Busy Times

The posts are as usual high quality, but currently a little more sparse because of some ongoing election efforts. 10x25MM…

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Bang head here.

Well, the children in Detroit are at it again.

And is there any wonder why there is so much blow-back from Gov. Snyder’s latest excuse to waste Michigan Taxpayer money on Detroit?

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Busy Times

The posts are as usual high quality, but currently a little more sparse because of some ongoing election efforts.

10x25MM has done a fine job pointing out the DPS foibles, and this morning reminds me that bankruptcy really was the legitimate option for the failed district.  It appears that even after 617 Million has been approved, no one knows who is in charge yet. From the Detroit News:

Davis, who has been board president for two years, on Sunday said Lemmons was making his move.

“LaMar Lemmons is trying to hijack the ship, but he is not currently the president, even though he would like to be.”

Both insist they are following the June 9 board meeting results even though the stint is short..

Boys. boys…  Just remember, the Captain goes down with the ship.

In any event, I mentioned election efforts, right?  Below is a radio ad I have prepared to run this coming week, and then again closer to the election. I thought it might be of interest, and that THIS TOO might be of interest.  Higher taxes.. Right?

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The DPS Bailout – Debts & Obligations

Debt ImageDPS has two types of formal debt: operating and capital. Operating debt is a conversion of present and past annual operating deficits into ‘long-term notes’ sold to the financial markets, as well as more immediate debts owed to the State of Michigan directly. DPS capital debt exists only in the form of bonds which were sold to financial markets to purchase and rehabilitate facilities.  DPS’ formal bonds are identified by Series, which consists of the year issued and a letter suffix when different purpose bonds are issued in a single year.  The financial markets apply a further identifier, CUSIP, which is a unique identifier of municipal bonds by series and their intended dates of redemption.  All of the DPS debt sold to the financial markets has been enrolled in Public Act 92 of 2005, a program designed to reduce interest rates to local school districts in accordance with the 1963 Michigan Constitution’s Article IX, Section 16.  Most DPS debt is effectively secured by a general obligation to pay, which requires Detroit taxpayers to increase taxes and reduce spending should financial difficulties repaying arise.

DPS 2009B Bond StatementDPS pays off its capital debt in annual installments of both interest and principal, before it pays off (or adds to) its operating debt.  Bond interest and principal payments are required by bond terms which – if ignored – would result in immediate default and bankruptcy.  The exact contract terms of DPS debt sold to the financial markets are laid out in official statements which detail all the formal legal and financial features of the bonds.  The official statement is essentially a contract between DPS and its bond purchasers.

DPS’ operating debt payments are somewhat more flexible than capital debt payments because only a portion of operating debt has been converted into formal bonds covered by statements; much of it is separately owed to the Michigan School Loan Revolving Fund. The SSLRF can best be thought of as a State sponsored credit card. School districts tap into it when they are short of cash, and pay off their balance when they are flush.  Operating debt is only converted into formal bonds when Michigan school districts exceed their limits at the SSLRF.  Those limits are not exact, and generally come into play when DPS goes through one of its periodic financial spasms.

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The DPS Bailout – The Bankruptcy Alternative Not Taken

Daniel Howes ImageGovernor Snyder browbeat the Michigan Legislature to approve the $ 617 million bailout of Detroit Public Schools which he signed today by regaling them with a parade of horribles which would occur if the bailout was defeated and DPS was forced to file for bankruptcy. Daniel Howes regurgitated Governor Snyder’s compelling tales of impending doom delivered behind closed doors in a Detroit News article, but was any of it true?

Right at the top of Governor Snyder’s parade of horribles was the Federal bankruptcy filing of the Richmond [California] Unified School District on April 19, 1991 . Governor Snyder portrayed the outcome of this action as the U.S. Bankruptcy Court denying the petition and ordering the State of California to financially bail out the district.  From Daniel Howes’ article:

There is scant precedence for school districts filing for bankruptcy, the Snyder administration found. In 1990, according to an administration letter to state Rep. Laura Cox, R-Livonia, the Richmond Unified School District in Northern California filed for bankruptcy because of $42.5 million in debt. The judge ruled the district could not be protected by the court in bankruptcy and ordered the state to provide the district with operating funds.

Nothing could be farther from the truth.

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The Veto Does It

car-repairHB4344 is dead.

We scoffed at the consumer protections aspect of this ‘aftermarket’ legislation.  How is raising the cost of repairs and limiting choices in a market environment seen as ‘protection?’

Rick Snyder, often criticized on these pages did one right.  The veto of HB4344 assures that a strong aftermarket industry remains in Michigan. He opines:

I support much of the modernization of the Act that HB 4344 includes, as well as limiting structural parts that are proven to impact safety. However, I am unable to sign this bill because it overreaches in the limitation of aftermarket parts negatively impacting consumers and creating the potential for negative consequences for Michigan’s automotive industry. Accordingly, I am returning HB 4344 to you without signature.

Well done.

Now perhaps we start looking at other protectionist legislation?

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Gamrat Cleared

Cindy A GamratAt least there is an end to some of the nonsense.

From Click-on Detroit:

Lansing District Judge Hugh Clarke Jr. ruled Tuesday there’s not enough probable cause for tea party conservative Cindy Gamrat to face felony misconduct in office charges.

Who pushed for this in the first place?

Oh yeah.

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I can’t wait until the rest comes due!

Gov. Snyder, Sen. Meekhof and Sperker Cotter demonstrating their best use for Michigan Taxpayer dollars.

With that conveniently (and consistently) “overlooked” $3.5-billion in debt, the Mi(a)GOP just handed the Michigan House to the democrats in the fall.

Screwed Image 1

Here’s a not-so-subtle hint.

 

More to follow…

 

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Greasing The Monkeys

car-repairWithout written permission to spend less, your auto repair bill will cost you more.

Incredibly, that first line above was a last minute ‘fix’ in HB4344.  Prior to it being added as an amendment by Pete Petallia, there was no wiggle room for any aftermarket part that wasn’t subjected to the extremes set up by the automakers to make their parts competitive.  The section of HB4344 addressing this:

House Bill No. 4344 as amended May 31, 2016

1  original warranty, or during the first 5 years of the vehicle  manufacturer’s original warranty, whichever is less, the motor  vehicle repair facility shall replace the major component part, and  a person that is an owner or operator of the motor vehicle repair facility shall ensure that the major component part is replaced, with 1 of the following:

(a) A new original equipment manufacturer part.

(b) A used or recycled original equipment manufacturer part.

(c) A part that meets any applicable federal motor vehicle safety standards established under 49 CFR 571, and meets the standards for parts recognized as OEM comparable quality as verified by the Certified Automotive Parts Association, NSFInternational, or another nationally recognized automotive parts testing agency.

(d) A part that does not meet subdivision (a), (b), or (c), if the facility is directed by the owner of the motor vehicle in writing to install that part.]

Michigan Capitol Confidential might be thanked for bringing this up originally.

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