Will the Real Numbers Please Stand Up?

Falling housing prices, reduced credit availability, higher food and fuel costs have middle class people feeling squeezed to the limit even to the point where they are turning to credit cards to survive. Credit card companies are lowering limits because they fear the borrower’s ability to pay. Lower credit limits means higher debt ratios leading to lower FICO scores, the gold standard of creditworthiness. Lower FICO scores means higher interest rates on future money borrowed. If you want to restructure your budget by reducing your housing costs, you can’t sell your house even if you wanted to. If you try to get a better job, employers are now checking your credit score rather than personal references, the same score that you just ruined by struggling to survive. Even if you want to get help, debt counselors and consumer credit counselors cannot help you until you fall behind on your debt. You have to ruin your credit score before you can get help. It seems like everything is a vicious cycle feeding on itself. And don’t even check your retirement account because the teetering stock market is eating it alive.

Enter the economists who claim that based on the numbers, things are not as bleak as they were in the 1980s or during the Great Depression. Many claim that the media is responsible for the pervasive “negativity propaganda.” They state that the reality is that while most people will have to cut back, the consumer is absorbing all of the costs and hikes remarkably well. How is this possible? I always return to this question. We have way more debt and costs in this new age - home equity lines and credit cards, larger houses and associated costs, more vehicles and stuff, new technology payments; cell phones, television programming, internet, satellite radio, exurbs requiring increased transportation costs – that we did not have in 1970s and 1980s when I was growing up. Even the post office says it is losing money and keeps raising its rates when I know that I have never received so much mail in my life. I spend hours each week sorting and dealing with the mail and yet I still can’t keep up.

When the government releases numbers for unemployment and inflation, GDP and income growth, they don’t sound that bad. The experts say that we still have not dipped into a recession because the economic stimulus package gave the economy a boost and exports are still doing well. I want to know how the economy was saved by $150 billion dollars in rebate checks when we have a nearly $10 trillion dollar deficit. Month after month, I hear about layoffs, lack of job creation, net jobs loss yet according to the numbers we are still holding up. Maybe it really is true that things aren’t as bad as they seem if you eschew common sense and stick to the numbers.

Read the Fine Print: Your Credit Limit May Be Lowered

Today, Long Island Power Authority (LIPA) officially announced a 4% rate increase for electricity bills. (See 6/9/08 entry). Heating Oil is now near $5 per gallon meaning that homeowners with oil heat are looking forward to a 1^st winter fill-up of at least $1000. Most oil companies give you 30 days to pay before charging late fees and you definitely have to pay or else you won’t get your next month’s $1000+ fill-up. How do most of us plan to cover these extra costs? Credit Cards. Many of us are already using credit cards to make ends meet now that our economic stimulus checks are spent.

Well, before you start whipping it out again, you’d better check your limit. It might not be what it was last month. Yes, credit card companies are LOWERING credit limits based on their assessment of your ability to pay. Now that financial institutions are suffering from mortgage losses, they are turning their attention to credit card defaults which are slowly creeping up. If you are late on any payment or are carrying a high debt ratio, beware, your only notice will be on your bill in that blurb of fine print as usual.

Obviously this is a bad time to lower limits for some people who are surviving on credit cards. At least the analysts see a bright side - credit card companies will in effect help to limit consumer exposure to more debt. So, if you open your bill and your limit has been reduced, please be sure to thank them.

Cash, Are you There? The Market Has Tanked Again.

A couple of months ago, I rolled over a small 401k from a past employer to a new account. The primary reason was to get a little more control over the funds since the old account, overseen by a “full-service” brokerage had not gained a solitary penny for the past 6 years. Any gains absorbed by fees and more fees. Of course, now that I’m my own Administrator, as it were, I have chosen no funds or securities in which to invest. The cash is still sitting there.

I have been very concerned with my foot-dragging especially since the stock market appeared to be improving despite the faltering economy. After all, you have to be in it to win it. Yesterday, the Federal Reserve held interest rates the same after steadily dropping them for the past 9 months. Basically, the economy should continue as it is and the Fed will wait to see if inflation requires them to raise the rates again. This holding-pattern approach seemed to make sense until today when the market dropped 350 points to a new low not seen for almost 2 years. Great!

Why the sudden drop when the news is still the same? The price of Crude Oil continues to rise driving up the cost of everything especially food and energy. Firms that were the backbone of the economy are faltering. Financial firms continue to hemorrhage cash. Governments are still trying to come up with solutions for the mortgage and housing mess. And, the main driver of our economy, consumer spending is still down.

The news was bad today but no worse than other days. Now, I really don't know how I'm supposed to figure out how to invest my 401k cash? All of the market gurus tell us to pick the right allocation for our retirement needs and not to jump around with your picks, buy and hold, set it and forget it, re-balance once a year, don’t try to time the market and so on. I know I have to pick sooner or later, at least the cash is still there, not more but not less either.

Bruno is OUT, Skelos is IN

New York State can take a breather now that Joseph L. Bruno, the most powerful Republican in New York State, has stepped down as NY Senate Majority Leader, a post he has held since 1995, though it seems like forever. Bruno, 79, has been in office for 32 years representing Rensselaer County and the southeastern part of Saratoga County that includes Saratoga Springs. Bruno and Sheldon Silver, the Democrat from New York City who became Speaker of the NY State Assembly in 1994, have run the state together over the past 12 years or so with virtually no opposition from previous Republican Governor George Pataki until Eliot Spitzer, the muckraking Democratic Attorney General turned Governor, came along at the beginning of 2007.

Eliot Spitzer was elected with the mandate to change politics as usual in New York State and immediately went head-to-head with Bruno. Unfortunately, megalomaniac Spitzer brought himself down a year later without accomplishing his goal and suddenly Lieutenant Governor David Paterson was thrust into the Governorship a mere 3 months ago. I, for one, thought that Bruno and Silver would stomp all over him and that he would not have a fighting chance. So, lo and behold, Bruno suddenly decides to step down. Could it have anything to do with the FBI’s yearlong investigation into his business dealings? Bruno states that he plans to “move on with my life and give my constituents an opportunity for new representation and my colleagues in the Senate who have supported me, an opportunity for new leadership.” Joe, sorry you didn’t see fit for us to have benefited from this years ago.

Anyhow, the Republicans have elected Dean Skelos to become their new Leader to take the helm of the NY Senate which has been dominated by the Republican Party for the last 40 years. Likewise the NY State Assembly has long been dominated by the Democratic Party. The most important part about Dean Skelos is that he is from Long Island and has represented Rockville Center, Nassau County for the last 22 years. He is basically a career politician so I’m not sure how much change that will bring to NY State government. Many are suggesting that with Bruno gone, the Republicans may lose their majority in the Senate come November.

Skelos, 60, claims that his top priorities are property tax relief and job creation. Long Islander’s have been screaming for property tax relief for years. Where has Mr. Skelos been all of this time? Anyway, I am glad to hear that he is finally going to do something about it. Whohoo! I did not know this but apparently he was instrumental in helping Bruno attain the Leadership post back in the 90’s so he is no small fry. At the very least, he should be able to put Long Island squarely back on the map in Albany. Maybe something good will come of his reign after all.

Cablevision Control of Newsday and News 12: Sanctioned by the Feds

A reluctant reality is upon is. The Justice Department and the FTC have approved Cablevision Systems bid to purchase Newsday, Long Island's only major newspaper, from Tribune Company. While I was certainly relieved that Cablevision’s bid beat out the alternative, Rupert Murdoch’s News Corp., the repercussions are very unsettling. Cablevision, a cable television operator turned media conglomerate, is a privately held company controlled by the Dolan family. Its assets include Channel 12, Long Island’s only news station ("available only on Cablevision.") When the deal is consummated the Dolan family will have a virtual news empire on Long Island controlling both the major print news and the television news.

Based on the Long Island Power Authority’s (LIPA) 2008 survey, the population on Long Island is 2.85 million. For comparison purposes, the city of Chicago has a population of 3 million people. Can you imagine Chicago having one television news station and one newspaper owned by the same company controlled by one family?

This is certainly not the time for our news sources to be converging. However, that is what we have to look forward to. There are many small publications but all have limited circulation, maybe one of them will become a larger presence in response to “Cablevision media.” Maybe we have nothing to fear and Newsday will become a better newspaper…maybe.

Another Icon Lost: George Carlin

Alas, another American icon of my youth is gone. It seems lately that the people and things that I grew up with are moving out of this world. Sometimes I speak about what I write to these “older folk” and they say, “Oh, they’ve been talking about that for years” or “forget about it, things will never change.” Now, they are just too set in their ways to accept change. Not, George Carlin.

George Carlin started out entertaining the parents of the generation he came to represent but he didn’t stop with them either. His comedy broke so much new ground that by the end, he really could be funny without reservation; the crux of his matter had become part of the vernacular; the taboos that he wrestled with a distant memory to the new breed. And as these new comics continued on breaking new barriers, albeit some using too much vulgarity without originality, George Carlin stayed as sharp and as witty as ever. For this, we are very grateful.

71 is way too young to die these days. I’m sure he's out there right now thinking, “Why the #^%* did I have to die before they gave me the #^%*ing medal? At least, I would like to think so.

Suffering Life: Suffolk Life Newspapers Closing After 46 Years

I have not been out on Long Island long enough to experience the heyday of Suffolk Life. But, I have been here long enough to appreciate the wealth of information that I gained from reading it, every single issue since I moved here.

I always read the "letters to the editor" to gauge community reaction to news and events unique to Suffolk County. And I definitely read Wilmotts and Why Nots to see what “Mr. David” had to say. I didn’t always agree but I admired his spunk. He reminded me a little of a Lou Dobbs type figure, a fist-thumping champion of his cause. It was pretty clear that he held the well-being of Suffolk County near and dear.

I realize now that I took for granted its arrival every Wednesday without fail, never absent, never late. I know there are other local papers out there but they are town or village specific. No other paper, not even Newsday covered the scope of Suffolk County to the extent of Suffolk Life. It will be sorely missed.

Historical Words of Hope for Long Island

Before I am permanently labeled as "Ms. Doom and Gloom” or “Nelly Naysayer,” I will throw in a historical word of hope. After all, we need only look back to any previous decade to find moments of economic uncertainty, real estate calamity and various other economic undoing. All of which we have overcome.

Does anyone remember the stock market crash of October 1987? Or the early 1990’s when housing on Long Island took what seemed like a devastating turn for the worst with a year long inventory (just like now)? We had hard economic times in the 1970’s after the oil embargo. Even New York City nearly went bankrupt during this time. Thankfully our long term memories minimize the pain of any trauma that befalls us.

Since Long Island is geographically-situated in a prime metropolitan area, the chances of its continued survival are great. In fact, the world is producing enough humans to continue the demand. In 1999, there were 6 billion people in the world. The government has now predicted that in 2012, the population will reach 7 billion people. Yes, in a mere 13 years, the shortest time span in history, one billion more people will have been added to the world. And, of course, many of them will want to come to New York City, be in New York City, live in New York City…And their lives, desires, and circumstances will change so they will decide to live close to New York City and that is where Long Island comes in. So, we know people will continue to come for the same reasons that we are all here and all will be right with the world again.

However, we can’t just sit around with the same old mentality and resign ourselves to business-as-usual. We have options to improve our world so that it will be better for all of us and we can welcome the immigration and migration in a positive manner and not from a defensive standpoint or derision. People-flow is good when we are prepared for people-flow.

There is no doubt that Long Island needs young people-flow to provide a workforce so we can retain all those companies that contribute to the local economy. This requires affordable housing. There is no doubt that Long Island needs people-flow willing to do the type of labor-intensive work that our suburban world requires. This requires a system of acceptance for these types of workers. There is no doubt that Long Island needs more sewers so we can bring more companies and allow for higher-density people-flow housing and development in our downtowns and commercial hubs. This requires creative initiatives to get them built while satisfying the NIMBYs and the Environmentalists. If we can find ways to get it done then we all will be happy, happy, happy.

Reality Check: Affording a Home on Long Island

Much of the housing meltdown can be attributed to a flagrant disregard for the general guidelines of housing affordability that have been in place for decades. Many argue that an easing of the rules was necessary to increase homeownership especially in high-cost regions like Long Island. No one can deny that we were all excited that homes were selling like hotcakes and that everyone’s equity was increasing allowing us all oodles of cash to spend. Spending is great for the economy, a win-win situation.

Unfortunately mortgage brokers and other unscrupulous lenders turned that ‘easing’ inch into a yard and here we are. Now that lenders have returned to strict adherence of the guidelines it appears that suddenly no one can get loans. Financial experts have taken to assuring us that the credit crunch is overblown and that those with good credit can still get loans. But given the current conditions, how much house can anyone really afford on Long Island?

Most of us are still of the mindset that a household making $100,000 is doing well. According to the real estate affordability math, that is simply not the case when it comes to homeownership on Long Island. The basic rule of thumb is/has been that aspiring homeowners should spend no more than 28% of their gross income on housing and have a 10% down payment. (Since we are only finding a rough estimate of affordability, we can disregard the other factors that do come in to play like creditworthiness; the amount of long term debt such as student loans, credit cards, car payments and the like.)

Using simple math, 28% of $100,000 allows for $28,000 a year on housing costs or about $2330 a month. If we subtract an approximate monthly average of $500 for real estate taxes and insurance, $1800 a month is available for principal and interest. Assuming an interest rate of 7%, our $100k earning homeowner(s) can borrow $270,000, essentially affording a house for $300,000 with a 10% down payment of $30,000.

Considering that the median home price is currently $440,000 in Nassau County and $360,000 in Suffolk County, this potential homeowner faces a difficult search. The median prices have dropped at least $15% from their highs but unfortunately they are still too high for most of us. Many of us could not afford to buy the very homes that we are in if we were starting out on that path today given the current prices. Somewhere along the line the ratio of the median income to the median home price went way out of whack. We will have to be patient while the market corrects.

Markets rebound, they always do…well, they always have.

Let Go and Let Capitalism; mega-malls abound on Long Island

It is nice to see that Long island is adding more mega-malls to its portfolio. Having traveled out to Riverhead many times this week, I have passed the ‘old’ Tanger Outlet many times. One only has to continue east on Old Country Rd (Rt. 58) to see both sides lined with brand new big box malls. Recently, my husband passed by the ‘new’ Tanger mall construction site in Deer Park and he was astounded at the size. Also, after 7 years of battling the Town of Oyster Bay to build a new 860,000 sq. ft. mall in Syosset, the courts have upheld Taubman Centers Inc. rights to build, but at a more ‘modest’ size of 750,000 sq. ft. In my travails, I have seen a brand new shopping center on Horse Block Road (Rte 16) in Medford that is empty except for one lonely store. And, a brand new shopping center on Carleton Ave (Rte. 17) in Central Islip awaiting smaller tenants to round out the new big-box stores.

Every time I see new shopping malls, the amount of vacancy signs in the older malls, especially strip-malls always worries me, a little. Do we really need any more shops? Even though it sometimes appears to me that the existing square footage for shopping is adequate for current growth. As in, tenants are simply moving from the old to the new without really expanding the industry. I hold my tongue, because building and construction is good for the economy. It creates many jobs and gives us the aura of growth and modernity, vibrancy and expansion, not to mention the amount of dollars added to the tax rolls. What community wouldn’t want that? Especially since 2/3 of the U.S. Economy is driven by consumer spending, we have got to keep them shopping. Again, I hold my tongue because I’ve been too overly concerned that much of that spending has been financed by debt.

My problem is that I expect forethought and planning with an element of realism, a notion that capitalism should be rational in all of its components but it isn’t. “If we build it, they will come” always prevails and in many cases it usually is true. They don’t mention the part about abandoning what was there before, here I go again. Experts say let the market suffer “bubbles” and “irrational exuberances” because it will all correct in time and soon there will be enough people with enough money to shop and shop and shop, so let it happen. Personally, I think if we built more affordable housing, for workers, college grads, starter families and the like, that would create a much larger base of shoppers. No. Stop. Cease and desist. Let Go and Let Capitalism.

Who is the Middle Class?

As most of us know, the definition of middle class is far from simple. There is no official government definition but rather a broad analysis of income based on the census data.

“Based on 2005 Census Bureau reports, some 40 percent of the nearly 115 million households in the U.S. earned less than $36,000 a year. That represented just 12 percent of all income. The 40 percent on the next rung up the economic ladder took in between $36,000 and $91,705 — or about 37.6 percent of all income. The top 20 percent, who made $91,705 or more, collected half of all income” (MSNBC 10/17/07)

One could conclude that the middle class is the 40% of people making between $36k and $92k. Considering that the 2007 federal guidelines state that the poverty threshold for a family of four is $20,650, this definition makes sense. However, this data would make it seem that many of us on Long Island are well-off. Enter The Fiscal Policy Institute (FPI), a nonpartisan research and education organization that focuses on the tax, budget, economic and related public policy issues that affect the quality of life and the economic well-being of New York State residents. According to their press release dated June 12, 2008 the federal poverty level is a poor indicator by which to base affordability standards.

“The federal poverty level is the same whether the family lives in Manhattan or rural Mississippi. That makes it an especially inappropriate measure for New York, where the cost of living is high…In New York, the basic budgets are higher than in most other states, and range from just over $41,000 for a four-person family in rural areas to over $60,000 in Nassau and Suffolk counties.”

This data probably confirms what most people living on Long Island already know. If you live on Long Island, earnings of 90-100k plant you firmly in the middle class even if census data puts you in the top 20% of earners for the United States. The teachers, policemen, county officials and other public service personnel tell us this repeatedly when defending their 90-100k salaries - without these salaries they cannot afford to live on Long Island. I certainly agree with this assessment if you read their defense to mean that they cannot afford the middle class lifestyle on Long Island. (note: My problem with their earnings is that they get these salaries along with lucrative benefits and pensions all at the taxpayer’s expense.)

Make no mistake about it, if $60k is needed to cover basic needs then many middle class Long Islanders are struggling (as we know they are). However, federal poverty level guidelines disqualifies them for any public assistance. When calculating these guidelines, the government does make regional adjustments for Alaska and Hawaii. Based on the FPI data, the government definitely needs to reconsider its classifications and extend those regional adjustments to include other high cost of living states like NY and California.

The Day Journalism lost an Original: Tim Russert dead at 58

Today I have very little to say because I am stunned by the sudden death of Tim Russert. Tim Russert is one of my favorite journalists; intelligent, unbiased, unrelenting but fair. My husband and I grew up with Ted Koppel, Peter Jennings, and Bill Moyers to name a few. We like our journalism the old fashioned way; doing your own homework, asking the tough questions and never taking sides. It is hard to see that these days. My Sundays with Meet the Press will never be the same and I absolutely cannot imagine the presidential election season without him.

Farewell Tim. We will miss you!

McCain or Obama: Who will help the middle class?

As the presidential election season gets underway between Republican nominee John McCain and Democratic nominee Barack Obama, the mudslinging has already begun with much more to come I’m sure. While both candidates have their shortcomings, the number one issue in the back of everyone’s mind, no matter how we try to tiptoe around it, is that Barack Obama is ½ black. Unfortunately, this makes many Americans uncomfortable because of the legacy of racism in this country.

However, we cannot let racism define this election. Nor can we let partisan politics define this election either. At this point in time, it is imperative that we stick to the issues; the economy, the Iraq War and all of its consequences, healthcare reform, education initiatives…the list goes on. For the majority of Long Islanders, we need to weigh these issues so we can answer the most important question in the voting booth; Which candidate is going to do the most to help the middle class?

For the past eight years, the Republicans have not behaved as Republicans and the Democrats certainly have not behaved as Democrats. We have a clean slate in this election. Now is the time to get past the labels and listen to what the candidates have to say. Get the facts before you vote, our stake in America depends on it.

Saving money by reducing inventory

Today is Wednesday. Today I saved over a hundred dollars instantly simply by making the decision to reduce the inventory in my cupboard. For the past four years, I’ve done the grocery shopping on Wednesdays out of sheer convenience since my child takes a year-round hour-long extracurricular class 2 minutes from the discount chain grocery store. This has always been a happy medium, saving gas, time and money, since for me grocery shopping is a real chore and an hour of it is about all that I can stand. When my time is up, I leave whether I have everything or not. “Too bad, I’ll get it next week” is how I approach it. My husband used to do the shopping but I felt bad about him having to do it especially when his daily 4 hour commute started to take its toll. He still helps out but now I’m the main shopper.

Well, today I did not shop except to pick up some perishables at a produce mini-market. The realities of the rising cost of food and fuel has made me pause before I buy anything these days. When I actually stopped to take inventory, I realized that I really did not need anything. The lure of buying discount food and paper goods ushered in by the Costco’s, BJs and gigantic supermarket super-centers of the world has most of us middle class dwellers buying and storing more food and paper goods in inventory than we actually need. In fact, every single week I buy multiples of whatever is on sale because it is on sale, lug it home and do the storage shuffle. Like every one else I complain that my kitchen storage is inadequate. Perhaps our kitchen storage is inadequate because we are buying too much stuff - hundreds of dollars worth of food and goods perennially sitting on a shelf; hundreds of dollars that can be used for something else like buying gas for instance. Going forward, I plan to keep my inventory at a reduced level. Now I’m not saying that I’m going to give up my habit of having a backup of most items, but I’ll stick to 1 or 2 not 6.

"Crookhaven" is Alive and Well

As I was catching up on reading my community newspapers today, many things struck me as appalling but the most egregious were the ongoing shenanigans of the Brookhaven Town government. It is absolutely shameful how ordinary citizens, when elected to office, suddenly lose sight of their moral compass and raid the public trust with complete impunity. For the last few months the esteemed councilpersons of Brookhaven Town have been squabbling over the best approach to reduce the Town vehicle fleet. Each political party wants credit for the right plan to save the taxpayers money especially since the Town faces a shortfall due to the decline in mortgage tax revenue.

Brookhaven Town has about 600 vehicles in the Town Fleet. How did the Town come to have so many in the first place? Are there really 600 people working for Brookhaven Town who need vehicles for Town Business? Not to mention that all of these vehicles have access to free gas at the Town gasoline pumps 24/07. Yes, while the rest of us are suffering from high gas prices, hundreds of Brookhaven Town officials and employees get a free car and free gas to drive to work courtesy of their struggling taxpayers. Furthermore, not one of the proposals to reduce the fleet adds up to a significant reduction. After all the years of squandering taxpayer dollars for which they now want to take credit for saving, how about starting with half the fleet being reduced immediately. Figure it out. If you can’t, bring in a citizen committee to do it, I’m sure they won’t find it too difficult.

Reducing Energy Consumption: Do we have the power?

It is the 1st heat wave of the summer and my family is making do with our ceiling fans. We don’t have central air conditioning and though we usually put in 2 window units, we haven’t done so yet - the sudden heat catching us by surprise. Nevertheless, I’m happy to have some warmth in my bones since the weather has been rather cool and wet lately. If the current weather is any indication, keeping cool this summer will be a challenge for those people who cannot imagine life without air conditioning.

Considering that the price of home heating oil has now reached epic levels - $700+ fill-ups are the norm for those with the standard 250 gallon tank - the skyrocketing cost of fuel will also greatly affect the price of electricity needed to keep those air conditioners churning. The Long Island Power Authority (LIPA) has already raised the rates of the power supply portion of our electricity bill and further increases are expected. Therefore, according to their press release dated May 29, 2008, LIPA is proposing to allocate $140 million of a $213 million special fund (created when LIPA agreed to the KeySpan/National Grid merger) to reduce the burden of future increases in the Power Supply Charge over the next 30 months. This will amount to a $4 per month savings for the average ratepayer but these savings may evaporate quickly if fuel continues to rise.

While any savings, no matter how small, is welcome, short term solutions will only yield short term results. The cost of fuel is only one side of the equation. The capacity of the electric grid is already severely strained. We would accomplish more with a community-wide effort to reduce electric consumption thereby limiting fuel costs and easing the strain on the grid. After all, do we really need to cool our homes and buildings below 70 degrees in the summer and heat them up beyond 70 degrees in the winter? How many times have you had to reach for a sweater in the summer because the air conditioning was too cold? Or remove your sweater in the winter because the heat was too high? Will we ever give up our self-entitled comfort zone for the greater good? Now is the time to decide.

Update on Special Districts reform

In Monday's (6/2/08) post I discussed the special districts reforms touted by former Gov. Spitzer in February. I was concerned that these reforms worth millions of dollars in tax savings for Long Islanders had been lost in the gubernatorial shuffle. However, it turns out that we have no one to blame but ourselves.

In today's Newsday an editorial in the opinion pages addressed the lack of action on special districts reform (See Newsday, 6/6/08 LI delegation should step up - Reform bills are withering in Albany, and there's no excuse for that). It turns out that Long Island’s flat-footed state legislators have done nothing about it. Yes folks, the very people that we elected to promote our interests in Albany have dropped the ball on an easy fix that would save us some money. Not one of Long Island's 30 legislators (21 Assembly 9 Senate) has bothered to sponsor any reform bills at all. Without sponsorship, these reforms will die along with any hope of property tax relief.

Debt Be Not Proud

The stock market went up today due in part to increased retail sales in May because Americans had in fact joyfully spent their economic stimulus checks. There had been some uncertainty that people would use them to pay down debt and not go out and spend them thus diluting the intended purpose. I was thinking that Americans now have an almost insurmountable wall of debt that they can no longer ignore and with the escalating food and gas prices, they simply couldn’t possibly consider spending that check when it arrived. Alas, I was wrong.

Consider some of the relevant data:

- The foreclosure rate has hit an all time record and shows no signs of abating as indicated by the record number of outstanding late payments.

- American’s equity in their homes has dropped to the lowest levels since World War II. This means that the amount of debt tied up in our homes is more than the amount of equity we have built up.

- The average family owes $9000 in credit card debt.

- The savings rate is now less than zero.

Yet, somehow, people still went out and spent that check. It gives me a headache just thinking about it. Granted, the economy does need a boost, though I am very concerned about it being propped up by consumer spending. Since the consumer has been borrowing and spending with, it appears, very little concern for how that debt will be repaid. Even when most Americans were given a little reprieve, a little something to put away for a rainy day, they spent it.

Fight Back! Buy the Cheapest Gas You Can Find

As I drive around town these days, I catch myself glancing up at the signboard of every gas station I pass by silently logging the new price that is higher today than it was yesterday. Today when I saw a car swoop into the Sunoco station where regular was selling at $4.23, I was stunned. On a main road lined with competitors selling gas at up to 10 cents per gallon cheaper, this person deliberately chose to spend more per gallon at Sunoco. In a nation where branding is everything, we still believe the hype, in this day and age, that a certain brand of gasoline is better than another. Why? because these major brands spend millions in advertising dollars telling us so. And, to pay for all of this advertising, they charge more for their gas because they know we are always willing to pay more for the “premium” brand.

I know people will argue this point until they turn blue but the fact of the matter is gas is gas. Now, I know I can get testy about the taste of different brands of milk – my husband says it is all in my mind - but when it comes to gas, it is going in the car and I’m going to use it up driving from point A to point B a lot faster than I wish these days.

For more proof to the point, the following excerpts are from a 2008 issue of Car and Driver, AAA’s magazine:

“In recent years, the Federal Trade Commission has slapped several big-name oil companies with complaints about misleading or unsubstantiated ads. “Exxon gasoline keeps your engine cleaner…so it can help drive down maintenance costs,” said one ad. “Amoco Ultimate is the only premium refined an extra step to remove harmful impurities…for unsurpassed performance and a cleaner environment,” said another. The government forced the companies to pull these and similar ads because they didn’t have the scientific evidence to back them up.”

“In fact, experts point out that all base gasolines are pretty much the same. Trucks from several companies usually fill up at the same terminals, and the various proprietary additives are “splash-blended” in the truck. So there are differences between various brands, say the experts, but they don’t matter much in engine performance; as a general rule of thumb, the cheapest is the best.”

I know that those loyalty gas cards are a big incentive for people to stick to a certain brand especially when they get 5% cash back or whatever the latest gimmick. Since these cards generally carry a 21% interest rate only those of you who actually pay off the balance each month can realize a savings of $1 to $2 every time you fill up. Those of you who carry-over balances or get less than 5% cash back end up paying much more.

In any event, we cannot as consumers begin to fight the high price of gasoline if we still continue to patronize higher priced stations. If we all were to start buying gas only at the cheap stations in our area, this would create pressure on the higher priced stations to lower their prices to attract customers. We only hear about Exxon-Mobil’s record profits but Sunoco, Amoco and all the other brand names are reaping record profits as well. Nothing works overnight but we should at least try to take some matters into our own hands.

Can Long Island ever embrace change?

I just finished listening to Barack Obama’s speech tonight after clinching the Democratic nomination and it was inspiring. Whether you are a Democrat, Republican or Independent, it would have been impossible not to be moved by the spirit of hope that permeated the speech. I started to think how it would be to frame the speech positively for Long Island...

I have a dream that one day our property taxes on Long Island will decrease, not increase, because the long-standing provincialism and NIMBYism will be set aside allowing people to work together to consolidate services so there will not be 127 school districts, 340 special districts and a myriad of segregated towns and villages. I have a dream that one day our talented and well-educated youth will be able to afford to live and retire on Long Island instead of seeking refuge in another geographic region. I have a dream that we will work together to ensure that all 2.8 million people benefit from the wealth of the region and not just the privileged, well-connected few…

America definitely needs change. May the candidate best suited to the task prevail. In the meantime, may the people of Long Island get up the courage to demand change right here in our own backyard. Then maybe, just maybe, Long Island can actually think seriously about becoming its own state. Ah heck, I’m just dreaming.

What happened to Special Districts Reform?

On February 8, 2008, the all but forgotten former Governor Eliot Spitzer, announced special district reforms proposed by the Commission on Local Government Efficiency and Competitiveness. The recommendations included ending pay for special district commissioners and encouraging town control of sanitation districts, as part of a larger package of initiatives to promote greater efficiency by local governments in delivering public services.

These reforms would save millions of dollars for the tax payers on Long Island. The press release stated that

“Long Island is unique in that it has a greater number of special districts than other areas of the state. Many of these districts overlap and dramatically increase the tax burden of residents. Nassau and Suffolk counties have a combined 340 special districts, which annually levy $271.3 million and $169.5 million, respectively, in property taxes. The average special district tax levy for other counties in the state is $7.7 million.”

Even though Spitzer is gone, we cannot let these recommendations fall to the wayside. We need to get back on track to making sure that these reforms are implemented. Do you really care who runs your sanitation or water district? As long as you could get the same service for less money, why should it matter? We do not need all of these fiefdoms costing 20+ times as much as it costs to provide these services in other counties. Period.