The Municipal Market Advisors research shop says today that recent court decisions in Minnesota and Colorado upholding states’ rights to reduce cost-of-living pension increases for current retirees could affect municipal credit quality.
Writes MMA:
Also likely to help [municipal bonds] is news of favorable court rulings in CO and MN, where judges threw out retiree lawsuits contesting those state pension plans’ reductions to [cost of living allowance] payments. While still subject to appeal, and of limited precedent outside of those states, these developments are highly constructive for long term credit quality: COLAs present a huge share of total unfunded future liabilities for state pension systems.
COLAs are important, because they cut off, or at least curtail, inflation as an avenue through which state and local governments can pare down their liabilities. Without COLAs, future pension obligations look more like fixed-rate bond obligations. Inflation could nibble — or chomp — away at them.
So, good news in that state and local governments may have a bit more flexibility — and that could be true, someday, too, for states like New York, with supposedly ironclad constitutional guarantees against any reduction in pension value (the state constitution is not made of money).
But, bad in that Washington now has one more incentive to neglect inflation, the debtor nation’s pernicious problem solver.
Organizations across New York and the country this week observed to raise awareness of the educational pathways that exist outside of residentially-assigned public school systems. But what does Read More
Newly available records shed further light on the origins of former Gov. Andrew Cuomo's pandemic memoir, which won him a $5.1 million publishing contract before contributing to his political downfall.
The records reveal that his government staff were a Read More
Average daily office occupancy in New York City has bounced back from 2020-21 lows, but by most accounts remains well below pre-pandemic norms. Read More
The more time passes since the spring 2020 Covid-19 outbreak, the more New York stands out among all states for the weakness of its post-pandemic employment recovery.
As of December, seasonally adjusted private employment in New York was still nearly 2 Read More
Attorney General Letitia James' recent lawsuits against nursing homes have not only exposed dangerous conditions for the residents – but also dangerous blind spots at the Health Department.
Read More
Governor Hochul may be getting ready to take the confirmation battle for her Court of Appeals chief judge nominee, Hector LaSalle, to the courts. Read More
Governor Hochul gave health care surprisingly little attention in her State of the State speech on Tuesday – a sign that taking on dysfunction in one-sixth of the state's economy ranks low on her list of priorities. Read More