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March_5_2008 - though we don’t put it into savings...

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Capital budget – long term borrowing Starting in 50s cities were Losing Corporation, losing revenue but demands on budget were growing. So to finance without raising taxes too much they borrowed money on long term projects and skimmed part of it. So they should have increased taxes and lower budget but they did neither enough. Relied on increased property taxes but new homes weren’t built and property value didn’t go up enough. NYC was on verge of having to sell assets! Every government, city, county gets in trouble at some point, during recession you lose money, people spend less money. Sales tax depends on consumer spending. Consumer confidence increases then economy will turn around from recession. Our economy relies heavily on consumer demand, when people not buying things companies have to lay off workers. Some people criticize US that we don’t save, but people don’t put money into savings account they put it in bonds and stocks which don’t count. So in a way we do save and want to increase our money even
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Unformatted text preview: though we don’t put it into savings accounts (cash accounts) because it doesn’t help you in long term (doesn’t keep up with inflation). • Bond rate – when you invest in bond you look at this so you don’t put money into shaky bond. Companies rate cities and counties on their credit worthiness, how strong they are financially. o S & P and Moodys look at how much city spending, how much they bring in taxes, how much they borrowed in past, what total assets are…etc. If outside good standard then lower rating. They give AAA, AA, A, B ratings and the higher the rating the less interest rate. They give good interest rate on shakier bonds, so if really high rate of interest probably because no one wants to invest in those bonds because low rating. Cities want to get good rating so they can pay less when borrowing money. • Mandated expenditures – every city has them, items they have to pay for but don’t control. • Imports and exports...
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