Muni sweeps: Connecticut may issue layoff notices

May 11, 2011

Connecticut issues layoff notices

The governors are getting it done. And it’s painful.

From the Wall Street Journal:

After months of closed-door talks with state employee unions, Connecticut Gov. Dannel Malloy announced that no deal could be reached to garner $1 billion annual concessions needed to close a $3.5 billion budget gap.

“The state employee representatives have thus far not offered enough,” Malloy said in a statement Tuesday morning.

To balance the two-year $40.1 billion budget and comply with contractual layoff notice requirements, Malloy said layoff notices would go out Tuesday to “the first 4,742 state employees,” resulting in an estimated savings of $455 million. The remaining $545 million in savings would be achieved by cuts to government programs, which could result in additional layoffs.

Ohio could sell prisons, maybe turnpike

Ohio is moving towards selling off public assets to reap a one time benefit to plug its budget deficit.

I’m not convinced that asset sales, at firesale prices, are really beneficial for the public in the long run. I’d be very interested in any research that addresses the issue.

Ohio is also considering ending their 7% estate tax.

From Bloomberg:

Ohio Governor John Kasich could sell or lease six prisons and the state turnpike under the $55.6 billion, two-year budget that passed the Republican-led House of Representatives 59-40 [on May 5th]…

…Kasich’s March 15 spending proposal called for raising an estimated $200 million by selling five prisons to companies that would run them. The House plan would add a juvenile correctional facility for sale or lease.

The House budget also calls for transferring wholesale liquor distribution, now run by the state, to JobsOhio, a nonprofit group created to oversee economic development.

The proceeds of any asset sales or leases could only be spent with legislative approval, according to budget documents. Kasich has estimated that the state could get $3 billion for a lease of the 241-mile (612-kilometer) Ohio Turnpike…

…The House plan also calls for ending the estate tax starting in 2013. The levy of as much as 7 percent generated $333.8 million in 2009, according to the Taxation Department.”

California’s Top 20 Municipal Employees Collect $9.8 Million

It’s not retired teachers that are sucking up the big bucks — it’s policemen.

From Bloomberg:

The three highest-paid city officials from outside of Bell all were high-ranking police who collected six-figure payouts when they retired in 2009.

Topping the list was Roy Campos, who retired as police chief of Downey, a city of 108,000 in Los Angeles County. Campos’ $593,999 payout was the result of about 30 years of unused holiday, sick and vacation time, the Orange County Register reported. The city manager’s office didn’t have an immediate comment when called by Bloomberg News.

In Monterey Park, another Los Angeles County suburb, former Police Chief Jones Moy took home $531,107 in 2009, according to data from the controller’s office. The San Gabriel Valley Tribune reported that $372,559 of Moy’s payout was for unused vacation, holiday and sick leave at the time of his retirement in September 2009.

California budget dance

From Thomson Reuters Municipal Market Monitor daily commentary:

California Gov. Jerry Brown will release a revised budget next week that will outline plans to close a $15 billion hole after he hit firm resistance to his original budget-balancing plan.

Without a balanced budget California will not be able to issue its annual revenue anticipation notes this summer.

In March, S&P warned of a negative revision to its “A-” rating if a budget battle prevents this sale.

What are “municipal advisers”?

Did you ever wonder how smallish cities and public pension funds got involved in complex municipal debt structures and derivatives? Did they figure this out on their own or did Wall Street sell them these products?

Actually there is a class of municipal professionals you may never of heard of. This is the “municipal advisers” class and now Dodd-Frank begins to regulate them.

From AdvisorOne:

A municipal adviser is generally defined as a person who provides financial advice concerning the issuance of municipal securities and investment of bond proceeds to states, local governments and other borrowers.

Section 975 of the Dodd-Frank Act defines “municipal adviser” to include the following:

  • financial advisers
  • guaranteed investment contract brokers
  • third-party marketers
  • placement agents
  • solicitors
  • finders
  • certain swap advisers

This list casts a pretty big net. These players have been required to register since October 1, 2010.

Here are the “Municipal Advisor Temporary Registration Forms Received” by the SEC.

Here is an example for Davidson Fixed Income Management, Inc.

Note to SEC: Can you please move this to a Google spreadsheet or other searchable/sortable format?

Mini sweeps

Reuters: U.S. munis: no disaster, but still vulnerable

Bloomberg: Texas Funds Formula One Races While Weighing Teacher Dismissals

FT Alphaville: Whistleblowers in muniland

Bespoke Investment Group: Muni Bond ETF Breaks Above 200-DMA

Investment News: New muni bond tool could shock clients

Bond Buyer: Vallejo on Track to Exit Chap. 9 by Late July as It Nears Union Deals

Image: Connecticut State Capitol

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