MuniLand

Texas Watchdog.org explains how Texas is mounting the transparency pony:

A quartet of the most powerful legislators in Texas filed bills Thursday to make available to the public detailed financial information from most local taxing entities and pension systems across the state.

Senate bills 14 and 13 and their identical House counterparts establish, at the request of state Comptroller Susan Combs, new requirements for the posting of public debt, unfunded liabilities, borrowing and project costs on websites maintained by state and local agencies.

This new legislation, if passed and signed by the governor, has the potential to set the gold standard for public accounting of spending and taxpayer liabilities. The legislation would require the posting of all tax rate information:

…committing the [State] Comptroller to maintaining tax rate information for every political body collecting a sales or use tax in the state, updated by the assessors and collectors for those bodies.

Outstanding debt for each local or special district issuer would be posted:

The state’s Bond Finance Office would post on a website a list of all outstanding local securities and schedules for their repayment. In turn, the issuers of local securities would submit reports of their activities to the state.

Cynthia Calvert, the editor of The Tribune of Humble, Texas, is restoring community journalism to its rightful place in the Fourth Estate. She has written a series of articles challenging the actions of the East Montgomery County Improvement District (EMCID), which funded a now-bankrupt theme park called EarthQuest.

Payments from a 2009 municipal bond offering, and possibly other East Montgomery County sales tax collections, have been paid to various “consultants” on the EarthQuest project, most of whom appear to have left. The land on which the project was to be built, the only asset other than the intellectual property, is being foreclosed upon by the local bank that lent the funds to purchase it. The 500-acre theme park was an enormous gamble for a county improvement district to support, and the district appears to have lost the bet and the taxpayers’ money.

Calvert fires her most recent salvo in her article “EarthQuest 2009 bond sale: where did tax dollars go.” In the very best tradition of a journalist holding public officials’ feet to the fire, she wants to know exactly where the money from the bond offering went:

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.

Minnesota reaches a deal

Minnesota agrees on a budget, ending a two week shutdown. But is it just accounting tricks? From the NewsObserver.com (emphasis mine):

Minnesota Gov. Mark Dayton and top Republicans agreed Thursday to end a budget impasse that prompted the longest state government shutdown in recent history.

Dayton said the state government would be back in business “very soon,” but he didn’t say exactly when.

We are making some headway on unemployment although some states still have substantial problems. For the larger, original version from Calculated Risk Blog click here.

Muni tax exemption “on the table”

Bond Buyer reports:

Two weeks ago, about a dozen issuer advocates met with staff members for Democrats and Republicans on the Senate Finance Committee to emphasize the important role tax-exempt bonds play in infrastructure development.

The issuer groups were told by staffers that the tax exemption of muni bonds was on the table as part of discussions on spending cuts, and that the committee may soon schedule hearings on this subject, sources involved with the meeting said.

Really, Texas.

Subsidizing a rich man’s sport while laying off teachers?

Is this in the public’s interest?

Bloomberg reports:

Texas, which may balance its budget by firing thousands of teachers, plans to commit $25 million in state funds to Formula One auto racing each year for a decade.

Four years after motorsports’ most popular series left the U.S., Texas investors including Clear Channel Communications Inc. co-founder B.J. “Red” McCombs are building a 3.4-mile (5.5-kilometer) track to bring the event to Austin.

Comptroller Susan Combs has agreed to pay $25 million for races through 2022, a subsidy questioned by critics and lawmakers as the state cuts costs to close an estimated $15 billion two-year deficit.