MuniLand

Green shoots?

Reuters reports on recent data from the U.S. Census Bureau that shows how tax revenues are improving:

State and local governments brought in record first-quarter revenues this year, according to a Census Bureau report released on Tuesday that offered a sign their budget crises may be abating.

Total state and local revenues for the first quarter reached $321 billion, a 4.7 percent rise from the first quarter of 2010 and the highest level on records going back to 1988. It marked “the sixth consecutive quarter of positive year-over-year growth,” the Census said.

Revenues fell from $381 billion in the fourth quarter. Typically, the fourth quarter shows the highest state and local tax revenues of the year.

States’ revenues alone totaled $179 billion, a separate Census report showed. That was 9 percent above the first quarter of 2010 and 13 percent above the first quarter of 2009, when state revenues hit their lowest point in the recession.

If you have been around Washington much, you know that a lot of what happens is often kabuki. What may appear to be a geisha girl coyly teasing a samurai is really a young man with heavy make-up and mincing steps. It’s beautiful deception.

I think a little DC kabuki maybe happening with the renewed chatter around an infrastructure bank funded with corporate overseas profits. Bloomberg reports:

The Senate’s No. 3 Democrat [Senator Charles Schumer of New York] said yesterday that his caucus is exploring the potential of using the short-term revenue a [overseas profit] repatriation holiday would generate to fund an infrastructure bank. The focus on infrastructure, he said, would “guarantee” job creation and address a key line of Democratic opposition.

Lisa Pollack of Markit in London sent over some interesting charts of U.S. municipal swaps. I put up this one which shows the market perception that risk is increasing again for some states, particularly Illinois and California. It is important to remember that these markets are thinly traded and that there is a large block of muni CDS written on California that is coming to market from the bankruptcy of Lehman Brothers.

National Totals of State Tax Revenue, by Type of Tax

The U.S. Census brings us these figures for taxes collected at the state level for 2010. You can see the substantial reliance on individual income and sales taxes (I left off some categories to fit the table in. Click through to the Census document to see more data): Quarter Total tax Individual income Corporate income Property tax State sales tax 2010 4Q $ 177B $ 61B $ 9B $ 4B $ 57B 2010 3Q $ 168B $ 57B $ 7B $ 3B $ 56B 2010 2Q $ 204B $ 72B $ 14B $ 3B $ 54B 2010 1Q $ 163B $ 52B $ 8B $ 8B $ 54B

Taxes are the fuel for the government. Without taxation the state withers. Our governments have taken on so many responsibilities but have become starved for fuel. There is much debate on how much we as a country should spend on entitlements and defense, but often these arguments are made on the premise that the United States has higher taxes than other nations.

The Center for American Progress developed the following charts to help visualize the state of American taxation. If you check out “Ten Charts that Prove the United States Is a Low-Tax Country” you will see that our nation, on a relative basis, does not have especially high taxes. It also helps explain why our nation is running massive deficits and is close to defaulting on its debt. We have choked off the fuel to support the public realm.  These charts almost make the case for the need to increase taxes on the wealthiest Americans in the short term to help reduce the deficit and bring the nation to a sounder fiscal footing:

Party is approach

An excellent piece by John Gramlich in Stateline about how party affiliation is driving state agendas. Here are the money quotes:

Hack for Change

Attention Muniland! Do you have an idea for a public web or mobile application? Change.org is sponsoring a Hack for Change on June 18th and 19th and is soliciting ideas for their programming competition. Here are some of the ideas that have already been posted:

A reviews site that allows citizens to rate and evaluate city government services and departments A site that makes government data more accessible and actionable An app that lists all San Francisco city legislation and allows residents to vote on it An app that notifies police of suspicious activity

Submit your idea today!

Muni Web 2.0 stars

Government Technology reports on the winners of a wonderful competition to create the best municipal Web 2.0 and social media technologies:

The United States Conference of Mayors released a survey Tuesday focused on metropolitan transportation investments. Generally the take-away is that the mayors want less money spent on highways and more spent on cities’ transport needs.

From the survey:

• Ninety-eight percent of mayors point to investment in affordable, reliable transportation as an important part of their cities’ economic recovery and growth.

• Three in five mayors said they would not support an increase in the federal gas tax if federal transportation funding were allocated among programs in the same proportions that it is today.

It’s a busy morning in muniland. Here are several big stories to get the day started.

Bloomberg’s Bob Ivry has written an excellent expose of why the French and Belgium bank, Dexia, borrowed more from the Federal Reserve in the financial crisis than any other institution.

Why is Dexia important for muniland? Dexia owned a bond insurer, FSA, that provided insurance and guarantees for a big swath of the municipal market. No funding for Dexia equaled no funding for many municipalities. The markets were teetering on the brink and a few semi-solvent institutions kept them afloat. Dexia was one we hadn’t heard much about until now. More to come on this big story.