Syracuse New York Headed for Bankruptcy

Syracuse New York Headed for Bankruptcy

Without a doubt Syracuse, New York is headed for bankruptcy. Not only is there an “official denial” but the mayor of Syracuse is seeking legal guidance on municipal bankruptcy.

Once again, public union wages and benefits, especially police and firefighters’ pensions are smack in the midst of it.

Please consider this news headline which I openly mock: Expert says bankruptcy for Syracuse is unlikely, but mayor should explore option

While the financial situation in the city of Syracuse hasn’t been described as desperate yet, Mayor Stephanie Miner has asked for some legal expertise on municipal bankruptcy.

The signs of the city’s financial problems have been evident for several years as city employees accept wage freezes and fire and police departments see staff reductions.

The city will use an early payment from Albany to help keep the budget from dipping into dwindling reserves. Skyrocketing pension and healthcare costs continue to be a problem for the city budget.

“Bankruptcy isn’t the answer. It’s not like we sort of restructure and become a different city,” said Professor of Economics and Senior Associate Dean, Maxwell School at Syracuse University Michael Wasylenko.

The mayor’s office says it is also learning about what a municipal bankruptcy would mean, following places like Stockton, Calif. who made that move.

The state has invoked a Financial Control Board before, currently in the city of Buffalo, twice previously in Yonkers, and once in New York City.

Mish Translation

  • Syracuse is doomed to bankruptcy
  • Skyrocketing pension and healthcare costs have sealed the city’s fate.
  • Bankruptcy is the answer
  • There is no other means to rid the city of onerous public union wages and benefits

Professor of Economics and Senior Associate Dean, Maxwell School at Syracuse University Michael Wasylenko is so clueless that he deserved to be fired.

Unfortunately, I strongly suspect that union contracts prohibit that option. In the union world, tenure rules. Gross incompetency is simply not grounds for dismissal, pay cuts, or pension benefit reductions.

About the author: Mike “Mish” Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management. His top-rated global economics blog Mish’s Global Economic Trend Analysis offers insightful commentary every day of the week. He is also a contributing “professor” on Minyanville, a community site focused on economic and financial education. Every Thursday he does a podcast on HoweStreet and on an ad hoc basis he contributes to many other websites, including UnionWatch.

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