The Christie discount
The media is reporting that New Jersey Governor Chris Christie will announce that he is not running for the Republican presidential nomination this afternoon. That’s probably wise given that the credit markets’ opinion of New Jersey would undercut any claim candidate Christie could make to being a responsible budget manager.
If you look at the Markit municipal credit default swap chart above you can see that credit markets think that the financial condition of New Jersey is pretty bad. It ranks only behind California and Illinois as a poor credit risk. It would be very hard for Governor Christie to tell the story of his fiscal successes in his state given the data. To be a credible candidate for the presidency he needs to develop real improvement for his state and reverse the Christie discount.
Here is the real muniland story
From the blog Credit Writedowns:
US states and local governments cut their debt by 3.2% in Q2 and 4.2% in Q1. This year looks to be the first year since 1996 that local governments in the US reduced their indebtedness.
Muniland’s dog eat dog
From Stateline (emphasis mine):
It may not quite be every level of government for itself, but many states are showing far less willingness to share revenues, even revenues that local governments consider theirs. They are forcing localities to streamline by limiting their ability to raise money, as with legislatively mandated property-tax caps in New York, New Jersey and Indiana, or Nebraska’s moves to keep Omaha from taxing the vehicles of suburban commuters and restricting cities’ ability to tax telecommunications.
States are setting out to reshuffle responsibilities up and down the governmental ladder — along with the funds that go with them — as California Governor Jerry Brown decided to do in this year’s budget. They are forcing local governments all over the country to reconsider long-established ways of doing business. And they are compelling local officials to rethink their relationship with state government.