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    Entries in Louisiana (4)

    Friday
    Apr082016

    The Week in Public Finance: Rating Downgrades, the War on Cities and More

    A roundup of money (and other) news governments can use.
    BY  APRIL 8, 2016

    Downgrade Week

    Louisiana and Atlantic City, N.J., were slapped with credit rating downgrades this week as both continue to struggle with revenue shortfalls and other budget problems.

    In the Bayou State, lawmakers are still stuck with a $750 million budget gap for the 2017 fiscal year, which starts on July 1, even after approving some tax hikes this year. Fitch Ratings said the current budget deficit has been caused in part by “overly optimistic revenue expectations” and by not budgeting enough for Medicaid. The agency downgraded Louisiana’s rating from a AA to a AA-, noting the budget problem has only worsened thanks to a prolonged plunge in oil prices.

    The rating downgrade affects nearly $4 billion in outstanding debt. It will also play a role in the interest rate the state gets later this month on about a half-billion in bonds it plans to refinance. The rating comes after Moody’s Investors Service downgraded Louisiana earlier this year, citing the state’s budget issues.

    Gov. John Bel Edwards, who pushed for and won some tax hikes this year, largely laid blame with his predecessor Bobby Jindal and the state legislature. Edwards plans to call a special session to address the shortfall, the second in a year.

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    Friday
    Mar042016

    The Week in Public Finance: School Shutdowns, Trading Munis and Small Business Lending

    A roundup of money (and other) news governments can use.
    BY  MARCH 4, 2016

    Education Opens Closes Doors

    One of states' top spending items is education. When lawmakers can’t agree on a budget -- or they decide to make severe cuts -- higher education often gets hurt. Sometimes, even K-12 spending takes a hit. In Illinois and Pennsylvania, ongoing stalemates over the current fiscal year’s budget may lead to school closures. In Louisiana, potential major cuts have students protesting.

    Let’s start in Illinois, where three state universities have taken severe hits. Last Friday, Chicago State University sent layoff notices to all 900 of its employees. The school is making plans to end its semester early unless the state makes good on funding promises. That alarming news came after Western Illinois University announced it would cut $20 million from its budget over the next two years, while laying off 100 employees. Southern Illinois University is contemplating $40 million in cuts and has already started closing programs, such as men’s tennis and women’s golf. Most recently, Eastern Illinois University, which saw its credit rating downgraded to junk status last month, laid off nearly 200 employees, although the school president offered assurances that the university was not closing.

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    Wednesday
    Mar022016

    Louisiana's Budget Has More Than Just an Oil Problem

    Unlike other oil-dependent states, Louisiana has deeper financial issues that began nearly a decade ago after Hurricane Katrina. The legislature is meeting in special session to deal with them.
    BY  MARCH 2, 2016

    The global oil surplus is forcing some energy-dependent states to rethink their financial arrangements. Already, Alaska, North Dakota, West Virginia and Wyoming have hit the official recession marker of sustained job loss, according to Moody’s Analytics. These and other states are slashing spending to right-size their budgets.

    But in Louisiana, the financial turmoil runs deeper than fallout from the last 20 months of declining oil prices.

    Last week, Moody’s Investors Service slapped Louisiana with its first credit rating downgrade in more than a decade. It’s the only energy state other than Alaska to be downgraded since the oil price slump began, yet Louisiana is far less dependent on oil than the Last Frontier. Severance taxes -- the taxes imposed on the production of oil and minerals -- made up nearly three-quarters of Alaska’s tax collections in 2014, compared to about 9 percent in Louisiana, according to an analysis by the Rockefeller Institute for Government.

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    Thursday
    Feb042016

    How Oil States Are Dealing With Sinking Prices and Revenue

    The states most dependent on oil tax revenues have different ways of dealing with the industry slowdown.
    BY  FEBRUARY 4, 2016

    Oil prices are now at their lowest level in 12 years -- below $30 a barrel. That's great news for consumers, but not for the states that depend on oil tax revenues.

    The falling price of oil, which has declined more than 60 percent since June 2014, has some states scrambling. With no end in sight, states that are more dependent on the industry simply can't replace the revenue by withdrawing from their substantial rainy day funds.

    Oil, natural gas and mining account for about 10 percent or more of gross domestic product in eight states: Alaska, Louisiana, New Mexico, North Dakota, Oklahoma, Texas, West Virginia and Wyoming. Last year, total tax revenues in the eight states declined by 3.2 percent, according to a new analysis by the Nelson A. Rockefeller Institute of Government. In contrast, the remaining 42 states reported a 6.5 percent increase in total tax revenues.

    Although most of these states tend to budget conservatively, the good years for oil had an impact on their finances.

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