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March 10, 2010     Feather River Bulletin
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March 10, 2010
 

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Bulletin, Progressive, Record, Reporter Wednesday, March 10, 2010 5B Tke st,0000tejust u on't take n)for an answer LEGAL MUSINGS STEVE BRENNEMAN steve@schoolpathways.com In the fall of 2008, the vot- ers of California were given a choice. Even before the inter- national recession got into full swing, the state was fac- ing huge budget shortfalls. Too few tax dollars chasing too many projected outlays. In a series of propositions, the voters were asked to pony up more money to cover the shortfall. Those supporting tax increases painted dire pictures of lawlessness and homes burning to the ground due to reduced police and fire departments, and the teach- ers' unions predicted class sizes reaching unmanageable levels. The voters were unmoved. In a resounding defeat for big government, the People re- jected all attempts to increase taxes and fees. Enough is enough, they said. So then we all sat back to watch how the government. would respond. Would waste- ful programs be cut? Would state workers feel the sting of the pink slip, like so many of their private-sector brethren? Would the dire predictions come true? Yeah, right. The Leviathan is nothing ff not resourceful. This state's out-of-control government bureaucracy did not become the pmlch line of so many late-night jokes without a reason, ff the state cannot tax, it borrows, ff it cannot borrow, it uses "cre- ative" accounting. If even that won't do, it simply con- tinues to spend and punts the problem into the next budget cycle. In this instance, one of the gimmicks adopted by the governor to stave off making the hard choices of where to cut was to force furloughs on state workers. In some in- stance:J, as many as three days a month. In other word.,;, rather than lay off any workers, as in the private sector, the state decided to spre;ad the suffering out equally. One might reasonably view this gimmick as a form of so- cialism, which has become a bad word nowadays. Treat all workers equally regardless of their level of service or the value of their contribution to the public, ff we must cut, heaven forbid we make any value judgments about the relative worth of certain pro- grams or employees. But something else may be at work here. Perhaps the Leviathan has simply refused to accept the new paradigm. I suspect the governor and the state Legislature view the current budget difficulties as a temporary glitch. So just buy time until things return to normal. In other words, continue all state programs (at slightly reduced levels) and maintain the current lev- el of state employment (at re- duced salaries) until the good times return. Then every- thing can revert to normal. California is not unique in this thinking. Despite similar budget woes elsewhere, state and local governments cut their combined 20-million- member workforce by only 0.2 percent during the first haft of 2009. Ah, but something happened to upset the governor's plans. Many state workers, or more accurately their unions, de- cided not to accept the fur- loughs lying down. One after another, like a line of domi- noes, groups of workers fried suit claiming they cannot law- fully be furloughed, either be- cause of their union contract or because of the nature of their jobs. You might be able to shut down the DMV for one day a week, but you can't very well shut down a hospital or a prison. Good point. A cynic might suggest the governor and the Legislature knew all along they would be furloughing people who could not be furloughed, yet pro- posed this gimmick just to get a budget passed (and put off the day of reckoning for another year). I won't indulge in such speculation. What I find interesting is the apparent willingness of state workers and their unions to bite the hand that feeds them. If we assume the state must reduce its payroll, it has three options: (1) lay off employees; (2) reduce wages; or (3) impose furloughs. If the state is too squeamish for the first option, then wouldn't you think workers would pre- fer the third option over the second? The pay is reduced, but at least you get some time off. How else would I have time to write this article? Or perhaps state workers and their unions understand the issues better than I do. If the state has a revenue shortfall, why must the budget be balanced on the backs of state workers? Why not cut programs or benefit levels instead? Well, for one thing, cutting programs and benefit levels means cutting state employ- ment. If you don't have a pro- gram, you don't need work- ers to run it. If you cut bene- fit levels, you may find there are fewer people who need those benefits after all, there- by further reducing the need for state workers. Once upon a time, the Peo- ple ruled the government. If the People wanted new pro- grams, the government added new programs. If the People wanted programs scrapped, the programs were scrapped. If the People said taxes are too high, taxes were reduced (e.g., Proposition 13) and the government adapted. Now, when the People say no new taxes, the Leviathan looks up, yawns and then goes about its business as if nothing happened. Is it any wonder the tea party folks are building up a head of steam? You might reasonably ask: But, Steve, aren't you a state worker benefiting from the status quo? Perhaps, but i'm also one of that ever-dwin- dling minority called a tax- payer. (Besides, I'm nearing retirement age. If they lay me off, I'll just retire on my fat pension. The People wouldn't take that away from me, would they?) [WARNING: The foregoing piece was written by an anonymous author from a bunker deep under an island somewhere in the Pacific us- ing crayons and recycled pa- per bags. It was shipped to Plumas County in a bottle that eventually made its way down the Feather River. It was not, I repeat not, written by the above-identified inno- cent civil servant. It is recom- mended that, after reading this piece, you immediately destroy it. The Leviathan is watching.] Reverse mortgages NAVIGATING FINANCIAL WATER.S MARY SHELTERS Attorney at Law Many seniors now face fi- nancial hardships the:y never dreamed of due to this Great Recession. Many have been forced into early retirement by job layoffs or small busi- ness failures as t,:mir cus- tomer base d isaIJpeared. : fltiers have S:flffered disas- trous real estate and invest- ment losses. A lot are overex- tended with c.redit card debt or uninsured rredical expenses. They're s,truggling to make ends meet and miserable to find them,selves at this time in their llives "broke." They're demoralized and de- presseC when they don't have enough money to visit their childJ:en or go out to dinner occaa ionally. Many are unaware a re- verse mortgage could be their "liJ:e raft," enabling them to live out their lives in their homes without the worry and stress of making ends meet. Because they've worked hard and been responsible, their homes have enough equity to be eligible for a reverse mort- gage, but they're afraid to avail themselves of this financial option. If you're 62 or older, own a home and are struggling to survive, don't rule out a re- verse mortgage or think of it as a last resort. A reverse mortgage could provide the extra funds you need to pay your bills each month and act as a safety net for unexpected expenses. Simply defined, a reverse mortgage is a home loan that allows you to convert your equity into cash in the form of a lump sum, monthly pay- ments, line of credit or a combination of the three. No repayment is required and ....... the debt is due and payabie' i when you sell your home, , permanently move out or upon your death (if you are the last surviving borrower). Your debt equals all the loan advances, finance charges and loan insurance. If this amount is less than your equity when you decide to pay back the loan or be- come deceased, whatever is left over belongs to you or your heirs. To qualify for a reverse mortgage you must be 62 or older, own your home out- right or have enough equity to qualify. You remain the owner of your home and are responsible for property taxes, homeowner insurance and property repairs. The fees you pay the bank are added to the loan balance a senior's/!Feral .financial security? and are paid back plus inter- est when the loan is over. Other debts against your property will be paid off from the proceeds of the reverse mortgage. Reverse mortgages are generally "non-recourse" loans, meaning the lender cannot seek payment against you (has no recourse) if your debt is in excess of your equity at the time of repay- ment or death. Lenders can declare a de- fault on the loan if you fail to pay insurance, property tax- es, special assessments, de- clare bankruptcy, perpetrate a fraud or misrepresentation, or fail to repair and maintain your home. The obvious disadvantage to a reverse mortgage is the depletion or diminishment of your legacy to your children. It's most parents' dream to leave their children an inheritance, which is usually the equity in their home. However, you need to re- think if it's fair for you to struggle so your kids can reap the reward of your hard work and financial responsi- bility. Shouldn't they earn their own success? Another, yet not so obvious, disadvantage is the requirement that you live in your home permanently and cannot be absent for more than one year (365 days) at a time. Confinement in a nursing home for more than one year, would allow the declare a default and require repayment of the loan, forcing a sale. Sadly, but realistically, if you've been incapacitated for a year or more, you're probably not coming home again anyway. Remember, however, the difference in the loan amount and the remaining equity (if any) still belongs to you and your heirs. Last, a major disadvantage is its cost. Loan amounts, interest rates and closing costs vary depending on the type of reverse mortgage you choose and the time of loan inception. It is a very expensive loan product. You don't get something for nothing. Just like life insurance policies, actuarial tables are, used to predict how much ill pay out over of the loan to insure their colla- teral (your home) will have enough value to cover the interest, costs and disbursements over the life of the loan. They're betting they'll be covered, but "just in case," an expensive non-recourse insurance policy is added to the loan to insure the lender will be paid back any costs over and above the value of your home when you sell, move out or die. Reverse mortgages are complicated and there are questionable practices taking place in this area of lending; so be careful to do your homework when considering which product and lender to use. Educate yourself by visit- ing AARP, Nolo, National Consumer Law Center and HUD websites to find a legiti- mate and economical reverse mortgage product and lender for you. Contractor mandatory pre-bid meeting Mar. 11 The California Department of Transportation will hold a mandatory pre-bid meeting Thursday, March 11, 1 p.m., at the Caltrans District 2 Office - 1657 Riverside Dr., Redding, for prime contrac- tors interested in bidding on the Spanish Creek Bridge Replacement Project on State Route 70 in Plumas County. The meeting will include project plans for viewing and prime and subcontractor networking opportunities. For more information, contact Becky Alexander, Caltrans Small Business Liai- son, 229-0561. Register at dot.ca.gov/dist2/smbusiness/ regform.htm. Prime Contractors: Pro- spective bidders must attend the mandatory pre-bid. Bidder's representative shall be a company officer, project superintendent or project estimator. Sub-Contractors: The pur- pose of mandatory pre-bids is to encourage the use of small THINK ] ST Invest in PLUMAS COUNTY business participation on contracts. While you are not required to attend, this is an excellent networking opportunity. Need help REPI If it's ing we can'll find somemmlmmo can. CONSTRUCTION SINCE 1984 m General Building Contractor Calif. Lic. #453927 (530) 283-2035 ENDEAVOR HOMES 1-800-482-8453 F.O. Box 1947 Oroyille. CA 95965