MuniNet Guide Archive
Assessing the Credit Quality of America’s Cities – Part Five: The Bottom Line
Due to its lack of accounting for infrastructure assets and all long-term debt and liabilities, including pensions, general fund analysis has limited utility when analyzing municipal financial health. By Richard A. Ciccarone By incorporating the...
Assessing the Credit Quality of America’s Cities – Part Four: FY 2014 Financial Condition
The most basic sign that a government is living within its means is that it balances its books at the end of the year. Traditionally, most city officials, experts, and observers of state and local government focus primarily on the general fund, usually a government's...
Economic Indicators Erratic and Uneven Growth among U.S. States
by guest contributor Bradford Langs Now in its seventh year, the U.S. economic recovery (which began in July 2009) has been deemed modest at best. Both gross domestic product (GDP) and job growth remain erratic and uneven overall - particularly among states. Regarding...
Trends in Urban Development: Planning Ideas in the New Millennium
Like anything else in history, urban planning trends come and go with the times. The flight to the suburbs began in the 1950s and 1960s, and continued through the end of the century. But as the first decade of the new millennium came to a close, infill development in...
Reducing Risk to Payment of State and Local Government Debt Obligations, Statutory Liens from Rhode Island to California SB222
by James Spiotto Government finance officers readily will admit that they consider assuring access to the capital markets at a low cost as part of their duties to their respective governmental bodies. The interest rates or the cost of borrowing is viewed generally as...
Use of Chapter 9 Bankruptcy (by Number, Type and Year)
Historically the use of Chapter 9 bankruptcy by a municipality has been rare and a last resort: Since 1954, virtually all of those municipalities that filed Chapter 9 were small or not major issuers of Bond Debt except for Bridgeport, CT in 1991, Orange County in...
Is Obamacare Fraying Our Healthcare Safety Net
by guest contributor Shelley Michelson “A nation's greatness is measured by how it treats its weakest members.” Mahatma Gandhi The Patient Protection and Affordable Care Act (“PPACA,” “ACA” a/k/a Obamacare) is providing a unique set of challenges for the nation's...
Chapter 9 and Alternatives – Part Three: Competing Interests in Chapter 9 and Bondholders’ Rights
by James Spiotto Chapter 9 is generally viewed as the remedy of last resort for troubled municipalities. If permitted by its state law, a municipality typically does not seek Chapter 9 relief unless it is in extreme financial distress with no obvious solution. Among...
Chapter 9 and Alternatives – Part Two: State Programs to Assist Municipalities in Times of Fiscal Crisis
by James Spiotto As discussed below, over half of states have implemented municipal debt supervision or restructuring mechanisms to aid municipalities. These programs, many of which are identified in the table below and which are described in detail in Municipalities...
Chapter 9 and Alternatives – Part One: Lessons Learned: An Update on the Municipal Bankruptcy Experience
by James Spiotto The state legislatures, in considering how best to assist local governments facing financial challenges or economic distress, may find instructive how other states have addressed these problems and the alternatives and opportunities available in the...
Are Public Libraries Still Relevant in American Communities?
by Mardee Handler Founded in 1833, the Peterborough Town Library in Peterborough, New Hampshire is the oldest tax-revenue supported library in the nation. If you visit its website, you’ll be greeted by an offer to follow the library on Facebook, attend a workshop to...
Of Michael Lewis and Today’s Muni Market
Market Outlook Last Friday, the fixed-income market reacted in rather surprising fashion to a very strong April employment report: it actually rallied, pushing the benchmark yield on 10-year Treasuries down near the low for the year at 2.58%. Apparently, the positive...
Assessing the Credit Quality of America’s Cities – Part Three: Long-Term Liabilities beyond Pensions
By Richard A. Ciccarone City Financial Challenges Beyond Pensions When Assessing the Credit Quality of America's Cities, pensions aren't the only big long term liability facing America's cities. Add to the list bonded indebtedness, other post-employment benefits...
Economic Indicators 2014 Year-End Data Reveals Uneven Recovery
The U.S. economic recovery is now almost six years old (June 2009 was the final month of the recession). This recovery has been deemed weak, with both GDP and job growth remaining both erratic and uneven. Unemployment levels have declined to a sub 6% level from a 10%...
The History of Payment of State and Local Government Debt in the United States
Why is it important to pay state and local government debt? by James Spiotto Past economic downturns have taught us the importance of state and local governments to timely pay their public debts: Panics, recessions and depressions: Since...
Legislative Action: States and Municipalities’ Attempts to Mitigate Pension and OPEB Underfunding
States and Municipalities Have Attempted to Enact Legislation to Reduce or Eliminate Pension and OPEB Underfunding to Address the Problem by James Spiotto Background Facts State and local governmental workers are 12% of the nation’s workforce, and since 1970...
Can Pension Benefits Be Reduced, Rolled Back, or Changed?
How Have Obligations Related to Pension Benefits Changed Over Time, and What Options Exist When They are Unaffordable? Pensions have undergone transition over time from a gratuity (to be paid if you want) to a contractual obligation (that is...
The Pension and OPEBs Crisis – The Hard Facts and Possible Solutions
The Current State of the Underfunding of Pensions and OPEBs by James Spiotto State and local government workers are approximately 12% of the nation’s workforce – 16 million employees. While available cash to pay for employee benefits was...
Trustee and Bondholder Rights and Remedies
By James Spiotto A. In understanding the rights and remedies of bondholders and trustee, it is important to understand the critical differences between revenue bonds and general obligation bonds, lease appropriation bonds and conduit financings and their respective...
The Myth That States Required a Bankruptcy Option – Debt Resolution Mechanism’s for States
By James Spiotto Myth: States need the ability to go bankrupt and have no standing debt resolution mechanisms. Reality: Since the late 1800’s, no state has defaulted on its general obligation bonds with the exception of Arkansas in 1933 which was refinanced. State...
The Myth That Bankruptcy Is the Only Option for Distressed States and Cities – Alternatives to Chapter 9
By James Spiotto Myth: State and local governments only recourse to financial distress is to file bankruptcy or to stop making debt payments to bondholders. Reality: States do not presently have a bankruptcy alternative and do not seem to desire one. State and local...
What Factors Have Helped to Prevent Municipal Defaults and Bankruptcies?
by James Spiotto A. Past market discipline and state and local governments need to borrow: As noted, in the 1800’s and 1900’s, states and local governments in order to fulfill their mandated mission borrowed for needed infrastructure and essential governmental...
What Are the Causes of Municipal Defaults and Bankruptcy?
by James Spiotto A. Traditionally causes of municipal bond defaults in the U.S.A. have been more linked to inability to pay rather than unwillingness to pay or political risks: Economic depression. Non-essential services. Feasibility of projects and municipal...
Understanding Municipal Bankruptcy and Who Can Use Chapter 9?
By James Spiotto What is Chapter 9? Exclusive chapter of the Bankruptcy Code that provides a method for municipalities to adjust debt. Not a tool for elimination of municipal debt but adjustment of debt to what is sustainable and affordable. It is voluntary, a...
How Is Municipal Debt Treated in a Chapter 9 Proceeding? (Priority of Payment)
By James Spiotto A. Types of municipality debt obligations in Chapter 9: There are various types of voluntary municipal debt ranging from bond debt sold to the investing public, debt owed to vendors for goods and services in operation of the municipality to cost of...