Massachusetts sets the bar for transparency
For openness in finances, debt management and budget process, Massachusetts is the gold standard among states. The legislature and executive branch have collaboratively embraced a five-year budgeting process and committed to sharing the results with taxpayers and the public. Because of the state’s efforts to reach out to the investing community, I predict that its transparency will lead to lower borrowing costs and more stable funding sources in the future. The state is rated AA+ by credit rating agencies for creditworthiness, but I’ll assign it the highest rating, AAA, for transparency.
Several weeks ago, the state treasurer, Steven Grossman, launched a new Twitter account (@BuyMassBonds) that keeps the public informed about new financial filings and bond offerings. It’s a model of excellence for muniland in terms of keeping municipal bond investors informed through social media. Here is a recent tweet about an upcoming bond issue, the Massachusetts Water Pollution Abatement Trust State Revolving Fund Bonds:
— Buy Mass Bonds (@BuyMassBonds) May 25, 2012
On the state’s Debt Management Department website, municipal bond investors have rapid and easy access to:
- Current Bond/Note Offerings
- Forward Bond Sale Calendar
- Ratings Reports & History
- View How Your Bonds Are Trading
- Official Statement Archive
The Municipal Securities Rulemaking Board’s EMMA site is the official document repository for the municipal bond market, but the Massachusetts site is streamlined and oriented solely toward its bond investors. The site makes finding the state’s bond information very simple. California does a good job of providing information about outstanding bonds, but the amount of information it provides doesn’t come close to what Massachusetts offers. I’m sure that California could broaden its pool of bond investors with an information flow as strong as that of Massachusetts.
Behind the well-managed Massachusetts debt program is an excellent state budgeting process. The state has adopted a new five-year budget process outlined in this presentation for credit rating agencies. Here is a good summary comment about the process, which was included in the rater presentation (page 21):
“This document reflects good government in action,” said Alan Clayton Matthews, an economist at Northeastern University. “It lays out a fiscally responsible plan for providing an achievable stable level of public goods and services under current tax law and given the reality of the current economic situation and economic risks going forward. It also informs policy makers of what the tradeoffs are between the future fiscal situation and alternative scenarios of growth in health care costs.”
The heart of governance is “providing an achievable stable level of public goods and services” with available resources. This process requires prudence, transparency and collaboration by many parties. Kudos to Massachusetts for its outstanding efforts.