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Millennials moving out of their parents’ basements

We’ve worried a lot about millennials and their ability to reach financial stability as they face mounting student debt for college degrees that aren’t getting them the career jobs they expected. But one Standard & Poor's (S&P) economist predicts they will soon start gaining traction. The report by Beth Ann Bovino says that the slower-growth market has delayed this generation from really taking off. But now things should start improving. “The job market will provide work, wages will increase, and, despite a somewhat slower-growth economy than in previous rebounds, millennials will start buying houses and cars to support their growing families,” the April 29 report said. Much like the Silent Generation, born from the mid-1920s to the early 1940s, millennials have a propensity toward conservative spending and saving patterns that will serve them well. Still, student loan burdens “could seriously crimp spending” and even lead to defaults and increased income inequality, the report said. S&P calculated the stagnated wage growth could cut as much as $244 billion from U.S. GDP growth over the next four years.

“It's crucial for economists, policymakers and the business community to consider this downside scenario when thinking of the future of the U.S. economy,and to have options ready to combat a difficult adulthood for this otherwise promising generation,” Bovino said.

It’s all about the kids

The Tax Foundation has released a map that shows where the most residents are receiving a child tax credit. The foundation analyzed county data and found substantial variation from a high of 31 percent of filers in Shannon County, S.D., receiving a tax credit to a low of 5 percent in Sumter County, Fla. The highest concentration of tax credits is in Utah. The analysis noted there is even strong variation among counties within the same state. In California, for example, "only 7 percent of filers in San Francisco County take the CTC," it said. "However, a couple hundred miles down I-5 in Kings County, 25 percent of filers take the CTC.”

The foundation offers a few reasons for the variation. The first and most obvious is that highly urban areas usually have fewer children and families. This is true of San Francisco County (7 percent), Arlington County, Va.; (6 percent) and New York City (6 percent). Florida is in a separate category. Sumter County and other counties in the state (as well as several counties in northern Michigan) have very few tax credit takers because they have many more retirees than the national average. But there are other factors besides age. The foundations reminds us that the CTC is means-tested, meaning that families with high incomes are ineligible. “For this reason, Falls Church, Va., has very few people taking the credit (9 percent), even though it is a perfectly nice place to raise children,” the analysis said. “Falls Church is simply too wealthy, and many of its residents are ineligible.”

Oh how the time flies

Puerto Rico is floundering. It has huge debt and can’t seem to balance its budget. So perhaps it’s not a surprise to some when the territory said this week it would not meet its May 1 deadline to file its audited annual financial report. This report is for a fiscal year that ended on June 30, 2014 -- nearly a year ago. Moody’s Investor’s Service this week called the notice a negative sign for the island's credit rating, which is already at junk status. Credit ratings agencies hate this kind of thing and place a high importance on governments’ ability to provide current financial disclosures and statements. “The commonwealth’s long history of delayed annual financial reports is reflected in its current Caa1 rating and this most recent delay will not by itself prompt a change in Puerto Rico’s rating,” Moody’s said. The agency added that Puerto Rico was already missing the mark as Moody's best-practices standard requires a March 31 publication for fiscal years ending on June 30. “However," it went on, "there is a risk that the delay will impede preparation of disclosure documents needed for bond sales that the government is relying on to restore liquidity at the [Government Development Bank].”

The GDB is unique to Puerto Rico and essentially acts as the territory's banking institution. Its fiscal stability has also been in limbo. At the end of 2014 (halfway through this current fiscal year), the GDB’s net cash had declined by about $460 million, or a whopping 30 percent, from just a month earlier.