Stockton - impact on munis ?

[FIREd]

The fact that there are lists of cities in trouble means that this is a well documented problem that is already priced in the market.

 

[ERD50]

The fact that there are lists of cities in trouble means that this is a well documented problem that is already priced in the market.

Good point. Getting back to the OP - What is the current NAV of these issues, compared to your purchase NAV 8 years ago? That would tell us something about that the market says about the risk in these issues.


-ERD50

 

[heirloom]

As long as the middle class income keeps going down, there will be less money from taxes to pay gov. employees. Plus, more people are going onto disability, which I think they don't have to pay taxes.

So...I really think this is the beginning of a hurtful event.

 

[samclem]

As long as the middle class income keeps going down, there will be less money from taxes to pay gov. employees. Plus, more people are going onto disability, which I think they don't have to pay taxes.

So...I really think this is the beginning of a hurtful event.

The problem isn't a lack of revenue. Government revenues have been on an upward trend for at least 30 years, and they are pretty much back on track despite the recession. The problem is not on the revenue side . . . .

Total State Revenues (Constant 2005 dollars)

Total Govt Revenues (Federal, State, Local) in Constant 2005 dollars​

​

 

[heirloom]

I agree the revenue is increasing, but not as much as costs. Take a look at Ca. in this map. You just can't spend more than you take in.

Comparison US State and Local Government Spending - GSP - Population 1992-2017 - Charts

 

[Original Wally]

I retired from a Calif Muni - the Sacramento Municipal Utility District (SMUD). The electicity supplier for (essentially) Sacramento County. It is an independent District. Their Bond Indenture contains a a requirement that rates be set at a level sufficient to provide (IIRC) NET revenues (after expenses) of 1.2x Debt Service requirements.

The point is, you have to know your muni. Like any company.

When the State of California General Obligation Bonds were downrated to a smidgen above Junk status some years ago, SMUD made a huge effort to educate the investing community that SMUD is different from the State.

 

[heirloom]

Nice return!
I'm from Penna.(our capital almost went bankrupt!). After I hear Obama on the 10th, I will want to look for some muni bonds within the state as long as he doesn't change the tax status on muni bonds.

Western Pa. has a lot of building going on. When the pipeline passes, there will be more.

 

[ducky911]

What is going to help CA cities is the housing recovery (boom) that has started. Higher property taxes means more money for cities.

 

[ERD50]

What is going to help CA cities is the housing recovery (boom) that has started. Higher property taxes means more money for cities.

Does it? Different municipalities are different, but in every one that I've paid taxes in my property value was used to determine my slice of the pie, not the overall size of the pie.

Example: they levy a tax of $1,000,000 in a community of 1000 homes which are all equal in value. Every home is charged $1,000. If home values all double, or half, every home is still charged $1,000.

IMO, this (using values to allocate the expense, not to determine the expense) is the better way to do it. Municipal expenses really don't change much with the whims of the housing market. A boom or bust doesn't affect the cost of maintaining a police or fire department, or the cost of re-paying a bond. But it makes some sense to split expenses based on the value of the property - I'm surprised I have not heard much talk about making this tax rate 'progressive', as every case I'm aware of this is a flat rate tax.

-ERD50