Saturday, May 23, 2020

KANSAS CITY SUFFERS NEGATIVE BOND DOWNGRADE DESPITE OVERLY OPTIMISTIC 85%-90% E-TAX RECOUP PREDICTION!!!



The global recession, and near depression, sparked by coronavirus has hit Kansas City finances harder than most.

With little to no "Cares Act" stimulus coming soon, the economic implications are dire. Many critics of KCMO spending have predicted impending bankruptcy without some form of emergency action.

Accordingly, here's how a major bond rating firm sees this town's debt obligations . . .

Fitch Ratings Affirms Kansas City (MO)'s Issuer Default Rating (IDR) at 'AA-'; Outlook Revised to Negative

"The Rating Outlook Negative reflects Fitch's concerns about fiscal challenges associated with the dislocation caused by the coronavirus pandemic and related containment measures. Fitch anticipates meaningful declines in revenues including earnings taxes, which comprise 44% of general fund revenues, due to the significant increase in unemployment claims. Fitch believes the city's financial operations may be challenged in this environment given limited independent ability to increase revenues, just adequate expenditure flexibility and a moderate level of reserves."

Here's how finance leaders estimate this town's economic game going forward . . .

"The city reports an estimated $30 million - 4% of general fund - revenue shortfall in fiscal 2020 due to a city extension of filing and payment of earnings taxes to July 15, 2020 from April 15. The city believes that it will recoup 85%-90% of earning tax revenues lost due to late filing in fiscal 2021 (fiscal year ending April 30). As a result, the city is expected to use a portion of emergency reserves to cover the lag in revenue receipts. The city maintains a pooled investment portfolio valued at $1.2 billion, which provides a significant source of liquidity. Unemployment benefits are not subject to the earnings tax. The city has seen a spike in unemployment claims, which is expected to have a negative impact on earnings taxes in fiscal 2021 and will likely result in expenditure reductions and the use of general fund reserves. The city has seen significant revenue declines in convention and tourism-related enterprises, which the city believes may require general fund subsidies throughout the city's five-year fiscal plan."

A hot take . . .

THIS HOPEFUL ECONOMIC OUTLOOK STILL DOWNGRADES KANSAS CITY'S ECONOMIC OUTLOOK & HINTS AT HIGHER TAXES!!!

The encouragement for "expenditure reductions" would help the economic crisis in the making but so far we've seen very little control over spending from the Mayor & Council who have approved more funding for developers, the streetcar and and city services since the start of the COVID-19 lockdown.

A GOP Super-Majority State Legislature in Jeff City, MO has proven to be the only backstop for more tax increases but a quick look at these numbers reveal the increasingly desperate need for cash in Kansas City that only looks to grow worse going forward.

Developing . . .

35 comments:

Anonymous said...

Broke KC.

This doesn't sound like that momentum they were talking bout.

Anonymous said...

Maybe we should just do the same thing that the U.S. government does when extra money is required.

Print more.

Anonymous said...

The new Midwest.

Violent, boring and broke.

Problem Solved said...

You know what will solve all of this?

More streetcar!

Anonymous said...

^^^ +1

We're talking about "momentum" toward bankruptcy? Right.

Anonymous said...

Vote NO on the regressive fire safety sales tax increase.

Ren said...

^^^

I will vote YES because I support the brave men and women of the KCPD who risk their lives daily. The only people who are voting no don't live in KC and want to see our city fail.

Anonymous said...

Quinton Lucas and the soap box have a different story; as does the head of KCMO finance, the head of KCMO finance that gave notice two weeks ago. The rats are jumping from the ship.

Anonymous said...

The bonding downgrade is because the people who decide the ratings actually know about and use ARITHMETIC to do their jobs,
Unlike KCMO electeds and staff, who think that somehow rah rah and PR fluff will confuse the money just as easily as it pulls the wool over the public's eyes.
When is the city going to make public its ACTUAL financial condition so that the residents have a better understanding of what's coming their way?

Anonymous said...

Homeowners should be girding their loins for the inevitable doubling of property tax ass raping they will no doubt see in the next year or two.

Anonymous said...

3:08 you are voting for regressive tax for fire fighter overtime and allowing city hall divert more money to entertainment districts, convention hotels and toy trains. That why KC bond rating is going down. NO fiscal responsibility.

Anonymous said...

Those morons should have downgraded years ago. We'd be a lot better off if KC had not been able to finance the new airport and hotels.

Anonymous said...

Weird that you were so loving the momentum for a new airport terminal which is going to cost us 10 x more.

Anonymous said...

Good. Kansas City has earned it. Next stop bankruptcy. That’ll cause all the transplants to go back to wherever they came from: Nebraska, Iowa, Ohio, Witchita and the rest.

Go4KC said...

Absolutely disgusting that this blog and some of its commenters choose to hope for the demise of our city. I also want to give a Stern rebuke for the people who saw this blog post and are sending it out via email and other means as they give in to this kind skepticism. A lot of cities Across the Nation are dealing with financial problems because of the horrible response from the Trump Administration to Coronavirus.

However, Kansas City has risen to the challenge and actually is much better off than some cities that are the same size or even bigger. Wow there may be some economic Fallout from the pandemic that is true of everywhere. Here in Kansas City our excellent leadership at City Hall from mayor Sly James and then mayor Lucas has prepared us for this kind of challenge. It's a challenge that we our meeting everyday as the city serves as the best example for safety and health information and guidance.

I seen some comments here want to falsely encourage against the question 1 sales tax increase. But what you should know is that our First Responders have strong support from all over KC MO. We will win this boat and re-equip are first class Fire Department. We will also continue to move ahead and overcome the haters who read this blog and who don't want to see our city succeed who don't want to go forward with Kansas City.

Anonymous said...

Sly has his people working weekends. Sad.

Anonymous said...

We’d also be better off if the City were not allowed to take peoples houses to build a oversized police station, East Patrol = 24 acres of occupied land. Plus, with all the overages, waste and downright grift associated with that project. I was born and raised in Kansas City and will never ever vote for any public safety sales tax again. It’s a hard no, and go fuck yourself! Police aren’t brave, heroes or anything else. Fuck ‘em.

Anonymous said...

4:50, of course the tax issue will prevail on June 2, but not because it should. It will win because the forces behind it are professionally organized and well funded, and also because there is almost nothing else on the ballot - so the only people who are motivated enough to drag themselves to a new polling place and vote for the tax increase are those who will benefit from it.

Please stop pretending that the city does not treat its residents and visitors like walking ATMs.

Anonymous said...

And the lackey of the corruption class is heard from again.

Anonymous said...

Bankruptcy Tsunami Begins. Thousands Of Default Notices Are "Flying Out The Door"

Anonymous said...

THE DEM CROOK LEADERS OF KILLA CITY ARE GOING TO RENTA CENTER THIS WEEK TO GET FIRE TRUCKS COP CARS ANDA NEW AIRPORT

Anonymous said...

GO FOR KC WHAT THESE DEMOCRAP CRIMINALS HAVE DONE TO KC AND THE PEOPLE OF KC IS DISGUSTING NOW GET READY TO BLOW YOUR TOP CAUSE TRUMP IS GOING TO KICK YOUR LAME ASSES JUST LIKE IN 2016

Anonymous said...

And yet Trump is trailing in all of the polls. Weird.

Waldo Rivera said...

What's a few hundred million dollars. It's all going to be worthless in a few months when the economy REALLY tanks.

Anonymous said...

Go4KC said...


Is that you Joni?

Anonymous said...

As Joe Biden would say here's the deal man: The opposition could defeat these proposals and city hall would then put them on the ballot next election or until they passed.

Anonymous said...

The Convention Center Hotel and new airport terminal are looking like awfully big albatrosses hanging from KC's neck. How is the storm/sanitary sewer segregation project going? Is the streetcar system paying for itself? Maybe KC's budget needs another multibillion dollar boondoggle to really finish the city's finances off.

Harold Eugene Johnson said...

If Killa City Misery can vote to spend millions on a soccer complex north of the river, why should they worry about a downgraded bond rating?

Anonymous said...

We don't want the City's demise. We want to see you and leaders at City Hall in a federal prison.

Bring back the guillotine said...

Yes. Prosecuted to the fullest extent of the law.

Prison is too good for those crooks. Beheading... or firing squad.

Anonymous said...

You’re nuts. People who don’t live in KCMO can’t even vote on the regressive Fire Safety Sales Tax. I live here and I’m voting no as are many people I know. Why? Because it’s a hoax. The money will be diverted for bloated rigged overtime expenses. The KCFD has all the money they need. They just need to quit bleeding their budget.

Anonymous said...

First class fire department? Are you rating them on their skills in raping the City with dummied up overtime? Remember, the highest paid City employee is a Local 42 EMT making nearly$250k per year, thanks to abuse of the overtime system.

Anonymous said...

^ Very true.

Anonymous said...

Go4KC is an absolute fucking moron. You know, when democrats spend money on everything and anything except for those things that are necessary to have a safe, productive city, the city pretty much dies due to people moving out because of high crime and high taxes. Once they totally waste money on unnecessary things like street cars, convention hotels, or any other SJW project they can conjure up such as renaming streets, Things like infrastructure and public safety go by the wayside because of loss of revenue. Then they try to make excuses to raise taxes on everything and property owners are usually the ones to feel the brunt of it. Once the makers leave and the takers stay, the city dies. Do you not understand this? This has been happening to democrat run cities, way before cronovirus. So GO TO HELL.

Anonymous said...

So, Go4KC where do you think people will shop, especially when the state line is just a few blocks away? Where do you think they will move to once KC's regressive taxes kick in? Do you democrats ever think this through?