Public-Private Partnerships Could Be a Lifeline for Cities http://t.co/qNiA1490XY
Although there are people, like Bond Dealers of America CEO Mike Nicholas, who have predicted that federal tax reform will not happen until 2017, the Senate Finance Committee has kick-started the process. Law firm KL Gates sent out a primer about the Senate Finance Committee plans:
About one third of the U.S. House of Representatives signed a letter to keep the current tax exemption for municipal bonds in place. Investment News got the story:
There is a lot of debate in muniland about how state and local governments should calculate pension liabilities. But I have not heard much discussion about the asset side of the pension story. It is a generally-accepted assumption that investment earnings are about 60 percent of the annual increase in pension funds. But what about the other 40 percent that represents the contributions made by governments and employees? We’re often told that state and local governments are under-funding their pensions. How much are they really contributing?
Pity Kevyn Orr, Detroit’s emergency manager who was hurried in by the city to clean up a long festering mess. The Greek hero Hercules re-routed two rivers to clean out the filth of 1,000 cattle, whose stable had not been cleaned in 30 years. Orr is attempting a similar feat by slashing and diverting cash flows to stabilize the city’s finances after 30 years of fiscal mismanagement.
Chicago has nearly identical fiscal challenges to its home state of Illinois: pension underfunding, massive school deficits and recurring deficits. But unlike the state, many of the decisions that need to be made in Chicago are out of the control of leaders, especially related to pensions. These decisions are made in the state legislature. Chicago Mayor Rahm Emanuel seems to have had little success lobbying for the city’s interest. Chicago political writer Greg Hinz described it in Crain’s Chicago Business last year:
The Federal Reserve Bank of New York has begun publishing data about the bond holdings of its primary dealers. Primary dealers are the largest and most active trading groups in bond markets. This new data will add a lot to our understanding of market flows.
Muniland’s oversight organization, the Municipal Securities Rulemaking Board, has proposed some new rules to the SEC that may make it easier for retail investors to buy bonds that are newly brought to market.