MuniLand

Should retirement be considered a growth industry?

Senior citizens account for a greater share of the population of Florida than of any other state in the country: 18.1 percent of the residents of the Sunshine State are over the age of 65, compared with the national weighted average of 12.7 percent. There are some obvious reasons for the state’s popularity among the elderly: It has excellent winter weather and is one of nine states with no income tax.

There’s also some indication that in the past Florida has explicitly courted seniors and encouraged them to relocate there. A 2002 report by then-Governor Jeb Bush’s Destination Florida Commission said this (emphasis mine):

Thinking of retirement as an important industry allows Florida to recognize the economic and social value of current elders and the aging baby boomer population. Retirement is a stable growth industry. Jobs and businesses needed to sustain this industry run the gamut from hospitality to health care, from janitorial workers to neurosurgeons…

…Florida exceeds the national averages for number of hospital beds per resident, Medicare expenditure per beneficiary, and Medicaid home health services.

I could not find any current economic analysis on this topic, so it’s possible that the commission’s guidance went unheeded (please leave links in the comments of any recent studies). Nevertheless, thinking of retirement as a “stable growth industry” seems somewhat counterintuitive to me. Seniors generally have lower incomes and need a lot more healthcare services than most other parts of the population. Given that the federal budget, which pays for Medicare and about 56 percent of Florida’s Medicaid spending, is being targeted for cuts, there’s a risk that the state could get saddled with paying more for seniors’ healthcare.

The Marlins’ new home, courtesy of taxpayers

Kevin Grey of Reuters wrote a delightful piece describing the opening of the the new home of the Miami Marlins. The stadium has all the touristy bells and whistles that you would expect from a state that brought us Walt Disney World, Universal Studios and Sea World:

When baseball’s Opening Day kicks off next week, the Miami Marlins will inaugurate a new $515 million ballpark built with all the trappings of South Florida – two enormous fish tanks, palm trees and a kitschy (of course) home run celebration display.

With all its fancy trappings, the Marlins’ new stadium could very well set the national standard for family-friendly sports destinations. But after the opening-day fireworks dissipate, it will become clear that the ballpark sets a low bar for public diligence and oversight and that it could result in an SEC sanction (or worse) for some local public officials.

Muniland’s most active states

In the municipal bond market, one of the most insightful ways to examine a state is to look at how actively its bonds trade. Broker-dealers make money by trading, so naturally they go where the action is and commit market-making resources to those states. It’s generally true that the most populous states are the ones with the most traded bonds, but if we map the wealth of a state’s citizens to how often that state’s bonds trade, we get some interesting results. For example, New Jersey, which has only 2.8 percent of the national population but a high proportion of its wealthy citizens, might have the highest number of municipal bond owners as a percentage of state population.

The municipal bond market does not trade on an exchange but rather on “alternative trading systems” (ATS). These are systems where dealers post inventories of bonds to be aggregated. The largest of the retail ATS is Bonddesk, which does some excellent data analysis for both the municipal and corporate bond markets.

From Bonddesk’s December Transparency Report I pulled the data for these charts showing the seven most actively traded states’ bonds. Bonddesk uses “investor buys” data, which represents trades that end up in a retail investor’s account. In the bond markets there are often many trades between broker-dealers before the securities land in an investor’s account, so Bonddesk scrubs the data to show the real level of investor demand.

The forgotten American homeless

CBS’s 60 Minutes showed a heartbreaking story last night that described several homeless families with children in Florida. The segment, entitled “Hard Times Generation: Families living in cars” (embedded above), detailed families living at the absolute edge of economic survival as they slept in their cars, in hotel rooms and with neighbors. In a deflating economy with few available jobs, they are the invisible underbelly. Big kudos to 60 Minutes for bringing their plight to our attention.

In 1933, a freshly inaugurated Franklin D. Roosevelt addressed a paralyzed nation with the following words:

More important, a host of unemployed citizens face the grim problem of existence, and an equally great number toil with little return. Only a foolish optimist can deny the dark realities of the moment.

New leadership for muniland’s regulator

New chair for muniland’s regulator

New leadership has been announced at the Municipal Securities Rulemaking Board, muniland’s primary regulator. Alan Polsky of Dougherty & Co., the incoming MSRB chairman, has spent much of his career working towards increased transparency in the muni secondary market where bonds trade after issuance. This is great news. From the Bond Buyer:

Alan D. Polsky, senior vice president of Minneapolis-based Dougherty & Co. LLC and former chair of the National Federation of Municipal Analysts, will be the next chairman of the Municipal Securities Rulemaking Board beginning Oct. 1, according to market sources.

Polsky spent a great deal of time trying to improve secondary market disclosure when he chaired the NFMA in 2001. During that year, the NFMA issued several “best practice” disclosure documents recommending how issuers, borrowers, and other market participants could improve disclosure in various sectors of the market. Polsky also was a member of the Muni Council, a group of about 20 muni market group representatives dedicated to improving secondary market disclosure. The group was responsible for the creation of the Central Post Office facility which temporarily served as a one-stop place for issuers to file their disclosure documents.

Muni sweeps: How much job creation?

Job creation or program pass-through?

The Congressional Budget Office has published a new report entitled “Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output from January 2011 Through March 2011.” It makes some large claims about how many jobs stimulus funds have created:

Various recipients of ARRA funds (most recipients of grants and loans, contractors, and subcontractors) are required to report, after the end of each calendar quarter, the number of jobs funded through ARRA. The law also requires CBO to comment on those reported numbers.

During the first quarter of 2011, recipients reported, ARRA funded more than 571,000 full-time-equivalent (FTE) jobs.

Open Palm Bay UPDATED

I’m very happy to present a guest post from Mr. Lee Feldman, the City Manager of Palm Bay, Florida. City Manager Feldman is a superstar of muniland transparency. Read how he and his team developed a fully open financial-reporting system to engage and empower the citizens of Palm Bay.  [UPDATE: On Tuesday, it was announced that Mr. Feldman would soon leave his position in Palm Bay to take over as city manager of Ft. Lauderdale, Florida.]

Open.PalmBayFlorida.org – Financial Transparency at the Public’s Fingertips

The City of Palm Bay, Florida, felt our neighbors deserved to have a simple way to see how their tax dollars were spent. In December 2009 the City created Open Palm Bay, an online interactive database that allows them to view and search the City’s financial information at any time.

The intuitive database enables anyone to follow their money right down to the penny. Palm Bay believes that this easy-to-use website is the first of its kind in Florida, setting the benchmark for financial transparency in local government.

Let’s give Meredith some credit

Everybody beats up on Meredith Whitney for her muniland panic call.

Yesterday she doubled down on her prediction of “hundreds of billions of dollars’ worth” of municipal-bond defaults.

Whitney was speaking on a panel, Reading the Tea Leaves: What Lies Ahead for Financial Markets?, at the Milken Global Conference.

I want to give Whitney some credit.

Whitney has a very good macro view of the U.S. economy. At the Milken conference she said that housing has contracted for four consecutive years. States have spent at a 30% higher CAGR rate than consumers.

Muni sweeps: Arbor Day


Among other things today is National Arbor Day.

It’s time to be thankful for our wonderful trees. Some municipalities make the preservation and addition of trees a centerpiece of town planning.

Consider planting a tree this weekend or donating to local group who is beautifying your community.

Stranded assets

There are 67 miles of toll roads in Orange County, California that drivers don’t seem to want to drive on much.

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