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    Thursday
    Nov102016

    This Government Bond Insures Against Failure

    The first-ever environmental impact bond gives an agency some of its money back if its idea doesn't pan out.
    BY  NOVEMBER 10, 2016

    As the drive for accountability in government spending increases, many are looking for ways to keep from paying the full price for programs that don't work.

    In Washington, D.C., that desire has led to the first-ever environmental impact bond, issued this fall by DC Water, the city's water and sewer authority. The $25 million bond will pay for new, green infrastructure like rain gardens and permeable pavement to reduce stormwater runoff.

    But if the projects don't work as expected, that's where the new financing structure comes in. Under the terms of the bond, which DC Water sold directly to Goldman Sachs Urban Investment Group and the nonprofit Calvert Foundation, the utility stands to get a multimillion discount on its total borrowing costs if the project doesn't meet a certain threshold.

    It's essentially an insurance policy on the project's effectiveness. Here's how it works: After five years, the new infrastructure will be evaluated. If stormwater runoff isn't reduced by at least 18.6 percent, investors will owe DC Water a $3.3 million "risk share" payment. The payment represents a near-full refund of the 3.43 percent interest rate payments DC Water made during the first five years of the bond. After that, the bonds would likely be refinanced into 25-year bonds. DC Water would also drop green infrastructure projects and go back to so-called gray ones (like pumps and water tunnels) to reduce runoff.

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    Wednesday
    Nov092016

    Missouri Passes Nation's First-Ever Ban on Services Sales Taxes

    As states increasingly try to tax services like Netflix and yoga, Missouri voters have decided to keep that from ever happening. How that will impact consumers is unclear.
    BY  NOVEMBER 9, 2016

    As more governments look to expand their sales tax to services like Netflix and yoga, Missouri has become the first state to pass a ban on doing so.

    With nearly all precincts reporting, voters approved the ban Tuesday 58 percent to 42 percent, persuaded by the argument that the measure was designed to protect the state's middle class and lower income earners.

    The sales tax is generally seen by economists as regressive, meaning it places a bigger burden on low-income families because it takes a bigger chunk of change from their income.

    “The time was right to make a stand," said Scott Charton, a spokesperson for the ballot measure's backers. "This is a victory for Missouri’s hard-working taxpayers and their families."

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    Wednesday
    Nov092016

    Arkansas, California Voters Approve Spending on Mega Projects

    In an anti-debt climate, voters in the two states cleared the way for spending on major economic development projects.
    BY  NOVEMBER 9, 2016

    In the post-recession era, "debt" is a four-letter word. State debt levels as a whole have been stagnant in recent years and, in 2014, actually recorded the first decline in the 28 years Moody's Investors Service has been tracking them.

    It's in this climate that voters in Arkansas and California have cleared the way for more spending on mega projects that could be economic development boons in those states.

    In Arkansas, voters overwhelmingly passed a ballot initiative that eliminates the state's current 5 percent cap on debt related to economic development projects. Proponents of Arkansas’ Issue 3, who included Gov. Asa Hutchinson, want the cap lifted so the state can be more competitive in attracting new corporations by helping fund mega projects. Voters easily approved the measure, 65-35.

    In California, which has one of the highest taxpayer debt burdens in the country, the results were much closer. Voters narrowly rejected a proposal, 51-49, that could have derailed two of Gov. Jerry Brown's legacy projects. Prop. 53 would have limited the state's ability to issue debt for major projects by requiring voter approval to issue more than $2 billion in revenue bonds.

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    Wednesday
    Nov092016

    Pleas for More Education Funding Fall Short on Election Day

    Voters in two states rejected measures that would have raised taxes -- either for consumers or corporations.
    BY  NOVEMBER 9, 2016

    Voters in two financially-struggling states have struck down proposed tax increases that would have given more much-needed funding to education.

    Public education was one of the biggest casualties of the Great Recession. Nearly a decade since it started, nearly half of states are still providing less general funding for schools than they were the year the economy tanked. But the rejections on election night reflect a feeling among taxpayers that governments are punting on a problem by passing on costs to them, rather than making their own difficult decisions.

    In Oregon, which is facing a $1.3 billion deficit, voters shot down a proposal to impose a tax hike on corporations with more than $25 million in annual sales in the state. Opponents, largely corporations, called it a sales tax in disguise because they warned businesses would pass on the costs to consumers.

    Pat McCormick, a spokesman for the campaign to defeat the tax, told the The Oregonian/OregonLive that Measure 97 "fell of its own weight when people understood what it would do."

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    Wednesday
    Nov092016

    Bilingual Education Will Make a Comeback in California

    The state, which has more English-language learners than any other, restricted bilingual education in the '90s. Voters are bringing it back.
    BY  NOVEMBER 9, 2016

    Nearly two decades after voters made California one of the most restrictive states for bilingual education in public schools, residents on Tuesday reversed that decision.

    In California -- which has the nation's highest rate of students who speak a non-English language at home -- fewer than 5 percent of public schools now offer multilingual programs. But by approving Proposition 58, school districts can now offer regular dual-language programs.

    In 1998, voters approved Prop. 227, a law passed amid anti-immigrant fervor that said students whose first language isn't English can only take one year of intensive English instruction before transitioning to English-only classes. Parents who wanted bilingual classes for their kids beyond that had to sign a waiver each year.

    Prop. 58 essentially repeals the waiver system but keeps intact the part of the law requiring proficiency in English. It cruised to victory Tuesday night by a nearly three-to-one margin.

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