Key Takeaways From a New Survey of Municipal Bond Analysts

Here are state and local government stories that caught Route Fifty’s attention ...

STATE AND LOCAL FINANCE | The 2018 Municipal Bond Analyst Survey released by PNC Capital Markets on Thursday takes the temperature of those who have a keen interest in state and local government finance. Some of the key takeaways from the bond analysts’ survey (pdf):

• State government credit quality (48%) jumped to the third-ranked “most important trend” in our survey of 168 municipal analysts. Last year, state credit quality was ranked eighth (24%). ƒ

• Public pensions (92%) and federal policy uncertainty (60%) remain the first and second most important issues/trends facing the market. ƒ

• The 2017 Tax Cuts and Jobs Act impact on municipals: 78% of analysts forecast 2018 municipal bond issuance will be under $350 billion versus $446 billion in 2017. ƒ

• More related to the 2017 tax cut: 29% expect the elimination of advance refundings to have the greatest impact on the municipal bond market. Total 2017 issuance was a record $446 billion. ƒ

• Tax-exemption threat: Only 11% of municipal bond analysts see a “strong” or “very strong” threat to the municipal bond tax exemption after the passage of last year’s tax cut legislation. ƒ

• Climate change: Only 3% of those surveyed believe state and local governments are “prepared” or “very prepared” for climate change. ƒ

• Infrastructure: President Donald Trump’s infrastructure proposal did not resonate well with those analysts surveyed, with 37% having a “negative” or “very negative” opinion of the plan. ƒ

• Pensions: Half of the municipal analysts polled think there is a public pension funding crisis.
   
• Recoveries: Most (79%) analysts do not expect future municipal bond recoveries to be “strong” or “very strong.”

More on pensions: As this chart illustrate, only 44 percent of municipal bond analysts surveyed thought that state and local governments had the fiscal tools available to address the current public pension funding crisis:

[PNC Capital Markets (pdf)] ƒ

IMMIGRATION | During a visit to West Virginia on Thursday, President Trump said that Oakland, California Mayor Libby Schaaf should be prosecuted for relaying information to the public about anticipated Immigration and Customs Enforcement raids in the San Francisco Bay Area. "How about the mayor of Oakland, where she tells a 1,000 people to get going, law enforcement is coming to get you," Trump said. "To me that's obstruction of justice and something should happen there." [KGO-TV / ABC7]

TEACHER STRIKES | Major school districts in Oklahoma will remain closed on Friday as the statewide teacher walkout continues as state legislators try to figure out an education funding solution that will settle the labor action. The Oklahoma Senate is scheduled to consider two bills on Friday that have already passed the House, including a measure to have Amazon collect state sales taxes from third-party vendors. [National Public Radio; Oklahoma Watch]

If Texas teachers were to walk off the job like their colleagues in Oklahoma have, “state law says that teachers could lose their teaching certificates and pensions.” Due to the 1993 statute in the Lone Star State, several teacher associations are “encouraging their members to refrain from leaving their classrooms and going on strike.” Meanwhile in Arizona, where educators have been discussing the possibility of a larger organized walkout and laid out five demands for state lawmakers last week. [Texas Tribune; The Arizona Republic / AZCentral.com]

ELSEWHERE …

• Asheville, North Carolina: Officials in Buncombe County are looking “to strengthen policies that allowed former manager Wanda Greene to spend hundreds of thousands of dollars on retail shopping and fine dining.” That includes proposals that restrict the use of gift cards by county officials and employees. [Asheville Citizen-Times]
   
• Lynn, Massachusetts: A U.S. Department of Housing and Urban Development’s recently announced $2 billion in aid to help local communities build housing and develop supportive services for homeless individuals includes more than $1.8 million in funding for this city’s continuum of care, led by the Lynn Housing Authority & Neighborhood Development. [The Daily Item]

• Mobile, Alabama: In what “appears to be a breakdown in communication between the courts system and the jail,” a man charged with capital murder was mistakenly released from the Mobile County Metro Jail and hadn’t been rearrested as of Thursday afternoon. [AL.com]

• St. Louis, Missouri: Economic development officials in St. Louis were told by Amazon that the reason their city didn’t make the cut for further consideration for the company’s second headquarters campus because it lacked a “blueprint for talent.” [St. Louis Business Journal]

• Lyon County, Nevada: A group of citizens in this rural county southeast of Reno are trying to kick out legalized prostitution “with the goal of creating a more family-friendly environment to attract tech workers to their communities.” [The Nevada Independent]
   
• Macomb County, Michigan: After a circuit court judge last week removed anti-government activist Karen Spranger as county clerk due to a residency ineligibility when she ran for public office, the outspoken Spranger filed a “largely nonsensical” appeal in a Detroit federal court on Monday that was “rife with spelling errors” and “accuses a number of county officials of insurrection, rebellion and mutiny.” Spranger was the subject of intense scrutiny due to the mismanagement of the county clerk’s office and her various interpersonal conflicts with other officials and staff. [Michigan Radio]

• Minneapolis, Minnesota: In the Land of 10,000 Lakes, brown marmorated stink bugs have been on the march in recent years. “Homeowners are advised to caulk every possible joint around windows, doors, foundations and so forth, but considering this bug needs an entryway only seven millimeters wide, the odds of success are poor.” Good luck. [MinnPost]

• LaPorte, Indiana: The LaPorte County coroner’s office has acquired a 7-month-old Malinois dog that can be used to find bodies and human remains, plus track down missing persons who may have for instance, wandered away from a nursing home. “This is something no one has in this part of the state,” and LaPorte County has offered to share the new dog with surrounding jurisdictions in northwest Indiana. [South Bend Tribune]