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Billions of dollars in tax-sheltered municipal bonds are sold to fund stadiums and arenas that enrich team owners while fueling federal deficits. Local politicians can’t say no, but Congress should.
Governments need to balance expected returns on their invested cash with the costs of their bonds and other obligations. Shifting a portion of their long-term debt from fixed to floating rate is a way to hedge interest rate risk.
An online resource now being built out has the potential to become an important intellectual hub for public-sector investment practitioners. They need to articulate what they most want to find there.
It is irresponsible and dangerous for politicians to dictate which investments public asset managers must favor. States, municipalities and public pensions are paying higher interest rates on bonds and getting poorer returns on investments.
A debt-ceiling breach would cost states in terms of revenue, pension investment losses and increased borrowing costs. Even a fix at this point will likely lead to cuts in federal grants.
State and local financiers now face interest rate markets that anticipate decelerating inflation and a weaker economy. Public treasurers and debt managers need fresh ideas, agility and prudent strategies.
Culture wars over environmental, social and governance factors used by pension fiduciaries are in the spotlight, but it’s the municipal bond arena where long-term analysis must trump short-term symbolic politics. Sustainability actually matters to investors.
With a bond issue earmarked for community projects and marketed to individual investors as well as institutional buyers, Chicago is trying to move the needle on social equity. Is it the start of a durable trend, or just a cute public finance anomaly?
If a congressional debt ceiling deadlock persists and capital markets seize up, states and localities will still have to pay their bills. Public financiers need to be ready to adjust their portfolios to establish a liquid cash buffer.
A new federal law will eventually make some data searches and comparisons easier, but implementation will be a challenge. Software vendors will be staking their claims, but public-sector finance associations should take the lead.
Disinflation and economic deceleration will dominate state and local budgets and investments. Cash is king, at least for a while. Payroll costs will outrace revenues. It’s going to be a year for muddling through.
Inflation punished Wall Street and Main Street, and public financiers who ignored it squandered billions. Congress passed two bills important to states and localities. And pensions took a hit, but taxpayers won’t feel that pain for years.
Tax-exempt issuers’ costs have shifted upward dramatically this year as the Federal Reserve has pushed interest rates higher to fight inflation. It’s time to re-strategize debt management programs.
As costs rise, the economy slows and federal grants decline, Tom Kozlik warns that cities, including Philadelphia, may have to adjust the way they manage their finances to prepare for tough times ahead.
The most expensive item on the November ballot will be a general obligation bond measure that could end up being the largest revenue stream in the city’s history, increasing property taxes by $40.91 per every $100,000 in value.
The city approved $1.2 billion in bond money for street repairs, affordable housing developments, a new police station and other projects. But some officials wonder if increasing inflation will force the city to revise its plans.