washington’s life, including several by Thomas Fleming. This book, however, put his entire life in perspective. Roughly, it portrayed an aggressive, rough individual who wanted to get ahead in the world, who was changed and matured by events in his life. While he wanted to get ahead in life, he was not enamored of power. He did not seek power, yet he had the ability to command others. He learned from his military mistakes and adapted his tactics. He learned to think long term and while wanting to risk a short-term victory, learned he did not have the resources to win that battle but, did have the capacity to outlast his opposition. He applied this to his political career and did what he thought best for the United States in the long term. He risked giving up the short-term applause of fellow politicians in order to do what was right. Today, that would be the equal of risking not suggesting legislation because polls show that he might lose votes if he pursued the legislation. In the end, he walked away from his successes, both military and political, by resigning his commission at the end of the Revolutionary War and by refusing to run for a third Presidential term. At both times in his life, he could have stayed on and become a King or Dictator. Probably, the greatest tribute to him was by Emperor Napoleon’s who said, “ I am no George Washington” when asked if he would give up his power. I can recommend this book as an easy summertime beach read or on the daily commute. After reading it, I felt I knew both the public man and the private one in his relationships with his wife and his stepchildren. I also felt that I had a benchmark from which to measure today’s candidates. As always, if you have any questions about these or any other matters, do not hesitate to call us. Remember, We’re Here For You!