Civic Circus with Ankur Patel breaks down local politics, with a weekly report on city, county, and state bureaucracies.

The media used terms like “financial apocalypse” to sensationalize the national debate over the debt-ceiling, but one point that has been crystallized is the fact that we, the United States of America, spend more money than we make. However, State, County, and City governments are not allowed to do the same. Instead, when local governments need money, they issue paper in the form of bonds, tax revenue anticipation notes (TRANs), and other financial instruments. Essentially, financial instruments are just pieces of paper with words on them that allow capital to control labor.

With such pieces of paper in mind, the city of Los Angeles approved $1,204,665,000 in Tax Revenue Anticipation Notes or TRANs during the City Council’s June 17th meeting, which was then amended during the Councils July 27th meeting. The entire discussion, debate, and vote took less than 15 seconds total.

The City issues TRANs, which are bought by investors through a holding company, in order to provide the city with cash up front in return for future interest. This is because revenue collections spike twice a year when property taxes are collected, but City spending is relatively consistent throughout the year. TRANs allow the city to keep an even cash flow.

It may seem like the symptoms of a cash strapped bureaucracy, but the city treasurer’s investment and cash management report shows how the city has, as of January 2011, $6,445,885,108 invested in companies like Coca-cola, JP Morgan Chase, Citi, McDonald’s, amongst others. Those funds are completely separate from City Employee pensions, or any other benefits system. The monthly report on that $6,445,885,108 was approved by the City Council – again, in less than 15 seconds – on July 22nd…

The real joke is the fact that we are investing money in companies like JP Morgan and Citi for returns that are less than what we are paying those same companies to borrow from. Even though the funds are kept separate, we are essentially paying to borrow our own money.

I know that if you talked to an investment banker, he or she would make it sound a lot more complicated, but if you were to go to a Los Angeles City Council meeting, held conveniently at 10:00 am at City Hall in room 310 every Tuesday, Wednesday, and Friday, and ask “how much money is in the general fund?” … you wouldn’t get an answer. You could take your entire 2 minutes of public comment asking “how much money is in the general fund?” and they wouldn’t answer. Instead you would have to fill out a California public records act request with the City Controller’s office.

Which is exactly what I did. It takes a few weeks to get a response, which sometimes feels like an empty envelope, but they do respond. I have continued to file more and more complicated California Public Records Act Requests because the status-quo isn’t going to ask the hard questions. We will have to.

The circus is in town, and it looks a lot like our financial system.