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To Limit Debt or Make It Limitless? 2 States’ Voters Will Decide.

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In an anti-debt climate, one state aims to rein it in while another tries to uncap it.
BY  | OCTOBER 27, 2016

In the post-recession era, "debt" is a four-letter word. State debt levels as a whole have been stagnant in recent years and, in 2014, actually recorded the first decline in the 28 years Moody's Investors Service has been tracking them.

It’s in this climate that voters in two states are considering nearly opposite proposals on debt.

California, which has one of the highest taxpayer debt burdens in the country, will decide whether to limit lawmakers’ ability to issue debt for major projects. Prop. 53 would require voter approval to issue more than $2 billion in revenue bonds.

In Arkansas, a ballot initiative proposes making it easier for the state to incur more debt. Issue 3 would eliminate the state's current 5 percent cap on debt related to economic development projects.

Each state's history with bond debt has a lot to do with these conflicting proposals

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The Week in Public Finance: School Funding's Lost Decade, Teacher Pension Pressures and More

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BY  | OCTOBER 21, 2016

A Lost Decade for Public School Kids

New data this week shows that nearly half of all states are providing less in per-pupil funding today than they were before the recession in 2008. Taking inflation into account, eight of the 23 states have cut funding per student by about 10 percent or more, according to a report by the Center on Budget and Policy Priorities (CBPP).

What's more, five of those eight -- Arizona, Kansas, North Carolina, Oklahoma, and Wisconsin -- have cut education funding while also cutting income taxes, resulting in tens or hundreds of millions of dollars in lost revenue each year.

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In Need of Education Funding, States Look to Customers and Corporations

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Tax-raising ballot measures this fall showcase the political power of corporations.
BY  | OCTOBER 21, 2016

Public education was one of the biggest casualties of the Great Recession. Nearly a decade since it started, nearly half of states are still providing less general funding for schools than they were the year the economy tanked.

Two states, however, are asking voters to boost education funding this fall -- but they differ on who should pay for it: customers or corporations.

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The Week in Public Finance: New Jersey's Tax Plan, Online Lending Myths and Cities' Recovery

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BY  | OCTOBER 14, 2016

New Jersey: Between a Rock and a Hard Place

Moody’s Investors Service has panned New Jersey’s plan to beef up its transportation funding, mainly because it does so at the expense of other state programs. The legislature this month approved a 23-cent gas tax increase, which will raise approximately $1.2 billion.

But to offset the tax increase, the legislature also approved tax reductions.

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City Revenues Expected to Finally Recover From Recession

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But cities are still dealing with slow revenue growth and rising costs, according to a new report.

BY  | OCTOBER 14, 2016

 

City revenues have struggled to get back to pre-recession levels. But things may finally be looking up.

On Thursday, officials announced that they expect city incomes to fully recover by next year -- a decade after the start of the Great Recession.

It’s by far the longest revenue recovery period in more than a generation as the bounce back period after the previous two recessions was done in half the amount of time. Currently, officials estimate that city revenues (accounting for inflation) have reached 96 percent of what they were in 2006, the year before the recession started.

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The Week in Public Finance: New Jersey's Tax Plan, Online Lending Myths and Cities' Recovery

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BY  | OCTOBER 14, 2016

New Jersey: Between a Rock and a Hard Place

Moody’s Investors Service has panned New Jersey’s plan to beef up its transportation funding, mainly because it does so at the expense of other state programs. The legislature this month approved a 23-cent gas tax increase, which will raise approximately $1.2 billion.

Privatization May Be Worsening Inequality

A new study suggests outsourcing government services can disproportionately impact low-income users' finances, health and safety.

BY  | OCTOBER 13, 2016

As state and local governments grapple with fewer resources for things like infrastructure or social services, many of them have opted to contract those responsibilities out to the private sector. But a new report warns that doing so may be widening the gap between the haves and the have-nots.

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The Week in Public Finance: Wells Fargo's Punishment, a Surprising Study and Kansas' Forecasting Blues

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BY  | OCTOBER 7, 2016

Governments Punish Wells Fargo

Some governments are temporarily cutting ties with Wells Fargo thanks to a scandal involving thousands of unauthorized accounts.

This week, Illinois and the city of Chicago announced they're joining California and suspending their relationship with the bank for at least one year. Meanwhile, Massachusetts, Oregon and the city of New York are reviewing their business ties with the firm.

In California, the Battle Over Bilingual Education Is Back

The state has more English-language learners than any other and also some of the country's most restrictions on bilingual education. November could change that.
BY  | OCTOBER 6, 2016

As research shows the benefits of a bilingual education, dual-language immersion programs are becoming more popular and not just for English-language learners. But in California -- which has the nation's highest rate of students who speak a non-English language at home -- getting a bilingual education is harder than in most states.

That could change in November, though, as voters have a chance to repeal a 1998 law that passed amid anti-immigrant fervor and severely limited access to bilingual education in the state. If approved, Prop. 58 would allow school districts to offer regular dual-language programs.

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Houston’s Plan to Cut Pension Costs in Half Overnight

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Mayor Sylvester Turner is garnering praise for his proposal's comprehensiveness and balance.
BY  | SEPTEMBER 29, 2016

Earlier this month, Houston Mayor Sylvester Turner released his outline for fixing the city's underfunded pension system, an issue that earned the city a credit rating downgrade in March.

Observers say the plan is the best effort yet at solving a problem that has eluded past city officials. If approved, the proposal would immediately cut Houston's unfunded liability by $3.5 billion -- or nearly in half -- while putting Houston on a path to pay off the rest of its pension debt over the next generation.

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The Week in Public Finance: Troublesome Sports Arenas, Buying Muni Bonds and California's Tenuous Recovery

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BY  | SEPTEMBER 23, 2016

Nebraska Town Hit With 'Superdowngrade'

The tiny town of Ralston, Neb., was surprised by a seven-notch "superdowngrade" this week when its arena bonds were sent hurdling into junk rating territory. S&P Global Ratings said it moved the rating from A+ to BB because of the financial strain the building is placing on the city of roughly 6,000 people.

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The Week in Public Finance: Pensionomics, Hidden Bank Loans and Private Equity Fees

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BY  | SEPTEMBER 16, 2016

Do Pensions Help the Economy?

A new study on how pensioners spend their money will likely give a boost to those who want to keep traditional, defined benefit pension plans in the public sector.

Published this week by the nonprofit National Institute on Retirement Security (NIRS), the analysis on pension retiree spending in 2014 estimates it resulted in $1.2 trillion in total economic output. The total is based on about a half-trillion in benefits paid to public and private pensioners in 2014. State and local pension benefits account for about half ($253 billion) of those benefits.

Pension Crisis: Could Buyouts Be a Solution?

State and local governments are trying unconventional ways to fund their pension liabilities, such as offering lump-sum cash payments to employees.
BY  | SEPTEMBER 15, 2016

When it comes to chipping away at pension liabilities, there aren’t a lot of options. In some places, lawmakers can freeze cost-of-living increases to pension payments or move back retirement dates for existing employees. But that’s not legal everywhere. So the majority of pension reforms in the past decade have targeted new employees and focused on controlling the growth of future liabilities.

But some places are getting more creative.

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The Week in Public Finance: Unsustainable Health-Care Costs, an Oil State Not in Crisis and More

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BY  | SEPTEMBER 9, 2016

Retiree Health-Care Liabilities Are Dramatically Increasing

State governments’ cost of keeping all their promises to retirees is “unsustainable.” That’s the conclusion of a report this week by S&P Global Ratings that looked at the growth in total retiree health-care liabilities across state governments.

In just two years, so-called "other post-employment benefit" (OPEB) liabilities have increased 12 percent, to $554 billion for states alone. This reverses a trend of stable to declining liabilities found in S&P’s past two annual surveys.

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Is Ending Atlantic City's Casino Monopoly Worth the Gamble?

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The closure of casinos in Atlantic City has left the municipality in financial crisis. Now New Jersey wants to build more in other places.
BY  | SEPTEMBER 8, 2016

A proposal to end Atlantic City’s casino monopoly in New Jersey would spell the end for the struggling seaside resort town. At least that's what opponents of the idea say.

Backers of the ballot measure, however, say it's the city's best hope for revitalizing its downtown and diversifying its economy beyond gaming.

This November, New Jersey voters will decide whether to allow two new casinos to be built in the state. About one-third of any new casino revenue would go to Atlantic City for 15 years for economic revitalization.

The vote comes as Atlantic City, once the East Coast’s gaming capital, has struggled in the face of increased competition in neighboring states. In the past 15 years, more than a dozen casinos have opened in Maryland, New York and Pennsylvania

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The Week in Public Finance: Mega-Subsidies Math, a Comeback for Bond Insurance and More

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BY  | SEPTEMBER 2, 2016

Megadeals Don’t Add Up

When it comes to economic development, spending more often results in a smaller return.

Looking at more than 170 economic development "megadeals" made in recent decades, a new report finds that states and localities spend more than $658,000 per job on average. By contrast, “most workforce development programs cost only a few thousand dollars per job, and studies find they pay off well,” said Thursday's report by Good Jobs First, which tracks government subsidies.

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Would Eliminating Taxes on Services Help or Hurt the Poor?

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As states increasingly look to tax services, Missouri voters can be the first to keep that from ever happening. How that would impact consumers is unclear.
BY  | AUGUST 31, 2016

States have struggled to keep up the same revenue growth as they experienced before the recession. One big reason is that their earnings from sales taxes are declining. That's because these days, consumers are spending far more on services -- most of which aren’t taxed -- than goods, which are.

To remedy the situation, lawmakers have tried and had varying degrees of success expanding the sales tax to services. Massachusetts passed a tax on the cloud and quickly repealed it after the tech industry complained. Pennsylvania enacted the so-called "Netflix tax" on streaming video services. Washington, D.C., added a long list of services to be taxed: yoga, tanning and bowling, to name a few.

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The Week in Public Finance: Pensions' Funding Gap, An Assault on Fees and More

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BY  | AUGUST 26, 2016

Most Pensions Falling Behind

A new analysis of state public pension plans this week shows that only one in three states are actually on a path to reduce their unfunded liabilities.

The report, by the Pew Charitable Trusts, used a new metric called net amortization, which essentially measures whether a pension plan’s accounting assumptions and payment schedule are holding up over time. Only 15 states are achieving positive amortization, according to Pew. In other words, they're following contribution policies that are sufficient to pay down pension debt. The remaining 35 states are facing negative amortization, or are following contribution policies that allow the funding gap to continue to grow.

Like the Industry, Payday Loan Ballot Measures Mislead Voters

In South Dakota, two seemingly identical initiatives in November would have vastly different outcomes for consumers' interest rates.
BY  | AUGUST 24, 2016

Annual interest rates on payday loans in South Dakota are among the highest in the nation -- a whopping 652 percent on average. Yet the business is booming there with nearly 100 stores across the sparsely populated state.

Critics of the industry say lenders prey upon low-income borrowers who are unable to access financing from mainstream banks. These borrowers, they claim, easily get trapped into a cycle of debt. Payday lenders, however, argue that they fill a critical hole in the economy by allowing people with poor credit to get emergency loans.

South Dakota voters have the chance to regulate the industry in November. But two seemingly identical proposals that would have vastly different outcomes are complicating the effort to rein in high interest rate

Would Eliminating Taxes on Services Help or Hurt the Poor?

As states increasingly look to tax services, Missouri voters can be the first to keep that from ever happening. How that would impact consumers is unclear.
BY  | AUGUST 31, 2016

States have struggled to keep up the same revenue growth as they experienced before the recession. One big reason is that their earnings from sales taxes are declining. That's because these days, consumers are spending far more on services -- most of which aren’t taxed -- than goods, which are.

To remedy the situation, lawmakers have tried and had varying degrees of success expanding the sales tax to services. Massachusetts passed a tax on the cloud and quickly repealed it after the tech industry complained. Pennsylvania enacted the so-called "Netflix tax" on streaming video services. Washington, D.C., added a long list of services to be taxed: yoga, tanning and bowling, to name a few.

But in Missouri this fall, voters could put an end to all such efforts in their state. A first-of-its-kind proposed constitutional amendment would ban Missouri lawmakers from ever expanding the sales tax to services