Several states are showing scary illiquidity.  New Jersey’s governor just yesterday impounded funds the legislature had already appropriated and announced a state of emergency.  He stopped short of “declaring” emergency, which would have given him special powers over contracts.  New Jersey comes up high on the list of states with big budget gaps, heavy pension [...]

fiscal stress, state and local politics, states

A blogsite, “Mish’s Global Economic Trend Analysis” recently aggregated a selection of news stories covering state and local government budget deficits and proposed layoffs.  Click here  to link to the post.  There are a few differences between private sector layoff announcements and the public sector that are worth pointing out.   The private sector typically announces layoff actions that are already decided.  [...]

fiscal stress, Nevada, state and local politics

Oregon voters passed Propositions 66 and 67 yesterday which support Governor Kulongowski’s budget proposal.  The following link will give you detail on the propositions, the vote, the key donors to each campaign and the groups advocating pro and con.  Oregon is a high income tax state and ranks high among the states with large budget deficits and [...]

ballot initiatives, fiscal stress, state and local politics, state income taxes, states

A particularly toxic form of adjustable rate mortgage is going to hit the headlines in the spring and summer of 2010 with defaults, foreclosures and workout discussions extending into 2012.  “Option ARMs” also known as “Pick-a-pay” allow the borrower to choose how much to pay each month and reports indicate 94% of all borrowers paid [...]

California, fiscal stress, Florida, mortgage securities, Nevada

The slowdown in migration in the U.S. has significant consequences for municipal finance.  New population growth in a community has been the driving force in municipal infrastructure finance since the beginning – and the slowdown we have seen over the last two years will affect bond volume in previously high growth centers.  Borrowing to meet [...]

California, fiscal stress, Florida, Nevada, states

From the trough of recession it can take up to two more years for cities (and other local governments) to reach their revenue low point, according to research by the National League of Cities and the Brookings Institution.  If the overall economy has hit bottom, we’re looking at another few years for local government to find the low [...]

fiscal stress

State legislatures, required to balance their budgets, are up against the wall.  Budget gaps have worsened mid-year.  When you total the gaps going into the budget for FY2010 with mid-year fissures you come up with more than $190 billion according to a recent report from the Center for Budget and Policy Priorities. This is after [...]

fiscal stress, state income taxes, states

Further to our discussion of Detroit’s pension, we see that Missouri’s public pension is in a lawsuit with State Street Bank over their securities lending program.  These programs are intended to act like demand deposits — but the dollars are huge, so any movement of large blocks of funds are likely to affect liquidity.  What with [...]

fiscal stress, liquidity, securities lending

The city of Detroit does not need another financial setback.  With unemployment topping 17% and ever increasing short term borrowing, the city is under an immediate survival imperative to cut spending or face insolvency.  State revenue sharing is being cut in the recent budget.  Local taxes, including the casino wagering tax are falling. 
The good news [...]

Detroit, fiscal stress, liquidity, securities lending