Bridges Crumble as Muni Rates at Least Since ’60s Ignored

http://www.bloomberg.com/news/2014-06-23/bridges-crumble-as-muni-rates-at-least-since-60s-ignored.html

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he legacy of the 18-month recession that ended in June 2009 still looms large for America’s states and cities. While revenue has revived, governments are under pressure to increase funding for education and other services after years of cuts. They’re balancing those needs against required payments toward entitlements such as pensions, having set aside $1.4 trillion less than they’ve promised to retirees, according to Fed data.

Pennsylvania Hangover

“There’s a psychological hangover,” said Uri Monson, chief financial officer of Montgomery County, Pennsylvania, outside Philadelphia. “We’re not going to go out and borrow unless we absolutely have to.”



Issuance this year has tumbled to $123 billion nationwide through June 13, down 20 percent from the 2013 pace, according to data compiled by Bloomberg. It’s also 30 percent below levels seen in 2010, the final year of the federally subsidized Build America Bonds program, which was designed to spur infrastructure investment.

Since 2010, states and localities have lowered their bond load by $111 billion, the most since the Fed began keeping records in 1945. They’ve paid down the liabilities even as yields on 20-year general obligations have averaged 4.25 percent in the five years since the recession, the lowest since 1969, according to Bond Buyer data.