My Plan for Columbia:
Our financial situation is serious and out of control. Our current financial crisis is born of a lack of accountability: our finances have gone for years without audit and reconciliation, yet council has continued to spend without knowledge of what is available. Consequently, we are in what I call “functional bankruptcy”.
If a business has liabilities greater than assets, expenses greater than income, no cash reserves, or reserves less than able to sustain the business for any appreciable time, it can be classified as bankrupt. Alternatives are either to restructure under Chapter 11 if expenses can be reduced, contracts renegotiated or broken, and some hope of increasing cash flow to exceed outgo. If not, the business would be forced into Chapter 7, dissolution.
Our city, as reported by our media, has liabilities far exceeding cash flow, including reserves. The long term liability of employee benefits, including insurance, the current liability of employee insurance, the almost non-existent reserve funds, the need for more policemen, the crumbling sewer lines, the failing water lines, the need for more and better equipment for city departments such as police, fire, utilities, park maintenance, and many other areas are begging for increases in funding. Yet ongoing city functions must also be funded. And potential losses in lawsuits such as the Vista hotel debacle may just break the city if the plaintiffs win, as one has in the first round of suits (and the city spent over $1 million on legal fees even before the case went to court, so even if the city wins, it may still lose).
Unlike a business, our city will not have to file Chapter 11 or 7. It can function, borrow money to continue, and raise fines, fees, property taxes and business license sales tax to make up the shortfall. Hence, what I refer to as functional bankruptcy. The politicians can charge us more for their lack of fiscal responsibility by simply forcing citizens to pay more, much as the Mafia forces a business owner to pay more.