From Florida to Michigan, states are readying record budgets as tax collections are set to exceed prerecession peaks. The achievement is going unrewarded in the $3.7 trillion U.S. municipal-bond market.
Kelly Blair, a banker from the Baltimore suburbs, spends hundreds of dollars online every year buying gifts and household supplies like pet food and shampoo. She doesn’t check to see whether she owes sales tax -- though her home state of Maryland says that she should.
For the past four years, U.S. states struggled to close more than $500 billion of budget shortfalls caused by the recession, ushering in tax increases, spending cuts and clashes with public-employee unions.
California’s first credit upgrade in six years shows how curbs on pension costs, a voter-backed tax boost and an improving economy have allowed it to exit Wall Street’s basement, leaving Illinois as the lowest-rated state.
After eight years as a guidance counselor at Scotts Valley High School and more than 14 years with the district in Santa Cruz County, California, Kimberly Frey says she lost her job in June as part of budget cuts.
States closed more than $325 billion of deficits in the last four fiscal years with spending cuts and additional revenue, according to the National Association of State Budget Officers. These balanced budgets have helped municipal bonds return more to investors this year than U.S. Treasuries, stocks, corporate bonds and commodities, even as Harrisburg, Pennsylvania, and Jefferson County, Alabama, filed for bankruptcy.
National Association Of State Budget Officers Photos