Philadelphia Mayor Michael Nutter announced that the city is taking out a short-term loan of $250 million from JP Morgan Chase. The loan has a 3% interest rate until December 1st and will go up to 8% thereafter. Nutter is nuts if he thinks that JP Morgan Chase is going to allow him to re-finance the interest rate on this loan before December 1st. Sorry to be the bearer of bad news, but bailed out banks aren’t interested in bailing out cities out of the goodness of their hearts.
The loan is going to those vendors that have gone without pay since July. It doesn’t cover all of Philly’s needs; the city may be forced to close libraries and recreation centers, and reduce trash collections. Now that just stinks!
State lawmakers will be voting on the budget changes on September 8th. Will Philly face a “doomsday budget” if it’s not approved? The answer is yes. Philadelphia will have to make $700 million worth of cuts, including 3,000 job losses, the closure of some whole departments, and the reduction of many city services. The current budget crisis has already caused a lot of strain for Philadelphia families currently looking for employment, housing and adequate education. In other words, it’s the people that need help the most that will be hurt the most.
Should Philly take out this loan? Is there another option? Oakland extended its parking meters until 8PM, and Chicago sold off its parking meters to a private company; neither plan has been without its downsides. What are your thoughts on cities dealing with debt?