MuniLand

America has lined up in support of Karen Huff Klein, a 68-year-old grandmother in Greece, New York, who was tormented by four teenagers while working as a bus monitor. Her ordeal was brought to the public’s attention with three postings on YouTube by CapitalTrigga that stated:

Note: I had nothing to do with this, I saw the video on Facebook and uploaded it here to show the world how messed up these kids are.

The public response has been deafening. YouTube is filling up with responses to the original bullying videos, and these reactions are nearly universal in condemnation of the teens. Meanwhile, an independent site that was originally established to raise $5,000 for a vacation for the victim has already raised over $533,000. More than 24,000 people want to make the situation right for Klein and have donated to the fund. America is pouring out its heart to this woman. Although public employees are increasingly being vilified in this country, Americans are rallying to the support of one who has been so egregiously wronged.

But there has also been a dark, and potentially violent, response to the bullying of Klein. Postings on the Internet revealed the names, ages and addresses of the bullies, opening them to harassment. Greece Police Captain Steve Chatterton said in a press conference yesterday that the children and their families had been subjected to death threats and prank 911 calls. He said that police resources were being stretched to patrol their four residences. In the press conference, authorities from the town supervisor’s office, police department and school district implored the public to let the rule of law unfold in the case and not to take vigilante action. The Greece School District issued a statement:

We have received thousands of phone calls and emails from people across the country wanting to convey their thoughts. People are outraged by what has happened and they feel the students should be punished. While we agree that discipline is warranted, we cannot condone the kind of vigilante justice some people are calling for. This is just another form of bullying and cannot be tolerated.

Federal Reserve reported public #pension assets ↑ to $3.1 trillion as of 3/31/12 — highest point since 08 market drop twitter.com/PensionDialog/…

— Pension Dialog (@PensionDialog) June 21, 2012

Good Links

Reuters: Public pensions to give “clearer picture” of finances

Reuters: Moody’s downgrades $64 billion of U.S. muni debt

Reuters: U.S. high-yield muni buyers lose safeguards

AP: Auditor: Total Illinois deficit nears $44 billion

Illinois Policy Institute: $203 billion and counting: Total debt for state and local retirement benefits in Illinois

The Republic: Glendale, Arizona considers pledging city hall and police station as collateral for sports-related debt

Interest-rate risk is the major challenge for fixed-income investors, especially in this period of exceptionally low interest rates. To help walk readers through the issue, I welcome this post from Douglas J. Peebles and Wayne Godlin, AllianceBernstein’s chief investment officer and head of Fixed Income and senior portfolio manager of Fixed Income, respectively.

Don’t Be Caught Long: Strategies to Curb Interest-Rate Risk in the Municipal Market

Today, a municipal portfolio full of bonds with maturities in the 20-to-30-year range is exposed to the high risk of rising interest rates. Now may be the right time to shorten your duration and lower your credit quality.

City Controller Alan Butkovitz released an audit of Philadelphia’s Video Surveillance program that found the city spent $13.9 million for surveillance cameras but that only 102 of the 216 installed cameras were functioning properly. This has resulted in a cost to the city of $136,000 per operating camera. ”The cost is exceedingly alarming, and outright excessive – especially when $13.9 million is equivalent to the cost of putting 200 new police recruits on our streets,” said Butkovitz.

Good Links

USA Today: State, local spending remains at a restrained level

WSJ: Food-stamp fiasco

Rolling Stone: The scam Wall Street learned from the mafia

Bond Buyer: Variable and auction-rate securities dwindle

Bloomberg: Impoverished city learns about the risks of subsidizing soccer

WPRI.com: Long: Woonsocket “is in a death spiral” that’s not ALEC’s fault

Reuters: Grim prospects for Stockton, California as bankruptcy looms

Bloomberg: Stockton slide to bankruptcy measured in more funerals

@Twitter Talk

Fed data: household debt still approx 115% of disposable income (2011 data); deleveraging to continue for years; consumers not consuming

The latest item atop Congress’s list of stuff to haggle over is the transportation bill, legislation the Washington Post calls the “best bet for passage of a major jobs bill this year.” The threat of the expiration of authority to spend money from the Highway Trust Fund at the end of the month is motivating House and Senate leaders to reach a compromise in the coming days. Although there are certainly investments to be made in our transportation infrastructure that would contribute to America’s economic competitiveness, it’s a shame that our energy infrastructure has received such scant attention from lawmakers.

The national electrical grid is as important for economic growth, if not more so, than the national highway system or the privately owned router system that supports the Internet. As part of the American Recovery and Reinvestment Act, the Department of Energy funded several demonstration programs for increasing electrical system integration and reducing peak loads on the electrical grid. These efforts are commonly known as the “smart grid,” and this is where Congress needs to turn its attention.

Fort Collins, Colorado was chosen for a public-private smart grid project supported with DOE funding. Called FortZED, the project integrates five public and private institutions into a web that shares excess electrical generation during peak load periods. Some facilities, like the University of Colorado campus, have enormous backup diesel generators that can be powered up to add electricity to the system during times of peak demand. A local brewery and city facility have large solar-cell arrays that can also feed electricity back into the system.

WPRI reports on Providence retirees voting on pension reform. The fiscally challenged city, like many across America, is trying to reduce expenses, including pensions and retiree benefits. Providence has been making good progress.

Good Links

Public CIO: Federal crowdsourcing may solve problems fast

MSRB: Report on municipal variable-rate securities

NYT: New Jersey’s halfway-house prison complexes

Bond Buyer: Scranton’s charged atmosphere stymies attempts to stay solvent

Bloomberg: Public-sector workers digging in to save pensions under assault

@Twitter Talk

$2.4 trillion or 16.4% of US GDP “@USATODAY: State and local spending is at lowest level in three decades usat.ly/MwmaiU #muniland

In his New York Times column yesterday, Joe Nocera laid the blame for the fiscal catastrophe in Woonsocket, Rhode Island on Jon Brien, a state legislator who blocked a bill that would have plugged a massive hole in the town’s budget by raising property taxes on its residents by 13.8 percent. Nocera argued that Brien took these actions to shrink the local government because he’s a conservative ideologue, further highlighted by the fact that Brien is also on the national board of ALEC, an advocacy group that pushes for smaller government.

Maybe it’s true that Brien was primarily motivated by ideology, but if Nocera had taken even a cursory glance at the financial statement for Woonsocket, he would see Brien’s position has some merit. Spending on retiree benefits and municipal debt are drowning Woonsocket. The city is in a death spiral.

Let’s start with what Nocera got right: Municipal pensions, the traditional whipping boys for conservative critics of out-of-control government spending, are not Woonsocket’s big problem. The town’s pensions are actually 60 percent-to-90 percent funded, pretty good by Rhode Island standards (page 77). Maintenance of the pension funds required a contribution of only 2.2 percent of the 2011 budget.

Two weeks ago I wrote about what seemed to be a smear campaign against Steven Dow, a forceful commissioner in the Oklahoma Department of Human Services who agitated for investigations into a series of deaths of children who were wards of the state and under DHS supervision. Dow was issued a public reprimand by the state’s Ethics Commission for alleged conflicts of interests related to his position as the unpaid director of a social service agency while he was simultaneously serving as a commissioner at DHS. His agency’s contracts with the DHS were tiny, and when they were brought up at the department, he recused himself from those discussions. Last Friday, in the state’s first-ever reversal, the Ethics Commission withdrew its public reprimand of Dow, citing newly discovered evidence that the alleged ethics violation was “inadvertent.”

As I wrote previously, the initial Ethics Commission action looked bogus because it was hard to see Dow’s motive:

The basis of the reprimand from the Oklahoma Ethics Commission was that there was a conflict of interest with Dow serving on DHS because he is also the unpaid director of Community Action Program (see page 8), a Tulsa non-profit serving the low-income community.

Last June I wrote about a bizarre, unrated municipal bond deal that was issued to finance some new parking garages at Yankee Stadium. Because very few people were using the parking facilities, it looked like the $237 million of tax-exempt bonds would soon default. Now the law firm of the former mayor of New York, Rudy Giuliani, has been hired to strike a deal between Bronx Parking Development Co, the parking garages’ operating entity consisting of a husband-and-wife team based in upstate New York, and the bondholders. From the Daily News:

Former Mayor Rudy Giuliani’s law firm has been hired by a group of private bondholders to restructure $237 million in tax-exempt financing for the nearly bankrupt owner of the Yankee Stadium parking system.

The surprise choice of Giuliani’s firm, Bracewell & Giuliani, is part of an agreement reached last week between Bronx Parking Development Co, owner of the 9,000-space garage and lot system, and its creditors.

Without comment: The Great State Fight

Good Links

Reuters: Swing states in muniland

Pensions and Investments: Pew Center: State pension funding gap widens

Pew Charitable Trust: States are $1.38 trillion short in funding retirement systems

Bloomberg: Pension reforms have their day in court

Reuters: Mayors back parents seizing control of schools

Bloomberg: Municipal regulators crack down on disclosure enforcement

Salon: Tactical urbanism, the “low-cost, low-commitment, incremental approach to city building”

@Twitter Talk

U.S. public retiree benefits gap grows to $1.38 trillion reut.rs/KYI5PB via @reuters