Wednesday, December 08, 2010

GOP proposals bill require state and local govt's offering tax-free bonds to do conservative pension accounting; could this affect muni bond prices, too?

The Washington Post ran an important editorial Dec. 8 about state pension plans, “Federal policies should help, not hurt, states’ fiscal health”, link here.  In print (p A18) it is called "Pension Reality Check: Congress can help or harm states' efforts to get a fiscal group".  

Three House Republicans (Reps. Devin Nunes (R-Calif.), Paul Ryan (R-Wis.) and Rep. Darrell Issa (R-Calif.) have submitted a bill that would require states and local governments that issue federally tax exempt bonds to file accurate reports on pension liabilities, using conservative accounting methods. The detailed story is on a website called “The Hill” (with a blog called "On the Money") by Peter Schroeder, with link here. It would be called the “Public Employee Pension Transparency Act”, and it should have an HR number in early 2011 with the 112th Congress. It’s possible that concern over the bill might have caused a recent dip in prices for tax-free municipal bond funds, as well as uncertainty over the tax cut extension situation (previous post, Dec. 6).

The Post editorial also criticizes a proposed Public Safety Employer-Employee Cooperation Act of 2009,. S 1611 (here at Open Congress), which could trip up state governments more by giving police and fire unions more power.

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