MuniLand

“The American Revolution was a beginning, not a consummation.” ~Woodrow Wilson

Happy belated Independence Day to all! Step by step, the United States is transforming itself. It’s a good time to remember our founding principles:

Individual liberty
Personal responsibility
Constitutionally limited government
The rule of law

Good links

Wall Street Journal: Food Stamp Use, by State

Bloomberg: U.S. State Cuts Hit Health Care and Education

Washington Post: A well-used but misleading Medicaid statistic

GAO: Medicaid and CHIP: Most Physicians Serve Covered Children but Have Difficulty Referring Them for Specialty Care

American Chronicle: The Importance of Timely Government Financial Reporting

Bond Buyer: Making the Case for Tax-Exemption

American Infrastructure: America’s Infrastructure Report Card

Australian Treasury: Infrastructure Report

Stateline: Tasting for dollars: States find new ways to tap alcohol for revenue

Bloomberg: Connecticut’s ‘Anti-Christie’ Governor Readies Worker Cuts

City Journal California: Yesterday’s Heroes?

Birmingham News: Jefferson County sewer receiver wants $60 million for corporation

Pension reform sounds abstract and distant from everyday life. It is almost entirely confined to state- and local-government workers. Companies stopped giving pensions to their workers decades ago as they switched employees to 401(k)s and other voluntary-type retirement schemes. This removed enormous future liabilities from the balance sheets of companies and shifted the risk of adequate retirement means to individuals.

Public pensions plans are now  squarely in the sights of state legislatures. They are terribly underfunded and have grown unsustainable. Changes, though, must be made within the law. For example, states cannot categorically take away pensions because they are “contracted obligations.” But states can and are chipping around the edges and making changes to things like “cost of living adjustments” (COLA) and the required retirement age.

These legislative modifications are being challenged in courts. This is not surprising since people don’t generally give up their benefits or rights on a voluntary basis. In many cases these pensions are the only thing that retirees will have to fund their retirement. Workers are not winning their court cases, though. The WSJ reports that:

America’s Interstate Highway System celebrates 55 years

This is the best example of how public infrastructure can really anchor tremendous economic growth. We can learn from history and use this time of economic challenge to conceive of equally profound infrastructure goals. From Fastlane, the blog of U.S. Secretary of Transportation Ray LaHood:

As President Obama has said, to win the future, we must dream big and build big. One of the best examples of dreaming and building big in our nation’s history is America’s Interstate Highway System, which marks its 55th anniversary today.

On June 29, 1956, President Eisenhower signed the Federal-Aid Highway Act of 1956, which established a program for funding and building the new system. This legislation has been hailed by historians as one of the top ten bills in American history, surpassed only by the Civil Rights Act and Medicare, and the Interstate Highway System has been called the greatest public works project in history.

Photo: California State Controller John Chiang

No allowance if you don’t do your homework

California’s Legislature rushed through a budget last week that they thought was balanced. The State Comptroller has ruled otherwise, and now he is withholding lawmakers’ salaries, the New York Times reports today:

California lawmakers will lose at least a week’s pay and living expenses because the state budget they passed last week was not balanced, the state controller said Tuesday.

When the Legislature approved the budget, several lawmakers praised themselves for passing it on time for only the second time in two decades. And they assumed that meeting the deadline would allow them to collect their full paychecks.

It’s a glorious spring day in America and everything continues to bounce along. A little progress here and some fall back there. Oh and that unpleasant negative ratings watch on United States debt from Standard & Poor’s. Yeah that is not good. Welcome to a new week in muniland.

The sun sets over a pond in Rogers, Arkansas, November 8, 2009. REUTERS/Lucy Nicholson

Increasing the muni investor pool:

Marketwatch has an article which frames the proposed Wyden and Coates federal legislation for muni tax-exemption as having the effect of shrinking the investor pool.