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Is Paying People Not to Commit Crimes Effective?

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Washington, D.C., may offer some people financial incentives to follow the law. It wouldn't be the first.
BY  | FEBRUARY 8, 2016

If the threat of jail or job loss isn’t enough incentive not to commit a crime, here’s one more: cash money.

That’s the tactic Washington, D.C., is considering after the city suffered an alarming 54 percent increase in its murder rate last year. A similar approach in Richmond, Calif., has helped to reduce crime.

The city council in D.C. gave unanimous but preliminary approval to a bill earlier this month that would identify up to 200 young people a year considered at risk of either committing or becoming victims of violent crime. If they complete behavioral therapy, life planning and mentorship programs run by the Office of Neighborhood Safety and Engagement -- and stay crime-free the entire year -- they would get paid.

The bill doesn't specify how much participants could earn, but the program would cost an average of $1.2 million a year for the first four years, including $460,000 for stipends.

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The Week in Public Finance: A Muni Bond Victory in Congress and a Ukraine-Inspired Idea to Restructure Puerto Rico

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A roundup of money (and other) news governments can use.
BY  | FEBRUARY 5, 2016

Preparing -- or Not -- for a Slowdown

The financial outlook for states and localities over the next few years, simply put, isn’t as rosy as it’s been for the past couple of years. (If you even want to call the last couple of years rosy.)

Last week, we reported that states other than oil-dependent ones are dealing with mid-year spending cuts. Looking ahead, state budget forecasters are expecting tepid sales and income tax revenue growth for both 2016 and 2017. If spending continues to grow faster than revenues, the next few years could be challenging for government budgets.

“States still haven’t made up for a lot of the cutting that got done in the last six to eight years,” said Bill Pound, the executive director of the National Conference of State Legislatures. In particular, states are still trying to restore education funding while implementing higher standards, he said.

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How Oil States Are Dealing With Sinking Prices and Revenue

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The states most dependent on oil tax revenues have different ways of dealing with the industry slowdown.
BY  | FEBRUARY 4, 2016

Oil prices are now at their lowest level in 12 years -- below $30 a barrel. That's great news for consumers, but not for the states that depend on oil tax revenues.

The falling price of oil, which has declined more than 60 percent since June 2014, has some states scrambling. With no end in sight, states that are more dependent on the industry simply can't replace the revenue by withdrawing from their substantial rainy day funds.

Oil, natural gas and mining account for about 10 percent or more of gross domestic product in eight states: Alaska, Louisiana, New Mexico, North Dakota, Oklahoma, Texas, West Virginia and Wyoming. Last year, total tax revenues in the eight states declined by 3.2 percent, according to a new analysis by the Nelson A. Rockefeller Institute of Government. In contrast, the remaining 42 states reported a 6.5 percent increase in total tax revenues.

Although most of these states tend to budget conservatively, the good years for oil had an impact on their finances.

New Library in Seattle Tries a Novel Idea: Books

In Seattle, a new private library -- the first of its kind in a century -- is based on the throwback idea of having a quiet place to read.
BY  | FEBRUARY 2016

These days, public libraries are as likely to have video production studios and 3-D printers as they are shelves of books. One library in San Diego is pushing things even further, with a new biotech lab, where patrons can examine cells under microscopes and even extract and copy DNA.

But in Seattle, a new private library is offering a surprising old-fashioned amenity: a quiet place to sit and read a book.

Called Folio, the nonprofit membership library opened last month, just a block from the city’s Rem Koolhaas-designed public library, with about 300 members. Well-established “athenaeum” libraries -- institutions devoted to literary or scientific study, like the libraries in Boston; Providence, R.I.; and elsewhere -- can boast 200-year-old collections and cultivate somewhat of an elite status.

But Folio, which bills itself as the first new athenaeum library in more than a century, has memberships as low as $10 a month, and its chief aim is to be a place where book lovers and writers can congregate -- albeit quietly.

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The Week in Public Finance: How Budgetless Illinois Still Runs, Spending Cuts Coming and St. Louis' Not-So-Big NFL Loss

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A roundup of money (and other) news governments can use.
BY  | JANUARY 29, 2016

Avoiding the Bill Collectors

Illinois is one of two states that still has no budget this year. How does it keep running? Partly, by letting its bills stack up.

Illinois law lets the state defer paying bills until the following fiscal year -- a tool the state has used liberally for years. Because of that, the state’s unpaid bills have now climbed to a total of $6.6 billion, a backlog equal to 19 percent of what the state spends from its general fund. “If the state fails to address its structural imbalance for subsequent years,” warned Moody's Investors Service, “the payment backlog will swell to $25 billion, or 64 percent of expenditures” over the next three years.

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Having a Rainy Day Fund, But Not Knowing How to Spend It

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Some states have millions in savings that they don't know when or how to use. A new report suggests ways to better manage their money.
BY  | JANUARY 28, 2016

As state lawmakers head into the budget-writing season, some will face the unpleasant task of figuring out how to fill projected shortfalls. In most cases, that conversation will include a debate on whether to withdraw cash from the state’s rainy day fund.

Some states count on their rainy day savings during recessions to limit budget cuts, while others strive to put away enough savings to avoid cuts altogether. But many states lack clear guidance about when to take money out of rainy day accounts, for what purposes and how much.

Rainy day funds have been around for decades. Among the 46 states that have them, only half have laws that clearly express what they're seeking to achieve with them, according to a recent Pew Charitable Trusts report. Two states -- Wyoming and Kentucky -- lack any statutory or constitutional direction about their purpose or proper use.

That means legislators have to argue each time finances become a problem.

Even with Stock Market's Rise, Many Pensions Haven't Recovered from Recession

BY  | DECEMBER 17, 2014

This fall, Jim Carroll appeared before the Kentucky legislature's Public Pension Oversight Board and testified about the state of the nation’s worst-funded retirement plan. Over the last three years, said the co-founder of Kentucky Government Retirees, the Kentucky Employees Retirement System has exceeded its assumed rate of return -- yet it lost more than half a billion dollars in that time.

In fact, the plan has been in a virtual freefall for years. At the end of the 2013 fiscal year, the plan had $3.3 billion in net assets -- that's roughly half of its peak value just before the Great Recession. The gap makes it the pension system that has the farthest to go to recover the assets it lost in the stock market crash, according to a Governing analysis of 146 larger pension plans across the country.

How Detroit Put a Rain Delay on El Paso's Stadium Financing

POSTED BY  | SEPTEMBER 3, 2013

There isn’t much that links a low-lying Texas border town like El Paso to a former northern industrial hotbed like Detroit—that is, there wasn’t until very recently, when the 1,700 miles stretching between the two suddenly seemed too close to officials in the southwestern city.

3 Cities That Used Natural Disasters to Revitalize Their Futures

Hit by tornadoes and earthquakes, Tuscaloosa, Ala.; Greensburg, Kan.; and San Francisco all learned how to turn local tragedy into a new and vibrant vision. Their lessons are a playbook for local officials dealing with disasters.

Originally published in the August 2013 issue of Governing Magazine

Neighborhood economy thrives on rising Nationals attendance

Liz Farmer, Examiner Staff Writer
The Examiner (Washington, DC) July 6, 2012

A few blocks from the Nationals Park, the crowds at Justins Cafe on First Street Southeast are buzzing.

"The vibe is definitely more fun, said owner Justin Ross. Its definitely more dominated by Nats fans this year."

After years in which the economic promise of locating a major league ballpark downtown was unfulfilled, the Capitol Riverfront neighborhood near the stadium is experiencing an upswing in nightlife that matches the rising fortunes of the baseball team.

Ross has seen the biggest difference when the team is away and people come to Justins to watch the game on TV. "When youre 20 [wins] below .500, thats not really happening," Ross said.

Nearly a quarter-million more people have flocked to the ballpark so far this year, and total attendance for the season heading into Thursday nights game is up 28 percent compared with the Nationals first 36 games last year. Once largely a 9 a.m.-to-5 p.m. neighborhood, Capitol Riverfront now hops on game nights, bringing a windfall to the few businesses equipped to handle thirsty fans.

Retail activity is expanding quickly and will soon catch up with the burgeoning crowds. Michael Stevens, executive director of the Capitol Riverfront Business Improvement District, said nine restaurants are slated to open within the next 14 months, in addition to a Harris Teeter store with residences and a gym on the upper floors.

Angry council members tired of drama as Kwame charged again

Liz Farmer and Alan Blinder, Examiner Staff Writers

The Examiner (Washington, DC) June 8, 2012 

As news of another charge against former D.C. Council Chairman Kwame Brown rippled through city hall one day after he resigned in disgrace, his former colleagues said theyre shell shocked and done with the drama that has rocked the John A. Wilson Building this year. 

"I'm angry. Im furious. Those people Harry Tommy Thomas [Jr.], Kwame their behavior has disgraced the District of Columbia," the councils acting chairwoman, Mary Cheh, of Ward 3, said Thursday.

It has been an unprecedented year for the city, during which two lawmakers have resigned in the face of federal charges.

In January, Thomas became the first council member of the Home Rule era to resign when he abruptly left office before pleading guilty to stealing more than $353,000 in city funds.

Five months later, Browns resignation came hours after prosecutors charged him with bank fraud for allegedly lying about his income on a loan application.

Marion Barry lectures on ethics during chaotic Council session

June 13, 2012

Liz Farmer
Washington Examiner Staff Writer

The D.C. Council is in such disarray that Marion Barry -- convicted of drug and tax offenses -- is lecturing his colleagues on ethics.

"We are the laughingstock of the nation," Barry said Wednesday.

At-large Councilman David Catania took a shot back at the "Mayor for life."

"The worst perpetrators are sitting on this dais," Catania said, lamenting the fact that a "member of the [Finance and Revenue] Committee is a convicted criminal, hasn't paid his taxes and yet he's allowed to lecture others on ethics and vote on tax policy."

The exchange was part of a 100-minute session to select a new chairman that saw another legislator in tears, a would-be chairman declaring he is "the best" and plenty of gavel-pounding and fist-banging for effect.

D.C. Council chair resigns after fraud charge

June 6, 2012 

By Liz Farmer and Alan Blinder
Washington Examiner Staff Writers

D.C. Council Chairman Kwame Brown was charged Wednesday with bank fraud and quickly resigned, making him the second District politician this year taken down by federal prosecutors who have been probing corruption throughout city government.

Brown, whose 2008 re-election campaign has been under investigation for nearly a year, is facing a single felony count of bank fraud. The charge is not linked to any of his political campaigns.

Brown was charged in a criminal information -- a type of filing that indicates a guilty plea is imminent -- with lying on an application to extend a line of credit on his home. Brown used some of the loaned money to purchase a 38-foot powerboat named Bullet Proof, prosecutors said.

Former Councilman Harry Thomas Jr. gets 3-plus years in prison

Liz Farmer and Alan Blinder
The Washington Examiner

May 3, 2012 

Former D.C. Councilman Harry Thomas Jr.was sentenced to more than three years in prison Thursday for stealing $353,500 in public money meant for youth sports, an act that prosecutors described as a betrayal of the public trust.

Thomas, who represented Ward 5 for five years until he resigned in January as part of his guilty plea, was allowed to leave court with his family and has agreed to surrender at a federal prison to serve his 38-month term when ordered.

"This is my weakest moment in my life," Thomas, 51, told U.S. District Court Judge John Bates, adding that he has had time to reflect on his crimes after a lifetime of working with local kids through sports programs.

"I concluded I took that money because there was a sense of entitlement," he said. "What happened, clearly, was I took office and lost touch with the values I cling to now more than ever."

On sentencing day, Ward 5 residents split on Harry Thomas Jr.

May 2, 2012
Liz Farmer
Washington Examiner

As their former council member is set to be sentenced in federal court Thursday, the District's Ward 5 residents are split among those who forgive Harry Thomas Jr. and those who don't.

Bob King, the longest-serving advisory neighborhood commissioner in the city and a Ward 5 resident, said the split tends to fall along racial and age lines.

"When you talk with the seniors, they're very passionate about their love for Thomas," said King, who also worked on Thomas' 2006 election campaign. "But it's also true ... that candidates are hearing from people, 'If I vote from you, will you steal the money?' There's a lot of shame and anger."

And even as residents and officials are looking for closure Thursday with Thomas' sentencing, the investigation into the Children and Youth Investment Trust Corp. continues. Thomas used the corporation to funnel more than $350,000 in grant money into his pockets, and both the feds and the city are still looking into how that happened.

Former exec: Pressure from city leaders aided misuse of funds

April 28, 2012
Liz Farmer
Washington Examiner Staff Writer

The organization that a former D.C. councilman used to steal money from kids became inundated by pet projects of the former administration and council members, a former board member told The Washington Examiner.

The result was that private funding for the city-run Children and Youth Investment Trust Corp. nearly dried up as foundations' faith in the organization's political independence plummeted, said former board chair John Hill. The trust typically hands out between $14 million and $19 million annually.

When the trust was founded in 1999, private funders were often able to stipulate where their money went and work with local nonprofits to maximize results, Hill said.

"And all of that changed when the administration changed [to former Mayor Adrian Fenty], and there was a feeling that there should be greater control over where the money went within the government," Hill said. "That's certainly what [former] Councilmember Harry Thomas exploited and also what led to concerns by outside funders."

No swearing rule highlights D.C. council tensions

February 21, 2012
Liz Farmer
Washington Examiner Staff Writer

The D.C. Council has banned swearing from all its public meetings after a dustup last week between two members at a council retreat led to outrage from some residents.

But the swift action pushed through by Council Chairman Kwame Brown on the matter has some people saying the ban is just meaningless posturing.

At-Large Councilman David Catania, whose expletive-laced outburstlast week at Ward 8 Councilman Marion Barry prompted the change to the council code of conduct, said he's still not apologizing for swearing at another member -- although he did vote in favor of Tuesday's resolution.

D.C. auditor says more fraud possible in city grants

January 23, 2012
Liz Farmer
Washington Examiner Staff Writer

A District auditor has warned that more fraud could lie ahead if the D.C. Council does not immediately take steps to enforce better oversight by the city organization that former Councilman Harry Thomas Jr. used to embezzle more than $300,000.

In a letter to Council Chairman Kwame Brown, City Auditor Yolanda Branche said a lack of sufficient internal controls "enabled the embezzlement" of District funds.

"We strongly urge the Council to immediately take steps toward restoring the public trust and protecting the resources of the District of Columbia from further fraud mismanagement and abuse by implementing the recommendations in this memorandum," Branche said.

The memo was written in response to Brown's request for

City hall rocked by charges against one of their own

January 6, 2012
Liz Farmer
Washington Examiner Staff Writer

The District's John A. Wilson Building was the scene of frantic scrambling for information and then shock and sadness Thursday as city hall officials and staff members absorbed the news that their colleague Harry Thomas Jr. faced prison time on charges of stealing from the city.

"He's disgracing himself, the District and his family," said Ward 3 Councilwoman Mary Cheh. "It's really been a lot to take on. I don't think he's a bad person -- I've known him for four years and I consider him my friend. But nobody's above the law."

Thomas said he would plead guilty in court Friday to the theft and tax fraud that federal prosecutors said began just months after he entered office in 2007. He resigned from office "effective immediately," according to a statement issued Thursday night.

In that statement, he acknowledged that he had caused pain to his family, friends and constituents.

"I made some poor decisions and acted in ways I simply should not have," he said in the statement. "I was wrong. I want to apologize to those I have let down, including my constituents, neighbors and friends."

D.C. Councilman Harry Thomas Jr. resigns, will plead guilty

January 5, 2012 

By Liz Farmer
Washington Examiner Staff Writer

Embattled D.C. Councilman Harry Thomas Jr. resigned Thursday night, and said he would plead guilty to charges of stealing $365,000 from federal grants meant for youth baseball programs at a court hearing Friday.

Thomas, who represents Ward 5, faces up to 13 years in prison if convicted on counts of tax fraud and theft brought against him by federal prosecutors.

"I made some very serious mistakes and exhibited inadequate and flawed judgment," Thomas said in a statement released Thursday night. After admitting he committed "two federal crimes," Thomas said he would enter the guilty plea when he appears before U.S. District Judge John D. Bates on Friday.

"I take full responsibility for my actions. I am truly sorry," he said in the statement.