States are riding a revenue roller coaster

March 7, 2013

This chart from Moody’s provides a clear picture of the swings in revenue that states have experienced over the last 12 years. Even with big changes in revenues, states must end every year with a balanced budget. It’s truly a feat of magic given the spending demands of states with education, Medicaid and pension payments leading the priority list.

The myths around the municipal bond tax exemption

March 6, 2013

The debate surrounding the sacred cow of municipal bond tax exemption is reaching new heights. In a recent report from the National League of Cities, estimates by SIFMA (the dealer trade group) show that municipal governments would have paid an additional $173 billion in interest over 10 years with a 28 percent cap on municipal bond tax exemption. And if Congress had fully repealed the municipal bond tax exemption, municipal issuers would have paid an additional $495 billion in interest costs over the last 10 years. These amounts would be on top of the $1.09 trillion in interest paid on municipal bonds in the last 10 years under the current law.

America should focus on rebuilding manufacturing

March 4, 2013

President Obama shut down his infamous “jobs council” at the end of January after very desultory efforts and no substantive outcomes. Reuters reports on what comes next:

The sequester disconnect

March 4, 2013

Last week media was in a frenzy about the effects that federal spending cuts would have on states and cities under sequestration. Last Monday morning, the White House put out information including the graphic above to highlight the implications of spending cuts for the most vulnerable Americans. These are tough numbers, but there is no context provided to understand the magnitude of spending reductions.

Can fixed income markets be regulated?

February 28, 2013

The SEC has announced that it will hold a Fixed Income Roundtable on April 16 in Washington to discuss improving the transparency and efficiency of fixed income markets. This news is welcome and long overdue. As I wrote in a comment letter to the SEC in 2008 (emphasis mine):

Airport privatization is approved in Puerto Rico, but won’t solve long-term problems

February 27, 2013

Reuters reports:

The U.S. Federal Aviation Administration signed off on Tuesday on a 40-year lease of Puerto Rico’s Luis Munoz Marin International Airport to Aerostar Airport Holdings LLC, making it the first large U.S. airport to be placed in private hands.

State leaders will need flexibility if sequester hits

February 25, 2013

In three days from now, $85 billion in cuts to federal spending – known as the sequester – will go into effect. Democrats and Republicans voted on the sequester in July of 2011, and they have done very little until the past few weeks to change the composition or timing of the cuts, if they take effect. Now, after taking a week off from legislating, Obama and leaders of Congress are back to dueling on how all this will play out. As they are currently planned, cuts are across the board and don’t allow adjustments for priorities.

A big week for state-sponsored online gambling

February 25, 2013

“Around the world, people are shifting their gambling from traditional slot machines and tables to online and mobile devices,”  David G. Schwartz, director of the Center for Gaming Research at the University of Nevada, Las Vegas. (via Philadelphia Inquirer)

Time to begin fixing Detroit’s fiscal problems

February 21, 2013

Political moves have drawn some financial data to the surface about Detroit as the city’s long spiral downward continues. Detroit’s Financial Review Team, appointed by Michigan Governor Rick Snyder, filed its report after a study of the ailing city’s finances.