Over the past year, Congress and the administration have taken up the issue, on numerous occasions, of federal budget deficit reduction. Many state and local officials understand the need for, and are supportive of, efforts to reduce the long term federal deficit. However, many state and local officials also have concerns about the way in which such actions will be implemented and believe it is important to understand the consequences of certain decisions.

Impact of Federal Deficit Reduction 10052011.pdf

The state and local government bond markets have held up well throughout the year despite a few high profile municipal defaults or bankruptcies by local governments. The forecasts from some commentators in 2010 and earlier this year predicting a municipal bond crisis have not come to fruition, and a collapse of the municipal debt markets is not likely to arise anytime soon. Certainly states and localities will continue to encounter fiscal strain, but potential defaults or bankruptcies are so few and far between that they are the “exceptions” that prove the “rule”.

Municipal Bonds - An Update on State and Local Borrowing.pdf

Facts You Should Know: State and Local Bankruptcy, Municipal Bonds, and State and Local Pensions was produced by the following organizations in early 2011:

Fact Sheet on Bankruptcy Bonds Pensions.pdf

This report finds that the recent improvement in the national economy has not translated to strong growth in total state spending. This is largely due to the fact that state revenues have not increased as fast as Recovery Act funds have declined, leading to a unique situation in which total state expenditure growth has slowed during the same time that the national economy has been improving.

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