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    Entries in management (11)

    Wednesday
    Aug092017

    The Hidden Wealth of Cities

    To find it, a new book says, localities need look no further than their roads, airports and convention centers.

    BY  AUGUST 9, 2017
    Downtown San Diego, with a view of the convention center.
    Downtown San Diego, with a view of the convention center. (Shutterstock)

    In the years since the Great Recession, there’s been a lot of effort made to ensure a government is sharing its complete fiscal picture. In many cases, this transparency push has resulted in a government’s bottom line going from a surplus to a shortfall thanks to the introduction of things like pension and retiree health benefit liabilities to annual balance sheets.

    But some think governments are still leaving a few things off the ledger. Dag Detter and Stefan Folster, co-authors of the new book The Public Wealth of Cities, say localities are failing to realize the true value of the public assets they own, such as airports, convention centers, utilities and transit systems, just to name a few. “The public sector owns a lot of commercial assets,” says Detter, a Swedish investment advisor and expert on public commercial assets.

    But, he adds, it doesn’t manage the risk of increased costs associated with those assets very well. Then, “the inclination is to give [management] away to the private sector,” he says. “But when you do that, you also have to give away the upside.”

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    Friday
    Mar312017

    The Week in Public Finance: Bad Balancing Acts, Best Taxpayer ROI and Double Taxation

    BY  MARCH 31, 2017

    Race to the Bottom?

    New Jersey’s pension problems and Illinois’ lack of a budget continue to dog their reputation in the eyes of creditors.

    In New Jersey, Moody's downgraded the Garden State one-notch this week to A3, citing the state’s “significant pension underfunding, including growth in the state's large long-term liabilities, a persistent structural imbalance and weak fund balances.”

    It’s the 11th downgrade by a credit rating agency during Gov. Chris Christie’s more than seven years in office. Overall, New Jersey’s credit rating has fallen four notches under Christie’s watch, from what’s considered high investment grade to borderline medium grade. Meanwhile, the state's unfunded pension liability has climbed to $136 billion, which mean it has less than half of what it needs to pay its retirees down the road.

    For its part, Illinois is the only state rated lower than New Jersey.

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    Wednesday
    Jan112017

    Have States Reached Their Savings Limit?

    After several years of growth, the amount states are socking away in rainy day funds has slowed.
    BY  JANUARY 11, 2017

    Rainy day savings deposits appear to be plateauing.

    After six straight years of squirreling away money, budgeted figures for fiscal 2017 show a slight dip in rainy day fund balances across the 50 states. States now have a median 4.9 percent of annual expenditures saved for the fiscal year, down from 5.1 percent the previous year.

    What's more, four states -- Illinois, Nevada, New Jersey and North Dakota -- now show no budget reserve funds, up from two states last year. The overall shift is a signal that tighter financial times could be ahead for states as a whole.

    The findings are based on Governing's analysis of projected 2017 budget data from the National Association of State Budget Officers. Given that roughly half of states are now expecting budget shortfalls for 2017, budget reserve balances could dip more than projected.

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    Monday
    Dec122016

    To Prepare for the Next Recession, States Take Stress Tests

    No government can be fully prepared for every economic twist and turn. Still, some are trying.
    BY  DECEMBER 12, 2016

    The Great Recession was uniquely devastating for states and localities because it hit all three major tax revenue sources: income, sales and property. It was a scenario that few, if any governments, were really prepared to absorb. As a result, governments were forced to make massive budget cuts.

    Now, as the recovery trudges on longer than most, a growing number of states are making sure they aren’t blindsided by the next downturn.

    Enter stress testing. The idea, which was borrowed from the U.S. Federal Reserve, essentially throws different economic scenarios at a state budget to see how revenues would be impacted.

    “We’re in an environment where everyone is starting to think about the next downturn and what that’s going to look like,” said Emily Raimes, a Moody’s Investors Service analyst. “A stress test is a tool for states to think about what types of programs they should commit to and how much to save now.”

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    Friday
    Dec092016

    The Week in Public Finance: Federal Budget Chaos, a Bankruptcy Win and Pension Portfolios

    BY  DECEMBER 9, 2016
    Chaos on Capitol Hill ... and in Statehouses

    As state lawmakers begin preparing for their fiscal 2018 budgets, their biggest challenge is in the unknown. With Donald Trump’s election, the future for key state and local funding is almost anybody’s guess.

    With Trump in the White House next year, Stan Collender, author of The Guide to The Federal Budget, predicts that a Republican-controlled Congress will move quickly on making major changes before the 2018 midterm elections. But after this unpredictable election, few are willing to predict what exactly those changes will be. All we know now is what’s on the table.

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