"Ensuring State and Municipal Solvency" outlines the tremendous fiscal challenges facing states and municipalities, including long-term structural issues like unfunded pension and health-care obligations, and outlines several options to stabilize the situation.
At this point, cutting back on services and increasing taxes won't be enough to stabilize state and municipal finances, even when the economy fully recovers. It's going to require real paradigm shifts: a fundamental restructuring of budgets and the entire budgeting process, sustainable revenue generation, new efficiencies and federal/state partnerships.
Key data points on the state and municipal budget situation include:
Proposed solutions include:
The report is a joint production of the Milken Institute and the Ewing Marion Kauffman Foundation and is the result of a Financial Innovation LabTM that pulled together a diverse group of state and local officials, union representatives, experts from the capital markets, money managers, academics, public-sector attorneys, and representatives from bond rating agencies.