Entries in Budget (6)


Chicago Invests $7 Billion to Fix Crumbling Infrastructure 

Scott Olson/Getty Images(CHICAGO) -- Gridlock and dysfunction in Washington, coupled with the aftereffects of U.S. economic malaise, have spurred cities like Chicago to take matters into their own hands when it comes to rebuilding crumbling infrastructure.

Chicago Mayor Rahm Emanuel, who knows a thing or two about Washington’s incompetence after working in Congress and the White House for more than a decade, this week unveiled a new $7 billion infrastructure plan that he believes will create 30,000 jobs in the next three years.

“Whether it’s renewing our parks or repairing our pipes, repaving our roads or rebuilding our rails, retrofitting our buildings or revitalizing our bridges, we must restore Chicago’s core,” Emanuel said Thursday in unveiling the plan, called “Building a new Chicago.”

The project is an ambitious one, designed to address flaws underground, on land and in the skies above the city: renovate, repair or rebuild more than 100 bus and train stations; create the first 16 miles of a rapid transit bus route; open two new runways at the city’s O’Hare airport; acquire 180 new acres of parklands; build 20 new playgrounds and 12 new parks; replace 900 miles of water pipes; modernize public schools and colleges; and retrofit city buildings to reduce their energy consumption.

That all sounds well and good. But how can America’s third-largest city embark on such a sprawling plan without receiving federal help or raising taxes? The answer lies in the private sector.

“Nobody is looking to Washington to be a savior anymore,” Joseph Schwieterman, a transportation specialist at DePaul University in Chicago, said. “During the recession, the federal government was seen as an important financier, but the stimulus is over and it’s obvious the federal government isn’t going to be able to provide as much as it once did. So now the mayor wants to bring private firms to the table in Chicago to run the city more like a business."

“He’s not using the word ‘privatization’, but there’s an element that’s similar to that, where a firm may, for instance, manage City Hall for a fee and in the process lower the electric bill and custodial costs. It’s exciting, but we all know the devil is in the details.”

Under the new arrangement, a non-profit fund known as the Chicago Infrastructure Trust -- unveiled last month with former President Bill Clinton in attendance -- will employ the resources and experience of the private sector to address Chicago’s public infrastructure problems.

“This model of private financing for public infrastructure is happening all over the world, but not here in America,” Emanuel noted.

Robert Puentes, director of the metropolitan infrastructure initiative at the Brookings Institution, praised Chicago’s aggressive approach.

“People understand that the city’s infrastructure needs to be fixed, especially when compared to other countries and their modern airports,” Puentes said. “People also understand that on a national level the federal government is not promising a lot of money to rain down on cities and states and metropolitan areas, so cities like Chicago are now starting to devise their own plans for how they’re going to make these big broad investments in infrastructure."

With states and cities across the country slashing their budgets and scrapping essential services in a desperate effort to merely stay afloat, Chicago’s project stands out as especially impressive. Emanuel made it clear that he has no intention of waiting around for help from the federal or state government.

“We can’t allow dysfunction, whether in Washington or [state capital] Springfield, to delay our economic development,” he stated.

Analysts such as Puentes and Schwieterman predict that it won’t be long before other cities follow Chicago’s lead, assuming the project here goes well.

“The frustration for cities comes from the fact that Washington doesn’t do anything -- they get in the way and they’re not being supportive. There’s a recognition of that,” Puentes said. “Many other metropolitan areas are watching what’s going on in Chicago and their successes and failures are really going to resound in the rest of the country. Chicago is first out of the box, but they won’t be the last.”

Schwieterman agreed. “I think other cities have no choice but to follow suit,”  he said. “We can’t rely on government to dig us out of the hole -- we’ve got to find new sources of revenue. It’s a new reality.”

But that is not to say there are not risks involved in Chicago’s plan. In the past, the city has suffered from public-private partnership projects gone wrong, such as the fiasco that has resulted from a 2008 deal that leased Chicago’s parking meters for 75 years to a private company. It now costs Chicago drivers a whopping $5.75 an hour to park downtown during peak hours.

Puentes said, “The public is right to wonder if this sounds too good to be true.  We could certainly do more with less, like realizing some savings through reforms, but private investors are profit-driven -- that’s why they’re in this game -- so in order to do this you have to figure out a way to pay them back with interest or figure out how they benefit from certain investments."

“The danger is falling into the trap that it’s free money,” he said. “It’s certainly not.”

Copyright 2012 ABC News Radio


Minnesota Government Shutdown: Neither Side Budging

DC Productions/Thinkstock(WASHINGTON) -- A bipartisan commission of former lawmakers was appointed Tuesday to seek a way around the budget impasse that has shut down the state of Minnesota.

But while the commission starts work to find a compromise to get the state's 20,000 employees back to work and reopen state parks, former Minnesota governor and current Republican presidential candidate Tim Pawlenty encouraged Republicans to stand strong and launched a new campaign ad touting his role as governor in 2005's 10-day stalemate.

"Minnesota government shutdown. Why? Because Tim Pawlenty would not accept Democrats' massive tax and spending demands. Result: Pawlenty won," the ad boasts.

That shutdown was six years ago, but once again the North Star State's government has come to a screeching halt. As the current impasse entered its fifth day Tuesday, some of the state's leading politicians on both sides of the aisle weighed in on the problem.

While Pawlenty bragged about his work in the 2005 impasse and suggested the current stoppage is good for the state, former Vice President Walter Mondale -- a Democrat -- and former governor Arne Carlson -- a Republican -- started a committee to find a solution by week's end. The bipartisan panel will come up with "a third approach," Carlson told reporters, according to Bloomberg News.

In the state capital of St. Paul, Democratic Gov. Mark Dayton was set to meet with the Republican leaders of Minnesota's GOP-controlled legislature. At issue is how to deal with the state's projected $5 billion deficit over the next two years. To reduce the shortfall, one of Dayton's proposals involves raising taxes on the rich, a move Republicans have opposed.

Dayton demanded that Republicans drop their focus on policies involving abortion and stem cell research and instead focus on "the fiscal side of things."

Amid all the partisan bickering, the shutdown continues -- with serious consequences for the Midwestern state. More than 20,000 state employees are now without work. State parks are shuttered. Construction projects paused. Highway rest areas are closed.

"This is a terrible situation," Dayton said.

The deadlock in Minnesota could be a preview of things to come in Washington. Lawmakers in the nation's capital are currently divided on how to raise the nation's $14.3 trillion debt ceiling, while at the same time reaching an agreement to reduce the country's deficits going forward.

Copyright 2011 ABC News Radio


Are You Playing Rental Car Roulette?

Photo Courtesy - Getty Images(NEW YORK) -- A survey of the major rental car companies by federal safety officials found that in a significant number of cases the companies have rented cars under safety recall without first fixing the defects.

According to the survey, commissioned by the National Highway Traffic Safety Administration (NHTSA), the big three in the rental car business -- Hertz, Enterprise which owns National and Alamo, and Avis/Budget – since 2006 have let tens of thousands of drivers go on the road without repairing defects.

Due to a calculation error by ABC News, an earlier version of this story, also reported on "Good Morning America," misinterpreted the data on the percentage of repairs and did not give the rental car companies all the credit they were due. Even so, safety advocates say anything short of a 100 percent repair rate is unacceptable.

"The bottom line shows that none of the rental car companies are doing a good job," Clarence Ditlow, executive director of the Center for Auto Safety, told ABC News.

Last November, NTSHA had asked the domestic car manufacturers to provide recall repair information from the car rental companies because of "incidents involving allegations of personal injury and death" allegedly caused by "safety defects" on rental vehicles.

The best overall performance came from Enterprise. In a study of 10 General Motors and Chrysler recalls between 2006 and 2010, after 90 days, Enterprise had fixed an average of 65 percent of the cars subject to the recall.

For Avis/Budget, 53 percent of the cars were fixed . At Hertz, only 34 percent of the cars rented 90 days after a recall had been fixed.

The NHTSA study came after ABC News reported on "Good Morning America" last July on the deaths of the Houck sisters of California, 24-year old Raechel and 20-year old Jacquie, who were killed in an accident involving their Enterprise rental car. The car they were driving was a Chrysler PT Cruiser, one that a month earlier had been recalled because a possible leak in the power steering fluid could "result in an under hood fire."

The Houck's car was never fixed. Raechel and Jacquie died instantly after the PT Cruiser caught fire and hit an oncoming semi-tractor trailer on Highway 101 in Northern California. The sisters had rented the car in Santa Cruz, Calif., to visit their parents in Ventura County.

"We found out that they had rented this same car three times in that month period before they rented it to Raechel and Jacquie," Houck's family lawyer, Larry Grassini, said.

The Houcks sued Enterprise, and after a lengthy legal fight, the company admitted negligence and was required to pay $15 million in damages to the family. Now, the girls' mother Cally Houck is pushing the California legislature to pass a law requiring rental car companies to ground all recalled vehicles until they are fixed. Citing the Houck case, the Center for Auto Safety has also petitioned the Federal Trade Commission to require Enterprise to fix vehicles under recall before renting them out.

"I do not want another family to have to go through this type of ordeal," Cally Houck said.

Rental Companies Dispute Survey Findings

The rental companies dispute the survey findings, saying they pick and choose which recalls are most important, and have a high rate of fix for the most serious problems. Both Avis and Enterprise noted that after a 2010 recall of Pontiac vehicles over sticking accelerator pedals, they grounded and repaired the vehicles in question before renting them out.

However, the NHTSA survey found that in the 2007 recall of a series of Chrysler vehicles with a brake problem "that could cause a crash without warning," Enterprise/National fixed 65 percent within 90 days, according to the survey, and Avis/Budget fixed 61 percent. Hertz fixed only 46 percent within 90 days.

"They cannot pick and choose," Ditlow said. "They're gambling with your life."

Hertz said it has dramatically changed its policy and told ABC News that as of last summer, it now grounds all cars recalled for any reason, and will not rent them until they are fixed -- a change of policy that grew out of the public attention drawn to the tragic case of the two sisters.

Enterprise also said the government's recall figures are historical and do not reflect their performance in the most recent recalls in which they said repairs were virtually 100 percent complete within 90 days.

It is a position safety advocates said they hope the other rental car companies will follow. In the meantime, Ditlow said the best recourse for consumers is to simply ask rental car agents if their vehicle is subject to an outstanding safety recall.

"If they don't tell you, they're deceiving you and if they won't tell you, just go to another company, go to another counter," said Ditlow. "They're all right there in the airport, this is a free market, pick somebody who's more responsible."

Copyright 2011 ABC News Radio


Gates: 'No Idea' on Size of US Troop Drawdown in Afghanistan

Photo Courtesy - Getty Images(WASHINGTON) -- Defense Secretary Gates called it a “fairly dramatic reduction in the overseas contingency operations budget," as war funding drops to $117.8 billion in 2012 from $160 billion this year.  But it’s all because of the U.S. drawdown in Iraq that will be completed by January 1, 2012 which makes next year’s war funding all about Afghanistan.  

The drawdown of the 98,000 U.S. troops currently in Afghanistan is slated to begin in July of this year, but Gates admitted Monday “we have no idea what the size of the drawdowns will be" because the pace of troop reductions will all depend on security conditions on the ground.
As such, Gates said it make more sense to continue to conservatively budget the war next year at the 98,000 U.S. troop level and see what happens as the drawdown progresses.
According to Gates, “It makes more budget sense to do this conservatively and budget on a straight line basis from FY 2011 and depending on the size of the drawdown, that maybe money we just won’t spend. “
However, Gates made it clear that while it made good budget sense to plan for maintaining a 98,000 troop level, that’s “not to say we will have 98,000 at the end of FY 2012, in fact that’s a lead pipe cinch we won’t.”

Copyright 2011 ABC News Radio 


US Cities Stagger Under Cost of Clearing Record Snowfalls

Photo Courtesy - ABC News(NEW YORK) -- From Nevada to New York, already-wobbly city budgets are being hit by the heavy cost of shoveling out from under record snowfalls.

A mid-December storm dropped 17.1 inches on St. Paul, Minnesota -- the most in almost 20 years.  The city spread 4,000 tons of salt on 800 miles of streets, added staff and paid overtime.  As a result, the city's public works budget has been snowed under by $1 million more than had budgeted for snow removal.

The figure, says Deputy Mayor Margaret Kelly, likely will rise to $1.3 million.  To pay it, she said, the city will have to dip into a fund used to patch potholes, maintain alleys and cut city grass.  The prospect that the fund could be depleted, she says, makes the rest of winter "challenging."

Things are worse in Minneapolis, which has exceeded its snow budget by $3 million.  It, too, plans to dip into reserve funds to pay the cost.

In Missouri, tight budgets mean snow plow crews are being told to make roads "passable," not necessarily clear.

New York City, hit hard by a late December blizzard, is still recovering and paying.  A spokesman for the mayor's office says that while not all costs have yet been tallied, the final snow bill should come in at around $38 million.  Given that the city's budget gap next year is forecast to be $2.4 billion, those millions will be missed.

Copyright 2011 ABC News Radio


Government Racks Up $1.3 Trillion in Red Ink Last Year

Photo Courtesy - Getty Images(WASHINGTON) -- The government ran up a $1.3 trillion deficit during fiscal year 2010, the Obama administration announced Friday. It is the second-largest deficit ever, only $122 billion behind last year’s record-high.

The administration touted the final budget deficit for 2010 is not only an improvement from last year, but also from prior estimates released earlier this year. The $1.29 trillion in red ink was $261 billion -- or 17 percent -- less than the estimate in the administration’s budget submitted in February.
“By carefully managing the emergency initiatives to stop the financial panic and by accelerating our exit from those investments, we have significantly lowered the cost to taxpayers, bringing the costs of the financial rescue down by more than $240 billion this year,” Treasury Secretary Tim Geithner said in a paper statement. “However, we still have a long way to go to repair the damage to the economy and address the long-term deficits caused by the crisis.”

The administration noted this year’s shortfall was equivalent to 8.9 percent of the nation’s gross domestic product, down from 10 percent of GDP last year.

However, with only weeks before the mid-term elections, Republicans seized on the new numbers to reiterate their calls for a cutback in Washington spending.

“Americans are speaking out, and I share their deep concern about the size of government and the seemingly endless spending in Washington,” Senate Republican Leader Mitch McConnell said in a statement. “After adding trillions more to the national debt, Democrats in Washington now want to take more money from the struggling Americans who need it most -- and from the small-business owners across our country who create jobs. Saying no to more spending, more taxes and more debt is exactly what our constituents have been asking us to do. So we’ll keep doing it.”

The 2010 fiscal year concluded at the end of September.

Copyright 2010 ABC News Radio

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