Shockwaves

February 1, 2010

by Al Doyle

The shockwaves of America's severe financial problems are reverberating far and wide.

Allstate Ins. will terminate as many as 20 percent of its agents. If one of the giants in the insurance industry is doing this, expect similar movesfrom smaller competitors in the future.

Stuck with a deadly combination of falling sales and property tax revenues, underfunded pension plans and rising employee retirement obligations, hundreds of cities are in the midst, or on the verge of, serious financial problems.

According to theRockford Register Star, a recent audit found that 68 percent of the city's vehicles are in poor condition or have excessive mileage and age.One estimate placed the cost of replacing the substandard equipment at $20.3 million.

"We've been hearing all along that the condition of the fleet is poor," said Rockford alderman Carl Wasco. "We're not going to be able to keep this going for long."

Even though the recommended lifespan for a fire engine is 10 years, the Rockford Fire Department purchased a pair of 20-year old units last year.

"Equipment is a very important part of what we do," said fire chief Derek Bergsten. "We're in a situationwhere our front line is old, and our reserve is older."

Colorado Springs residents will have to do without more than a third of the city's 24,000 street lights. They were shut off to save an estimated $1.2 million annually in electricity and maintenance. Firefighters, a police vice team, burglary investigators and patrol officers are facing layoffs.

Need a used helicopter? Colorado's second-largest city is selling its choppers on the internet. Parks will no longer be watered, and Colorado Springs city pools, recreation centers and museums will close March 31 unless private funding comes in.

Even the high, mighty and wealthy are scrimping these days. The New York Yankees have never let a few million (or tens of millions of) dollars stand in the way of signing players, but it's a different story in 2010.

After testing the frugal free agentmarket, last year's starting left fielder Johnny Damon was willing to re-sign for something in the vicinity of $7 million, or just a little over half the $13 million he earned with the Yankees in 2009. Despite some interest in retaining the popular Damon, Yankees management made an unprecedented statement - "We don't have the money in the budget" - as their reason for choosing another option.

Former San Francisco Giants outfielder Randy Winn will earn $2 million as Damon's replacement. That isn't poverty wages by any means, but when the ultimate big spenders ofprofessional sportsturn into tightwads, it says volumes about the state of the economy.