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    Entries in Moody's (4)

    Tuesday
    Nov012016

    The Week in Public Finance: Petitioning for Bankruptcy, Lost Airbnb Revenue and Downgrading New Mexico

    BY  OCTOBER 28, 2016

    'Put Bankruptcy on the Ballot!'

    Activists in financially beleaguered Scranton, Pa., are petitioning for a ballot initiativethat would let residents decide if the city should file for bankruptcy. It’s a first-of-its-kind petition and reflects the ongoing frustrations of a city that's been "fiscally distressed" for two decades.

    Scranton is one of Pennsylvania’s Act 47 cities, which designates it as fiscally distressed and opens it up to aid and other resources from the state. The designation also means that the city must comply with certain fiscal requirements, such as developing a recovery plan.

    But Act 47 has had its problems, the biggest being that it doesn’t seem to provide enough oversight.

    Click to read more ...

    Monday
    Oct312016

    To Limit Debt or Make It Limitless? 2 States’ Voters Will Decide.

    In an anti-debt climate, one state aims to rein it in while another tries to uncap it.
    BY  OCTOBER 27, 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 two states are considering nearly opposite proposals on debt.

    California, which has one of the highest taxpayer debt burdens in the country, will decide whether to limit lawmakers’ ability to issue debt for major projects. Prop. 53 would require voter approval to issue more than $2 billion in revenue bonds.

    In Arkansas, a ballot initiative proposes making it easier for the state to incur more debt. Issue 3 would eliminate the state's current 5 percent cap on debt related to economic development projects.

    Each state's history with bond debt has a lot to do with these conflicting proposals

    Click to read more ...

    Friday
    Mar182016

    The Week in Public Finance: Good and Bad News for Pensions and for Atlantic City

    A roundup of money (and other) news governments can use.
    BY  MARCH 18, 2016

    Pension Plan Peril

    The stock market has been kind to pension plans in recent years. But that ended last year: Pension plan returns for fiscal 2015, which mostly closed on June 30, were meager. Many were below 5 percent, lower than their target rate of 7 or 8 percent. To make matters worse, that was before the stock market turmoil that began late last summer, which means that when most pensions close out fiscal 2016 at the end of June, their returns will again fall short.

    The two-year hit will effectively wipe out the funding improvements seen in 2013 and 2014, predicts Moody’s Investors Service. In a report released Thursday, the agency analyzed 56 state and local government pension plans with total assets of more than $2 trillion. The report says that under the most optimistic scenario, where investment returns average 5 percent for the year, plans’ overall liabilities will still increase by 10 percent. This is because returns are falling short.

    The most pessimistic scenario? That plans report an investment loss of 10 percent. In those cases, Moody’s says that could bump up liabilities by more than half, forcing governments to have to put in more money over the next few years than was previously forecast. With a number of governments already balking at their pension costs, that’s going to be a problem. A little over half of the plans Moody’s sampled already aren’t receiving their full payments from their contributing governments.

    Click to read more ...

    Friday
    Jan292016

    The Week in Public Finance: How Budgetless Illinois Still Runs, Spending Cuts Coming and St. Louis' Not-So-Big NFL Loss

    A roundup of money (and other) news governments can use.
    BY  JANUARY 29, 2016

    Avoiding the Bill Collectors

    Illinois is one of two states that still has no budget this year. How does it keep running? Partly, by letting its bills stack up.

    Illinois law lets the state defer paying bills until the following fiscal year -- a tool the state has used liberally for years. Because of that, the state’s unpaid bills have now climbed to a total of $6.6 billion, a backlog equal to 19 percent of what the state spends from its general fund. “If the state fails to address its structural imbalance for subsequent years,” warned Moody's Investors Service, “the payment backlog will swell to $25 billion, or 64 percent of expenditures” over the next three years.

    Click to read more ...