Elsewhere on the Web: Smart OPEB Coverage

I continue to be pleasantly surprised by the generally in-depth, and non-inflammatory coverage the general-circulation press has been bringing to the issue of municipal retiree health-care liabilities (commonly known by their accounting acronym, OPEBs, or Other Post-Employment Benefits).  The Marin Independent-Journal is the latest addition to this list, with a thoughtful piece that illustrates the problem (one sewer agency is facing a 200% jump in OPEB outlays by 2020), and a detailed analysis of the tradeoffs that municipal employees and employers made in assembling the current system.

The solutions to the problem (which may include bonds) are not simple, but cool-headed education like that provided in the article seems like a good first step towards solid policy decisions.

The State of Maine is also looking at its long-term liabilities, in this case seeking to dedicate new funding sources for highway construction as gas-tax revenues stagnate.

Today's BB: Unwelcome News

Layoff stories always seem to hit hard in the municipal market, which still bears the scars from downturns in 1987 and 1995, when entire firms shuttered their muni departments.  Yesterday's breaking news alert that UBS is cutting 40 jobs in municipal finance sparked a familiar reaction, but looks to be a very different situation -- a one-time move by the firm to boost profitability, rather than any fundamental change in its committment to the business.

And while every layoff is hard, the silver lining is that these do come at a moment when the municipal finance job market seems strong -- new-issue volume is up year-over-year, and firms like Citigroup, JP Morgan, RBC and bond insurers CIFG and ACA have recently made high-profile hires in the midst of one of the more active recruiting seasons for bankers.  To help in the process, any displaced UBS bankers are invited to contact us for a free Bond Buyer Online password to be used during their transition period (up to three months).

Elsewhere, Chicago bureau chief Yvette Shields reports that financing business in Wisconsin may soon return to normal, after the dismissal of corruption charges against a former state purchasing supervisor gave finance officials more confidence that they will not be held criminally liable for doing their jobs, which sometimes includes choosing a negotiated transaction.  The state did its best to remain active in the market during the negotiated moratorium, even going so far as to price an advance refunding competitively -- an experience Capital Finance Director Frank Hoadley colorfully compares to "trying to steer the Queen Mary with a canoe paddle." 

And you can add Tucson to the list of cities that have concluded a publicly-financed convention center hotel is a key investment they need to make in order to bolster their appeal as a destination for major conferences and trade shows.  The hotel is one piece of a downtown redevelopment project that will include an arena and expanded convention center, and is expected to generate more than $300 million of municipal bonds.