State of the States

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					 State of the
   States
State Debt Management Network
     11th Annual Conference
                                      Alaska
                                      Arizona
                                     California
                                     Colorado
                                      Hawaii
                                       Idaho
       West                          Montana
                                      Nevada
                                    New Mexico
                                      Oregon
                                        Utah
                                    Washington
Robin Reedy
Deputy Treasurer, Debt Management    Wyoming
Nevada State Treasurers Office
       Western Region
• “triple-A”: Utah
• “double-A” : AK, CA, HI, MO, NV, NM,
  OR, WA, WY (TRAN)
• Not Rated - AZ, CO, ID
  – Colorado short term: Sp1, F1+
  – Idaho short term: Sp1, Mig1, F1
               Topics
• Education
• Technology
• Tobacco
• Transportation
• News
                  Education
• Alaska - School Reimbursement Program
   – $25 million authorized this year to reimburse up to 70%
     of school debt service
• California - Vote approved $9.2 billion for K-12
  Higher Education.
• Colorado - Higher Education - uses revenue
  bonds. State intercept program (Aa3, AA-)
• Hawaii - State Dept. of Education funds school
  infrastructure through GO CIP process.
                 Education
• Idaho - New School Bond Guarantee Program
  (sales tax). Idaho Revolving Loan/Grant Fund
  $10 million appropriation for school safety issues.
• Montana - Loan Program
• Nevada
   – Constitutional amendment proposed
   – “School bond bank”
• New Mexico - 37% of previous year‟s oil & gas
  revenues for Higher Ed & K-12 CIP projects,
  emergencies and deficiencies.
                Education
• Oregon - Guaranty Program
• Utah - Guarantee program for local school
  districts (AAA)
• Wyoming - Supreme Court case.
               Technology
• Electronic bidding
  – Alaska - Parity
  – California - Jan. 2001 first internet bidding.
  – Colorado - TRAN
  – Idaho - Municipal Bond Bank and School Bond
    Guarantee programs plan to utilize the internet and
    Muni-Auction
  – Nevada - Bloomberg & Parity. Electronic POS
  – New Mexico - Board of Finance has noticed an increase
    in bids - (5 - 6 bids vs. 12 - 15 bids)
  – Utah - Utilizes Bloomberg and Parity.
                Technology
• POS, OS, Disclosure
  – California - Website utilized for information - future
    issues, refundings, rating and disclosure information
  – Hawaii - Airport Division has posted POS
  – New Mexico - Website utilized for information
  – Utah - POS is posted electronically and Final OS is
    electronic with minimum number printed.
                     Tobacco
• Securitization
  – Yes
     • Alaska
          – Securitized 40% last year to net $93 million.
          – RFP in near future for another 40% which is expected to
            net $116 million.
                   Tobacco
• Securitization
  – No
     • California & Wyoming - no interest at this time -
       just talk
     • Colorado - Voted down last year and did not attempt
       this year
     • Nevada - Legislation failed for the 2nd time
     • New Mexico - Nothing came of legislation
     • Utah - no interest to securitize
             Transportation
• GARVEEs
  – Colorado - Issued through Dept. of
    Transportation
  – Montana - $125 million (2002-03)
• Airports
  – Alaska - $142 million will soon be offered on
    Parity
  – Hawaii - Airports are state supported -
    authorized through Department of
    Transportation.
               Transportation
• Alaska
   – $350 million package passed Assembly as a COP issue
   – Senate wants taxpayers to vote so it can be GO
• Hawaii - Last transportation issue was October 2000 (AA-,
  Aa3, AA)
• Nevada - $100 million GO (December) - part of a 5 year
  plan
• Utah
   – I-15 - $1.6 billion ($90 million estimated to be debt issuance)
   – Issued $358 million in variable rate - $208 million to be refunded
     to fixed in July 2001
   – Variable has averaged 3.7% vs. rate at issuance (4.6%)
              Transportation
• Oregon
  – Revenue Bond Program
  – $58 million last year
  – Legislature in process of approving $400 million
  – Rated Aa1/AA+/AA+
                          News
• Alaska - Ports and Harbor pooled COP proposal
  failed to pass.
• Hawaii - Master Lease Program
• Idaho
   – TRAN rating presentation
   – New vehicles for municipal issuance (MBB, School Guarantee and
     Revolving Loan/Grant Fund programs)
• Nevada - Lease purchase with specific parameters not
  included in 2% capacity of the State
• Oregon - Second “forward current refunding”
                       News
• Utah - Vanilla
• Wyoming - Mineral industry has moved the State from
  deficit to surplus (-$100 million vs. +$700 million)
                                        Illinois
                                        Indiana
                                         Iowa
                                        Kansas
                                       Michigan
                                      Minnesota
Midwest                                Missouri
                                       Nebraska
                                     North Dakota
                                         Ohio
                                      Oklahoma
                                     South Dakota
Kurt Kauffman
Debt Coordinator                      Wisconsin
Ohio Office of Budget & Management
               Topics
• Overview
• Tobacco
• New Bond Programs
• Use of Technology
• Other Highlights
        Overview – Ratings
•   “triple A” - Minnesota, Missouri
•   “double A” - Illinois, Ohio, Oklahoma, Wisconsin
•   Split rating - Michigan (Aaa/AAA/AA+)
•   Issuer (“shadow”) rating
    – Indiana (Moody‟s, S&P): Aa1/AA+
    – Kansas (S&P): AA+
    – North Dakota (Moody‟s): Aa3
• Not rated: Iowa, Nebraska, South Dakota
                  Overview
• Low to Moderate Debt Burden
  Per Moody‟s State Debt Medians for the end of calendar
  year 2000, Midwestern States:
  – Per capita net tax-supported debt ranges from low of
    $25 (Nebraska, 50th among the states) to a high of $859
    (Wisconsin, 13th among the states).
  – Net tax-supported debt as a percent of personal income
    ranges from Nebraska‟s 0.1% (50th among the states) to
    Wisconsin‟s 3.2% (15th among the states)
                    Overview
• Economic slowdown - more pronounced in states with
  sizable manufacturing sector
• Average to below average growth in personal income
• The trough in the “swoosh”

• Revenue collections have experienced high volatility
• GRF growth in range of 3-5% in next fiscal year
• No new taxes
                   Tobacco
• Primarily for health related purposes, including
  tobacco use prevention and medical research
   – Indiana, Iowa, Missouri, and Oklahoma

• Primarily for education programs and facilities
   – Ohio, North Dakota, and South Dakota
   – Michigan – 50-75% for a statewide scholarship
     program for high school students and a performance-
     based reward program for middle schools
                    Tobacco
• Other
  – Minnesota and Wisconsin are directing some portion of
    the receipts to the GRF for general state purposes
  – Illinois is directing its funds annually. Uses include tax
    relief, funding of venture capital, and seeding of the
    State‟s rainy-day fund.
  – Kansas - 100% to the Kansas Endowment for Youth
  – North Dakota - 45% for water development projects.
                     Tobacco
• Securitization
   – No
      Illinois, Indiana, Kansas, Michigan, Minnesota,
      Missouri, Ohio, Oklahoma, Nebraska, North Dakota

   – Yes
      • Iowa - Approximately $675 million (later in 2001)
      • South Dakota - Legislation gives Governor
        authorization to securitize (petitions are circulating)
      • Wisconsin - Legislation expected to pass.
        Anticipating $1.25 to $1.6 billion (first half of 2002)
      New Bond Programs
• Transportation
   – Indiana - “Crossroads 2000” has added capacity of
     $325 million
   – Michigan - “Build Michigan III Program” - $800
     million over 4 years
   – Minnesota - $100 million GO trunk highway bonds
     authorized, $30 million sold to date
   – Missouri - $2.25 billion authorized for highways, $250
     million sold to date
   – Ohio - $125 million of GARVEEs in the next 2 years
   – Oklahoma - $799 million in GARVEEs authorized
     New Bond Programs
• Other
  – Illinois – GO authorization for electricity generating
    facilities and “Build Illinois” expanded to fund
    community college facilities
  – Indiana - prisons and state facilities - $200 million
  – Iowa - “Vision Iowa” authorization of $300 million for
    local recreational and cultural attractions
  – Ohio - $400 million authorized for greenspace
    conservation and brownfield revitalization
  – Oklahoma - master lease program for higher education,
    administered by the Regents, issued by ODFA.
         Use of Technology
• Electronic Distribution of POS
   – Nearly all Midwestern States utilize electronic distribution
     of the POS and have posted their POS on the web.
   – About half of the states use electronic delivery in
     conjunction with a hard copy mailing; half make hard copies
     available only upon request.

• Electronic Bidding of Competitive Sales
   – 3-4 of the Midwest States issue bonds predominantly by way
     of negotiated sale.
   – Of the remaining Midwest States, all but 2 have utilized
     electronic bidding and have been very satisfied with the
     results.
             Other Highlights
• Indiana – very pleased with new commercial paper and VRDN
  programs
• Michigan – created a Debt Advisory Board, consisting of the
  State Treasurer, Budget Director, and certain dept. directors
• Minnesota - County Credit Enhancement Program extends State
  support to certain county GO bond issues
• Oklahoma - extended state tax exemption to local government
  obligations issued after July 1, 2001
• Wisconsin reminds states to be aware of the MuniAuction
  versus Parity patent claim
    Midwest Radar Screen
 (Important Issues in the Coming Year)
• National economy and its impact on credit
  ratings
• Proliferation of GARVEE and lease-backed
  obligations
• High volatility in interest rates
• GASB 34
                                           Alabama
                                           Arkansas
                                            Florida
                                            Georgia
                                           Kentucky
                                           Louisiana
    South                                 Mississippi
                                         North Carolina
                                         South Carolina
                                           Tennessee
                                             Texas
                                            Virginia
Bryan Archer
Debt Management
West Virginia State Treasurer‟s Office
        Southern Region
•   “triple-A” 4 states
•   “double-A” 4 states
•   “single-A” 1 state
•   Split Rating - TN (Aa1, AA+, AAA)
                Topics
•   Debt Issuance
•   Education
•   Debt Management/Capacity Initiatives
•   Technology
•   Other
              Debt Issuance
• Georgia
  – GO debt issuance
     • FY2000 $794.7 million
     • FY2001 $567.2 million
     • FY2002 $693.2 million (authorized)
  – GARVEEs
     • Legislation was passed
     • Could see $2.4 billion over next 7 years
     • First issue could be $200 to $300 million (possibly Nov. „01)
              Debt Issuance
• Kentucky
  – 1998-2000 and 2000-2002 budgets authorized more
    than $1 billion
     • $268 m and $28.2m Road Fund Bonds
     • $96 m and $117.5 Agency Funded Bonds (university issues)
  – Asset/Liability Commission (ALCo)
     • Commercial Paper
     • Standby letter of credit
             Debt Issuance
• Mississippi FY2001 (as of 12/31/00)
   – Approx. $474.6 million ($90 million refunding)
   – $100 million for MDOT Gaming Counties Highway
     Program
• North Carolina
   – State debt for FY2000-2001 $680 million
• Virginia
   – Various issues for Higher Education, K-12 Education
     and Lease Revenue Bonds
   – $375 million (Oct. 2000) FRANs - Transportation
     Board
                   Education
• Virginia
  – Virginia Public School Authority
     • Sum-sufficient appropriation added to Notes
     • Impact of exempt for-profit K-12 facilities
  – K-12 and Higher Ed. may be priority in next biennium
• QZABs
  – Tennessee looking at second issue
  – North Carolina - Camden Co. $10 million, other issues
    for Fall 2001
                Education
• Higher Education
  – North Carolina voters approved a $3.1 billion
    bond referendum (Nov. 2000)
     • $250 million issued in March 2001
  – Tennessee State School Bond Authority
     • Long-Term Debt - approx. $104 million
     • Commercial Paper - $45 million
 Debt Management Initiatives
• Georgia
  – Debt Management Advisory Committee
      • December 2000 report
      • Staying in target with other triple-A states
      • $700 million in revenue supported debt in FY2002
        & 03
• Mississippi
   – Making recommendations in conjunction with
     Treasury, F&A and the Legislative Budget Office
 Debt Management Initiatives
• North Carolina
  – COPs for prisons
  – Bills to expand
     • Special Obligation Bonds
     • NC Capital Facilities Finance Agency to allow for profit and
       not-for-profit corporations to issue debt – varied special
       purposes
• Virginia - Debt Capacity Advisory Committee
  – Recommended $698 million FY2001 and 02
  – Cited revenues and limited authorization during 2000
    General Assembly
               Technology
•   Internet/Intranet
•   Email distribution of POS
•   Electronic bidding
•   Disclosure
    – Tennessee – OS with disclaimers. Information
      must go through review and approval process
                      Other
• Louisiana - $25 million from Mineral Audit
  Settlement Fund to defease GOs
• Virginia
   – Sustained more than 4% actual annualized revenue
     growth in 1st qtr. of 2001
   – Continued reliance on appropriation vs. GO debt
   – Public Private Transportation Act of 1995
   – Design/Build financing proposals
                                          Connecticut
                                           Delaware
                                            Maine
                                           Maryland
                                         Massachusetts
                                        New Hampshire
        East                              New Jersey
                                           New York
                                         Pennsylvania
                                         Rhode Island
                                           Vermont
Lewis Logan                             Washington DC
Deputy Treasurer                         West Virginia
State of Maryland, Treasurer‟s Office
          Eastern Region
• “triple-A” - 2 states
• “double-A” - 10 states
                Topics
•   Debt Reduction / Affordability Plans
•   Education
•   Debt Issuance/Administration
•   Miscellaneous
            Debt Reduction /
             Affordability
• New York - Debt Reform Act of 2000
  – Phased–in cap which limits new outstanding debt to 4%
    of personal income.

  – Limits debt service cost to 5% of receipts

  – Debt restricted to capital purposes

  – Maximum term of 30 years for State supported debt
             Debt Reduction /
              Affordability
• Rhode Island
  – GO debt will grow from $937 million to $960 million
    by FY05. All other debt to decline from $725 million
    to $585 million which represents a 7% decline in the
    next 5 years.
  – Credit Guidelines
     • Tax Supported Debt as % of personal income - target of 5 - 6%
     • Debt Service as a % of General Revenue - not to exceed 7.5%
     • Guidelines may be exceeded temporarily under extraordinary
       conditions. If exceeded - return to guidelines within 5 years.
  – Continued Emphasis on Pay-As-You-Go
  – Sinking Fund Commission
             Debt Reduction /
              Affordability
• Maine
  – Debt Management has allowed Maine to reduce bonded debt from
    $405 million (1993) to $341 million (2000) while still issuing
    needed bonds for capital finance projects.


• Maryland
  – July 1999 bond sale reduced from $225 million to $125 million
  – February sale was cancelled
  – Savings of approximately $483 million
                Education
• New Hampshire
  – School funding issue still looming
  – Interim plan until January 2003
  – Consequences of Legislative inaction:
     • $200-$225 million shortfall next biennium
     • Rating downgrade
     • Continued uncertainty for State, cities, towns
                Education
• Connecticut
  – Legislature planning to use some of budget surplus to
    pay for school construction (and transportation
    projects) in lieu of bonding
  – UCONN2000 - expect to issue debt under this program
     • Student Fee Revenue Bonds without reserve fund or
       State credit support
• Maryland
  – $9.8 million in QZABs (Fall 2001)
                Debt Issuance /
                Administration
• New Hampshire
  – $525 million Rate Reduction Bonds
  – $50 million short-term commercial paper
  – $90 million GOs
• New York
  – Approx. $853.5 million in GO Bonds this past year
  – Continue to increase variable rate exposure in GO program
  – Five year capital plan calls for GO issuance of approx. $1.1 billion
    through 2006.
                Debt Issuance /
                Administration
• Connecticut
   – Issuing more variable rate bonds
   – Looking at derivative products
   – General Airport Revenue/PFC financing/refinancing ($213
     million)
   – Second Injury ($124 million)
   – Rate Reduction Bond financing - utility stranded costs ($1.4
     billion)
   – Forecast that GOs will be 20% higher for urban revitalization
   – New bond structures being evaluated: GARVEEs, POBs, Tobacco
                   Debt Issuance /
                   Administration
• Connecticut
   – Underwriters‟ takedowns
   – Radio advertising (retail order period)
   – Increased use of co-bond counsel and co-financial advisors to
     involve minority, local and emerging firms


• Maryland
   –   2000:   $350 million
   –   2001:   $400 million
   –   2002:   $429 million
   –   2003:   $410 million
                 Debt Issuance /
                 Administration
• District of Columbia
   – Plans to issue GOs to fund its CIP
       • FY 2002: $350 million
       • FY 2003: $385 million
       • FY 2004: $395 million
   – Variable rate debt
       • Approximately 7% is currently variable rate
   – Tobacco securitization
       • $521 million in revenue bonds
       • Defeased $480 million of GO debt
       • TIF
           – $300 million authorized
           – $6.9 million in May 2001 for the “Spy Museum”
           – $100 million in FY2002
                 Technology
• New Hampshire
  – Used e-bidding via Parity for sale of GO issue
  – Placed Official Statement on the web
• New York
  – Electronic bidding (pending legislation concerning
    physical bid option)
     • Allows accurate and timely submission of bids based on
       market conditions
     • Increases universe of potential bidders
     • Staff and travel time
                 Technology
• New York
  – Disclosure
     •   PDF format
     •   Electronic POS
     •   Availability of “paper” POS
     •   Distribution of final OS - physical form
• Maine
  – Treasury Automated Management Information (TAMI)
    system.
     • Promote electronic payments
     • Save time and eliminate duplicate data entry
     • Increase timely recognition of revenue.
                Technology
• Connecticut
  – Internal debt management system
  – OS posted on MuniOS web page
  – RFPs on Treasury web site
  – E-mail for bond transaction communications
  – Record retention
     • RFP responses and underwriter proposals
     • Electronic transcripts (including signature pages)
     • Electronic scanner
              Technology
• District of Columbia
   – PARITY
   – DBC software and Sungard treasury
     workstation software
             Miscellaneous
• New York
  – Auction Rate Securities
      • diversification
      • economic benefit
      • administrative requirements
  – Rating upgrade
• Maine - 3 major RFPs
  – Investment Consultants
  – Statewide Banking Services
  – State Trust Fund Investment Managers
             Miscellaneous
• Rhode Island
  – Rhode Island Capital Plan Fund
• Connecticut
  – Treasurer‟s Office becoming more involved in
    municipal finance issues
  – Oversight of pension obligation issues by
    municipalities
  – Treasurer serves on financial review board of distressed
    city
            Miscellaneous
• District of Columbia
   – Rating upgrade
   – Control Board
   – FY2001 - no seasonal cash flow borrowing

				
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