By LIZ FARMER | MARCH 18, 2020

The coronavirus’ potential impact on the global economy has sent shock waves through the U.S. stock market, with successive slides that spell bad news for public pensions.

Over the last month, all the market gains made last year have been wiped away as stocks tumbled by more than 25%. That means pension funds, which rely heavily on public equities to boost investment returns, are likely to have their worst year since the 2008 financial crisis, barring a stunning turnaround in the next few months.

At a recent rally in front of Baltimore City Hall, activists sang, chanted, and otherwise voiced their view that the city’s major nonprofit institutions weren’t “paying their fair share” of property taxes.

The gathering came as the City Council explored renegotiating an agreement under which 14 nonprofit universities and hospital systems voluntarily pay the city a total of $6 million per year. Those payments are in lieu of the estimated $120 million they would owe if they were not exempt from taxes on their real estate holdings.

Cities that feel hamstrung by property tax caps are increasingly using alternative approaches to taxing real estate, with the goal of eking out more revenue and, in some cases, changing behavior. But rather than helping city coffers, experts warn, such moves may be more likely to disrupt economic growth, raise equity concerns, and insert instability into the otherwise fairly predictable property tax revenue stream.

When Washington, DC, officials unveiled a major report on housing equity last fall, they did so at an unassuming, one-story bike shop located in the city’s posh Tenleytown neighborhood. This quiet district of single-family homes lies seven miles northwest of the Capitol, and the location was meant to send a message: the shop was all that was left of a plan proposed several years ago that would have added much-needed housing to the neighborhood. After fierce opposition from nearby residents, the developer scratched the mixed-use development.

Tenleytown and the other wealthy neighborhoods that make up Rock Creek West are home to the fewest affordable homes and apartments in the city—by far. Of the nearly 52,000 affordable housing units citywide, just 470 are in Rock Creek West, the city’s report found. Conversely, roughly half of the affordable housing stock (more than 25,000 units) is located in the city’s poorest neighborhoods, across the Anacostia River.

BY LIZ FARMER | DEC. 11, 2019

Free college is a popular policy among the 2020 Democratic presidential candidates, even as one in four states already has some type of program in place. But as more state and local governments roll out so-called college promise programs, lessons learned from early offerings suggest the funding should go beyond getting more students in the door. 

BY LIZ FARMER | NOV. 21, 2019

With enrollment sliding and statewide population trends promising to compound those troubles, the University of Maine System knew it needed a way to get more students through the door. 

From 2007 to 2017 alone, enrollment in its universities fell 15%. But it has since found a way to reverse that trend: recruiting nontraditional students, particularly those who want to attend college online. To do so, Maine has retooled its approach to adult learners, said Robert Placido, the system's associate vice chancellor of academic affairs. 

Early results indicate it's working. 

We moved beyond the suburbs so that we can breathe free, park without worry and enjoy a parade.

By Liz Farmer | November 6, 2019

In the Los Angeles suburb of Bellflower, California, officials are getting the city budget ready for a slowdown by tightening spending and beefing up reserves. For the past five months, the state’s fiscal health index has been trending downward, a shift that Mayor Pro Tem Juan Garza said weighs heavily on the city’s own forecasting. “For California to be experiencing that,” he said, “it’s an indicator of not only what California is going to experience, but also the rest of the country.”

Regional colleges have long played the role of community economic engines. For many students, the educational experience they offer is more aligned with the needs and opportunities in the local workforce than is that of their state's flagship institution.

But post-recession economic headwinds have worked against these smaller, less-resourced institutions. Many are facing financial pressures driven by declining budgets and changing demographics that are forcing a reorganization of higher education across the country. And although such moves can be controversial and take years to implement, experts say the trend is only expected to continue.

BY LIZ FARMER | AUGUST 16, 2019 AT 4:00 AM

Public pension plans are missing their investment earnings expectations for the first time in three years, a development that could strain future state and local budgets amid rising concerns that the national economy is slowing.

Plans with more than $1 billion in assets earned a median return of 6.79 percent for the fiscal year ending June 30, according to the firm Wilshire Trust Universe Comparison Service. That’s below those plans’ median long-term expected rate of return of 7.25 percent.

BY LIZ FARMER | AUGUST 7, 2019 AT 4:00 AM

As extreme weather increasingly wreaks havoc, credit rating agencies want more information about how vulnerable each state and local government's economy is to climate change.

Moody's isn't waiting for them to give it up.

BY LIZ FARMER | AUGUST 5, 2019 AT 7:00 PM

SPEED READ:

• 60 percent of parents and 75 percent of teachers say education funding is too low.

• Nearly equal shares say they would rather see cuts elsewhere than raise taxes for more school funding.

• People are most willing to raise so-called sin taxes on alcohol, cigarettes and gambling.

• But sin tax revenue isn't always sustainable or spent on schools.

Most people believe their public schools need more money. A new survey, however, illustrates just how wide the gap is between wanting more funding and being willing to pay for it.

BY LIZ FARMER | AUGUST 2, 2019 AT 4:00 AM

A new proposal in Congress could make financing infrastructure projects in rural America far more affordable.

Called the Municipal Bond Market Support Act of 2019, the bill would modernize a restriction on so-called bank-qualified municipal bonds that effectively limits small governments’ access to cheaper borrowing rates in the municipal market.

BY LIZ FARMER | JULY 25, 2019 AT 5:31 PM

After several failed attempts and a special legislative session, Kentucky -- the state with the worst-funded pension system -- now has a plan to ease the financial burden that employees' retirements are taking on quasi-governmental agencies.

In signing the pension reform bill on Wednesday, Republican Gov. Matt Bevin said it provides "much needed financial relief" and "a viable path forward for our mental health agencies, rape crisis centers, local health departments and other community agencies."

BY LIZ FARMER | JULY 24, 2019 AT 4:13 PM

An important issue for the future of marijuana businesses won crucial support this week on Capitol Hill. Several U.S. senators expressed support for giving banking access to the billion-dollar marijuana industry, which deals almost exclusively in cash.

Marijuana is legal in 33 states but still illegal under federal law, so any bank that handles marijuana money can be charged with money laundering. That threat makes it difficult for most growers and sellers to get a bank account for their business.

BY LIZ FARMER | JULY 19, 2019 AT 4:00 AM

Over the past decade, public retirement costs have spiked while governments' unfunded liabilities --now totaling more than $1.2 trillion -- have continued to grow.

But according to research that debuted this week, lawmakers shouldn’t worry too much about accumulating pension debt. “There’s an assumption that fully funding pensions is the right thing to do,” said the Brookings Institution’s Louise Sheiner at the paper’s presentation. "Most of the work in this area has been about calculating how unfunded these plans are [and] that’s led to a lot of concern that these plans are in a huge crisis.”

BY LIZ FARMER | JULY 17, 2019 AT 5:00 PM

Three states and a coalition of local governments are suing the IRS and Treasury Secretary Steven Mnuchin over new regulations that block them from circumventing limits on tax deductions imposed by the 2017 federal tax overhaul.

BY LIZ FARMER | JULY 17, 2019 AT 4:00 AM

SPEED READ:

• Massachusetts, New Hampshire, North Carolina, Ohio and Oregon still haven't passed budgets for fiscal year 2020.

• Moody's Investors Service has warned that the delay could hurt local governments, school districts and hospitals.

• Late budgets are unusual in Ohio, but that isn't the story in Massachusetts and Oregon where they've become pretty common.

More than two weeks after the start of the fiscal year in most states, five still don’t have a budget. In most cases, policy debates have held things up -- and that's causing instability in a few places.

BY LIZ FARMER | JULY 12, 2019 AT 4:00 AM

Nevada hopes to be the first state to create its own banking system for the booming marijuana industry, which has generated more than $150 million in tax revenue since 2017, according to Nevada Treasurer Zach Conine’s office.

Since the drug is still illegal under federal law, most banks won’t accept cannabis businesses as clients. As a result, the multimillion-dollar industry is mainly a cash business -- at least for now.

BY LIZ FARMER | JULY 3, 2019 AT 4:00 AM

While the most direct effects of the 2017 federal tax overhaul have been on tax revenue, the law has also impacted the way governments borrow money.

With banks making fewer direct loans to governments, many expected them to turn to the municipal bond market. But that hasn't happened.