The Obama economy goes local

Marin is a rich community that’s ridden out the recession much better than other places in the U.S.  Still in a recession of this duration, even the richest community isn’t entirely insulated.  For example, yesterday a report came out saying that Corte Madera, a nice middle class community by Marin standards (and a rich community by everyone else’s standards), is almost broke.  The problem is a typical one for liberal governance — during the fat times, the town spent like crazy, and made no reserve for the lean times:

Corte Madera may be nearing financial insolvency due to years of poor planning and careless spending, according to a Marin County civil grand jury investigation.

Despite its high per-capita revenue from sales taxes generated at major shopping centers and car dealerships, Corte Madera has the lowest reserves of any Marin municipality both in total dollars and as a percentage of its budget, the grand jury found. The report recommends Corte Madera adhere to “best practice” financial policies, take a longer view of its budget and maintain higher reserves, among other suggestions for improving the town’s money woes.

“The genesis of Corte Madera’s fiscal problems is rooted in practices that span several decades and a management approach that appears ad hoc instead of long-range; reactive instead of proactive; and hopeful instead of strategic,” the report said.

The town managers boast that they have been spending money on infrastructure, and that is true, but it’s an empty boast.  One can shore up a town’s infrastructure without making foolish decisions or engaging in spendthrift practices.  The simple fact is that, when the money was flowing in, the town spent like a drunken sailor:

Between 1983 and 2002, the town raked in an average of almost $1 million in surplus funds each year but spent $15.4 million of that $19.6 million on one-time projects — and failed to set aside adequate reserves, according to the grand jury report. In fact, the town hasn’t met its goal of putting 10 percent of its general fund expenditures into reserves for the past 29 years, the document said.

This year, Corte Madera — which boasted $1,416 in general fund revenue per resident — had only $978,090, or just over 7.5 percent, of its $12.9 million budget in total reserves, the report said. By contrast, San Rafael had only $901 in general fund revenue per resident, but put $6.5 million, or just over 12 percent, of its $54.5 million budget into reserves.

[snip]

A significant decline in sales taxes due to the economic recession and the 2006 purchase of the Park Madera Center on Tamalpais Drive for $10 million have further exacerbated the town’s financial problems, according to the report.

An appraisal showed the Park Madera Center was actually worth just $5.9 million.

One could say that, as long as it was in dry dock, the boat already had a hole in it.  The recession, however, left it stranded in the middle of a lake, taking on water.

Corte Madera was poorly managed but, in a peculiar way, one that doesn’t involve a community’s complete collapse, Marin is really struggling.  The following is a screen shot of today’s Marin IJ.  I’ve placed arrows next to the articles showing the financial hit coming to this comfortable area — closed businesses, higher rates for essentials.

The big question one reads in so many blogs, papers and magazines is whether the bad economic news today precludes an Obama victory tomorrow.  In a rational world, the President ought to be punished for what’s happening, especially because he promised that his presidency would magically make all the bad stuff go away.  In the irrational world that is Marin, however, I suspect all of the pain we’re feeling (and it is pain, even though many of us have the reserves to wait it out) we’ll be laid at George Bush’s door, with a soupçon of irrational hatred reserved for the same Wall Street that made so many Marin-ites rich.