Property taxes are all over the map

July 14, 2011

From Credit Sesame (click through the map above for an even better interactive version):

Other than their mortgage, most home owners’ largest home-related expense is their property tax bill. And it’s no secret that when it comes to property taxes, some states are much harsher than others. Consider this: In 2009, New Jersey home owners paid an average of 27 times more in property taxes than property owners in Louisiana. Ouch.

Hat tip to The Big Picture.

Potential U.S. rating downgrade rattles muniland

Bloomberg reports:

At least 7,000 top-rated municipal credits would have their ratings cut if the U.S. government loses its Aaa grade, Moody’s Investors Service said.

An “automatic” downgrade affecting $130 billion in municipal debt directly linked to the U.S. would occur if the federal level is reduced, Moody’s said yesterday in a report. Additionally, top-rated securities with no direct links to the national government will be reviewed for similar action.

The JP Morgan taint?

The Bond Buyer is reporting that regional bond dealer First Southwest is implicated in the JP Morgan muni derivatives scandal. This is not such a big deal, except that the vice-chairman of First Southwest is the chairman of the Municipal Securities Rulemaking Board. From the Bond Buyer:

First Southwest Co., as bidding agent for a repurchase agreement related to a $233 million bond deal in Texas for which it was financial adviser, improperly allowed JPMorgan Securities to lower its bid for the repo, reducing the issuer’s investment rate, according to documents and transaction participants.

First Southwest vice chairman Michael Bartolotta is currently chairman of the Municipal Securities Rulemaking Board. The MSRB was given regulatory authority over bidding agents for bond-related reinvestment and derivatives products by the Dodd-Frank Act last year. The legislation, along with the MSRB rules that implement it, treat bidding agents as muni advisers who are subject to a fiduciary duty and must put their issuer clients’ interests ahead of their own.

Hill Feinberg, First Southwest’s chairman and chief executive officer, said Tuesday he was surprised to see a transaction involving the firm in the SEC complaint against JPMorgan.

Stock market gains can’t fix giant pension hole

The Sacramento Bee reports that the California public pension fund CalSTRS made stock market profits of 20% in fiscal 2010-11 but still faces a large hole in funding their future liabilities.

The pension fund had unfunded liabilities – the gap between assets and future obligations to retirees – of $56 billion as of June 2010.

As a result, CalSTRS’ investment performance becomes a politically sensitive issue, particularly as Republican lawmakers and others press for an overhaul of public employee retirement. While CalPERS can impose higher taxpayer contributions on its own, CalSTRS must petition the Legislature for a rate increase and has been talking for the past year about doing so.

The state’s contribution to CalSTRS in the current fiscal year is around $688 million.

In the year ended June 2009, which included the market crash, CalSTRS’ portfolio shrank by 25 percent. The following year, it earned more than 12 percent.

Bridge bridge loan for California?

From blogger ZeroHedge:

First New Jersey, now California. The cash-strapped state, which begged for, and got, a “bridge” loan from JP Morgan as recently as October 2010 (the same bank that recently bailed out Chris Christie), is asking for another bridge to the old bridge loan, ergo a “bridge bridge” loan. The excuse: the potential upcoming government shutdown, which would lock California out of the muni market. Surely the fact that it already has little to no cash left was not a part of the equation.

BusinessWeek reports: “California is considering seeking a bridge loan from Wall Street ahead of an Aug. 2 deadline for raising the federal debt ceiling, in case talks fail and send the bond market into turmoil, Treasurer Bill Lockyer said. Proceeds from the loan would be used to help pay the state’s bills until Lockyer can sell an estimated $5 billion of so-called revenue-anticipation notes, or RANs, scheduled for late August.

Good links

Bloomberg: Reinhart and Rogoff: The Economy Can’t Grow With Debt

The Tax Foundation: Monday Map: EIC Recipients by State

Nuveen Asset Management: Municipal Credit Stress:Macro Prognostications and Micro Analysis

Reuters: US board changes swaps accounting for local govts

MuniNetGuide: Top Picks – July 2011

Reuters video: Illinois pension fund director eyes new investments

Bloomberg: New York Boosts Tax-Backed Sale on Flight to Safety: Muni Credit

Fiscal Times: 10 Insanely Overpaid Public Employees

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