Post Recession Good News
The National League of Cities reports that nearly ¾ of municipalities are better off in2013 than they were in 2012. In Broward County, over half the cities actually have more revenue in 2013 than they did in 2006. Property values are up in 72% of Counties, and real estate activity was high in 2012 and 2013, although it has slowed in 2014. Nearly 60% of the municipalities were not projected deferral of capital improvements, although 1/3 expect to reduce maintenance and 40% to defer capital. The biggest challenge cities identified was street condition (23%, followed by sewer, stormwater and water although these were all under 16% which is a bit disappointing given the condition of much of this infrastructure). Money remained their biggest challenge. Total local government budgets are $3 trillion, and the bond market Is a robust $3.7 trillion. New construction for local water, sewer and stormwater infrastructure is expected to reach $750 billion in 2014, with 3.2 and 4.8 billion respectively for water and sanitary sewer.
Pensions are the biggest liability and one that is critical for many local entities with their own pension plans (like Detroit). Many others have or will migrate to a state plan, or were already part of a state plan. Having a large pool off employees decreases risk to the pension plan and increased revenues (and future outlays). Pension plans or Ponzi schemes? Now that is the question….