Public Money

A Better Way to Measure Pension Debt's Danger

Last year, I wrote about an emerging theory among investors known as the “new neutral.” The theory holds that for the next several years we’ll see an unprecedented combination of slow economic growth, low interest rates and paltry returns on investments. So far, the new neutral has been spot on. 

To see this theory in action, look no further than state and local pensions. Investment returns have lagged, and as a result, so too have pension fund balances. Pension critics have renewed their calls for reform, saying that pensions are an existential threat to many local governments’ financial health. This is true, but it’s also incomplete.  READ MORE

Airbnb Creates an Affordable-Housing Dilemma for Cities

Home-sharing services like Airbnb are creating an awkward dilemma for cities and counties, especially in areas where housing costs are high. Municipalities are struggling to balance the economic boost from the growth of home-sharing services with the pressing need for affordable housing.

Before we go any further, let’s put the considerable growth of such services into perspective. One study found that 400,000 Airbnb guests who visited New York City in 2012 and 2013 spent $632 million, supporting 4,580 jobs. As compared to tourists staying in hotels, Airbnb guests tended to stay two days longer and spent nearly $200 more at local businesses during their visit. READ MORE

Bias in the Municipal Bond Market

In April, something remarkable happened in the otherwise sleepy world of public money. Orange County, Calif., long considered a problem child in local public finance, announced a plan to return to the municipal bond market.

At the start of the 1990s, the county made some big bets on an early form of financial derivatives -- not unlike those at the heart of the 2008 financial market crisis -- and it lost. It suffered major financial damage and eventually declared bankruptcy. But now the county is looking to borrow once again, and investors are primed to snatch up its new bonds at eye-poppingly high prices.  READ MORE

Can the ‘Sharing Economy’ Reduce Income Inequality?

So far, 2016 has been framed by unfolding fiscal tragedies in a number of cities -- Flint, Mich.; Ferguson, Mo.; and East Cleveland, Ohio, come to mind. Plagued by high poverty, rising crime rates and diminished sources of revenue, these cities are examples of the increase in income inequality among U.S. municipalities.

Just as the richest Americans have raced ahead of working-class Americans, there are haves and have-nots among cities, too. It got me thinking: What role should states play in all of this? And more specifically, are there ways to use the “sharing economy” to narrow the disparity gap? READ MORE

3 Ways to Take P3s to the Next Level

Public-private partnerships are the future of public finance. That little sentence can light a fire in the world of public money, which is struggling to find the wherewithal to pay for infrastructure.

For a while now, public-private partnerships (P3s), which let a private entity handle everything from the development and operation of a public project to its financing, have become a standard option to replace roads, bridges, wastewater treatment facilities and other core infrastructure. Recently, there’s been talk of using P3s for the reimagining of such icons as New York’s Penn Station and LaGuardia Airport, Chicago’s “L” train, and the Los Angeles Convention Center.  READ MORE