Since local governments cannot devalue their currencies to pay for services they cannot afford, they must either receive "free" money from the federal government (which can print money) or drastically curtail their spending. The federal government's most recent liquidity infusion to local and state coffers to fill budget holes suggests that they are fully aware of the economic consequences of public sector employment contraction. Unfortunately, the small cash infusions won’t provide much more than a temporary solution to a long-term secular problem.
The city of Miami is so broke it's forcing employees to take pay cuts, even though they're under contract.
Mayor Tomas Regalado said he's never seen a financial mess like this before, and his options are grim.
“It's either that or we layoff 1,000 employees or we raise taxes to the max, and we're not raising taxes to the max,” the mayor said.
Source:
nbcmiami.com
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