MUNILAND

Spending cuts of $25 billion will ease the deficit, though out-migration of high earners remains a drag on revenue. K-12 education will avoid significant cuts, but is vulnerable if the economy slows.

As climate issues mount, residents face escalating property insurance costs and, in some cases, difficulty obtaining coverage at all, which threatens to hurt the economy and curtail tax collections.

Local governments face a loss of economic vitality and tax revenue as the working-age population declines. Meanwhile, a tighter labor supply remains a chronic issue for the hospital sector.

As water shortages threaten to curb economic growth, governments in many parts of the country are stepping up investment in water management and conservation.

Suspension of commercial shipping in the Suez Canal and reduced activity in the drought-afflicted Panama Canal have the potential to reduce revenue at key US ports.

Pension liabilities for large local governments are falling because of higher interest rates. This dynamic — and greater contributions — bodes well for credit quality, though investment risk lingers.

While pandemic pain lingers, our higher education outlook has improved to stable from negative as revenue grows, margins steady and balance sheets remain generally healthy.

We have revised our outlook for the US not-for-profit healthcare sector to stable from negative as a recovery takes hold, largely driven by a slowdown in the growth rate of labor costs.

States’ pension liabilities, a source of credit stress for years, are declining and providing financial flexibility. In England, some local governments are grappling with substantial deficits.

With a slower economy in the central business district, the city projects deficits and we’ve changed our outlook to negative. We’ve done the same for Bay Area Rapid Transit with its ridership drop.

States with legal recreational marijuana are generating tax dollars for various needs, but no more than Nevada’s 2.5% of state revenue. Policy changes, however, have the potential to boost the amount.

With bankruptcy to shed debt and stay open largely unviable, colleges grappling with falling enrollment and rising costs are increasingly closing. In a shutdown, bondholder outcomes are a wild card with the amount of reserves on hand and value of real estate assets playing a role.

ChatGPT’s rollout has sharpened universities’ focus on AI pitfalls such as cheating and benefits like improved educational outcomes. Plus, US ports’ cargo volumes are way down, but business models and finances provide stability.

Kevyn Orr, who led Detroit’s 2013 bankruptcy filing, weighs in on why the landmark event enabled a turnaround for the city and recounts some of the restructuring’s peculiarities, including Renoir’s involvement. At Moody’s, the bankruptcy marked such an inflection point that it prompted changes in our credit analysis. Naomi Richman, a senior vice president in our Public Finance Group, joins the podcast at about the 22:30 mark to comment on those shifts and other reverberations from the Detroit case, while analyst David Strungis discusses the city’s current credit trajectory.

With an EPA proposal, US municipal utilities and cities are facing mounting costs to remove toxic PFAS, also known as forever chemicals, from drinking water. Yet the utilities’ ability to raise customer rates to recoup costs will limit credit risks. Meanwhile, companies that make the chemicals or products with them are dealing with a barrage of lawsuits similar to what hit Big Tobacco and opioid makers.

Moody’s analysts discuss accelerating electric vehicle sales’ effects on US auto insurers and auto finance captives, and implications for state fuel taxes.

Weak investment returns have chipped away at endowment values, but universities manage endowments with expectations of volatility, easing some of the adverse credit effects.

Hospital credit stress is not going away as labor costs, largely driven by a nursing shortage, drive up expenses and capacity constraints squeeze revenue.

Muniland welcomes New York City’s comptroller to discuss the city’s first social bond, affordable housing, his push to increase budget reserves and what’s next for the city’s economy.

Macroeconomic conditions, enrollment troubles and muted revenue growth will continue to hinder colleges and universities. For mass transit, a weak ridership recovery and looming end to federal pandemic aid signal more tough times ahead.

A one-notch upgrade has Chicago moving into investment grade. The city is set to benefit from a policy calling for greater pension contributions aimed at preventing growth in its unfunded pension burden.

A less-discussed part of the plan, which revamps income-driven undergraduate loan payments, will boost enrollment. Plus, Florida municipal issuers have tools to limit Hurricane Ian credit risks.

With flush rainy day funds and flexibility to cut costs, states are poised to avoid credit stress if a severe economic tailspin or even a recession takes hold. Plus, housing finance agencies’ credit quality remains strong, but the HFAs face challenges in the current economic environment.

Inflation stands to increase personnel costs and budget stress for states and municipalities, in part because of competition from the higher-paying public sector. Plus, peak hurricane season arrives amid the elevated inflation, driving up rebuilding costs for governments along the Atlantic and Gulf coasts if they’re hit by a major storm.

Rising prices are boosting state and local governments’ sales tax revenue, lessening their burden from inflation-driven cost increases. Plus, Marcia Van Wagner, who is retiring as a state analyst, speaks about her career path and offers some insight into how today’s inflationary environment compares with the turmoil in the 1970s and 1980s.

Digital currencies provide states and local governments with a means to collect taxes and utility fees, while universities are accepting tuition payments and donations in crypto form. Plus, states are making efforts to ban their municipalities from making ransomware payments, hoping to deter future cyberattacks.

Recovery patterns in Puerto Rico’s bankruptcy-like case resemble large municipal bankruptcies such as Detroit. Also, flood risks threaten to weaken some cities’ property tax bases, increase the need for infrastructure investment and disrupt the economy.

Susan Fitzgerald and Chris Collins of the US Public Finance team discuss enrollment and other revenue challenges affecting higher education. Plus, Ted Hampton discusses how gas tax suspensions will affect states’ capacity to pay debt on bonds backed in large part by the suspended taxes.

Tom Aaron of the US Public Finance team and Madhavi Bokil of the Credit Strategy and Research team examine why states, local governments and other public finance issuers are generally positioned to withstand moderately rising inflation. Plus, Chris Yared and Michael Wertz discuss to what extent federal infrastructure funding will address the 44,000 US bridges in poor condition.

Nansis Hayek and Matt Cahill of the US Public Finance team discuss how the pandemic-driven telehealth surge is helping the challenged healthcare sector. Plus, analysts Baye Larsen and Ted Hampton explain how manufacturing computer chips in Ohio and electric vehicles in Michigan will help the Rust Belt.

Marcia Van Wagner of the US Public Finance team discusses reasons behind the falloff in soaring state tax revenue growth, including expired federal pandemic aid and interest rates. Plus, Jennifer Chang, Adebola Kushimo and Coley Anderson weigh in on environmental, social and governance (ESG) issues facing state and local governments and delve into our new simplified way of communicating ESG risks.

Kendra Smith of the US Public Finance team discusses why a nursing/labor shortage and difficulties with insurer reimbursement contribute to our negative outlook for the healthcare sector. Plus, Tim Blake and Leonard Jones weigh in on solid tax revenue growth during the pandemic playing a leading role in the stable outlooks for states and local governments.

Matt Cahill and Beth Wexler of the US Public Finance team discuss financial challenges hospitals face from a shortage of nurses and other employees. Plus, Dan Seymour weighs in on how some smaller public finance issuers are recovering from pandemic-driven shutdowns.

Analyst Earl Heffintrayer of the Project and Infrastructure Finance team discusses how the air traffic recovery is helping US airports and their ability to weather COVID-19 surges. Plus, Eva Bogaty of the US Public Finance team examines prospects for tourism destinations Hawaii and Las Vegas and Tom Aaron weighs in on investment returns reducing pension liabilities for cities and states.

Dan Kowalski and Michael Wertz of the US Public Finance team discuss the bill’s funding to replace lead service lines and water utilities facing a mix of aging assets and climate change. Plus, Steven Goodman-Leibof and Helen Cregger weigh in on the credit effects of water reductions in Arizona, Nevada and California.

David Levett and Ted Hampton of the US Public Finance team delve into Chicago and the State of Illinois’ improved prospects despite heavy pension obligations. Also, Sarah Jensen and Al Medioli discuss the lack of pandemic-driven defaults among US public finance credits we rate.

Emily Raimes of the US Public Finance team discusses the rise in state debt amid COVID-19 and the role borrowing will play as states’ infrastructure needs mount. Plus, Joe Manoleas and Val Gomez delve into the potential effects of wildfires in California and hurricanes along the Atlantic and Gulf coasts.

Michael Osborn, Heather Correia and Matthew Cahill of the US Public Finance team discuss the increasing cyber threats facing universities, state and local governments, hospitals and transit systems. Also, Pisei Chea weighs in on what recent US Census results signal about states’ economic fortunes, while Frank Mamo comments on municipalities’ prospects as they emerge from the coronavirus pandemic.

Baye Larsen and Ken Kurtz of the US Public Finance team discuss how federal aid is buoying mass transit, but that a new normal awaits, with sector-wide ridership settling in below pre-pandemic levels. Plus, Val Gomez and Marcia Van Wagner explain how the pandemic has slowed progress toward gender equality in the labor force with implications for tax revenue and the housing market.

Ted Hampton of the US Public Finance team discusses how the State of Illinois is weathering COVID-19’s financial difficulties while pension obligations continue to weigh on its credit quality. Plus, Earl Heffintrayer and Myra Shankin of the Project and Infrastructure Finance team weigh in on the US airport sector’s improving prospects as passenger levels pick up.

Matthew Butler and Natalie Claes of the US Public Finance team discuss how better-than-expected revenue and a new wave of federal assistance spurred the outlook changes for US state and local governments in the face of the pandemic.

In the inaugural episode of Moody’s Talks – Muniland, Pisei Chea and Jared Brewster of the US Public Finance team discuss the effects of federal policies on states and higher education. Also, Susan Fitzgerald and Michael Osborn focus on how the pandemic’s upheaval will affect the year ahead for colleges and universities, including enrollment and debt refinancing.

Welcome to Muniland! Hosted by Nick Samuels of the US Public Finance team, Muniland delves into the latest developments impacting the credit environment for states, local governments, healthcare, higher education and more. In each episode, Moody’s analysts join Nick in exploring the ramifications of the pandemic, climate change, cyber risk, federal policy, pensions burdens and other deep-seated challenges.