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August 5, 2003
GovPro E-Newsletter
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Tuesday, August 5, 2003 Volume 2, Issue 30
Welcome to the GovPro Newsletter brought to you by the Penton Government Media Group. Look forward to news, resources, product and supplier information, and links relating to the government market.
If this message was sent in error or you wish to unsubscribe, see the unsubscribe information below.
Sponsored by MSA
CONTENTS
Bond Ratings Fall Below Average States Receive Royalty Checks Detector Locates Buried Plastics Wildfire Funds Wash Up News of the Weird
FEATURE
Bond Rating Drop Another Of States' Fiscal Woes
State bond ratings have taken a beating over the past two years, costing state governments hundreds of millions of dollars in higher interest payments and adding to long-term budget problems.
California is the most recent state to take a hit. Its bond rating was downgraded last week by Standard & Poor's, one of three major bond rating agencies. California is now the lowest rated state.
California Treasurer Phil Angelides said the downgrade could cost the state $1 billion over the next 30 years, because California will have to pay higher rates on its bonds to attract investors. The same budget-busting logic applies to other states facing lower ratings.
"Interest rates of course reflect risk. A lower bond rating means there is a higher credit risk, so consequently, interest costs tend to be higher. As a result, state borrowing costs will increase," said Robert Kurtter, senior vice president for state ratings at Moody's Investors Service, a bond rating agency.
The California legislature completed action late Tuesday night on a budget that pushes much of the state's $38 billion deficit into the future through heavy borrowing.
Moody's has lowered the bond ratings of nine states since July 2001 -- California, Connecticut, Illinois, Minnesota, New Jersey, North Carolina, Oregon, Tennessee and Wisconsin. Thirteen states have negative outlooks, according to Moody's.
Standard & Poor's has lowered ratings for five states over the past two years -- California, Colorado, Kentucky, New Jersey and Wisconsin. The agency said 11 states have negative outlooks.
"There have been a bunch of downgrades, which is pretty unusual. We haven't seen that since the recession of the early 1990s," Kurtter said.
Louisiana is the only state to have its bond rating upgraded during this period, although its current rating is still low relative to other states.
The reason for the recent spate of downgrades and warnings is that many states are on shaky fiscal ground due to the wobbly economy. As a result, they are finding it difficult to generate enough tax revenue to pay for state programs.
The choice facing states: cut program or raise taxes. Bond analysts generally don't care which course of action states follow. What they don't like to see is excessive borrowing or gimmicky accounting to paper-over serious problems.
"What [bond raters] have tried to stress, to somewhat depoliticize the process, is that they are looking for what they call structural balance. Simply put, that means roughly having your revenues match your expenditures with a reasonable margin of error included. It's a simple concept that is not easy to achieve in practice," said John Hallacy, managing director of municipal research at Merrill Lynch.
Despite the great fanfare that usually accompanies state bond rating downgrades, Hallacy said state governments, even California, generally remain good investment options, provided the investor can tolerate a little more risk.
"This is a case where we have a state that is at the investment grade edge. So it may not be suitable for everyone, but for a portfolio that can tolerate a little more risk it's an opportunity to buyand avail themselves of some outsize returns," Hallacy said.
The reason state bonds are generally considered solid investment options is because states have the ability to raise money and cut spending in ways that private corporations, and even local governments, can only dream of.
"States are sovereign, they have large tax bases, they are not like corporations, they can't go out of business and they have largely good management," said Moody's Kurtter.
In fact, Kurtter said he doesn't know of any state that has ever nose-dived into junk bond territory, despite recent warnings that California may be flirting with such an event.
"I don't recall a time, and I don't know that in our recordkeeping, at least the recordkeeping that goes back to 1973, and I don't know of any earlier time where we've actually had a state rating that was junk bond status," he said. Source: stateline.org
MSA
Since 1914, MSA has been offering a complete line of personal protection equipment. MSA has over 2,000 products on GSA schedules covering Respiratory/Head/Eye/Face/Hearing/Fall Protection and Portable Instruments for Gas Detection. http://www.msanet.com
NEWS
MINERAL ROYALTY SHARING
The Interior Department's Mineral Management Service distributed more than $548 million to 35 states during the first six months of 2003, their share of mineral and oil and gas lease payments. The lion's share of the money--$262.1 million--went to Wyoming. The smallest check, just $54, went to Georgia.
SWORDS INTO PLOWSHARES
A Waltham, MA-based company demonstrated a lightweight device that can detect metallic and plastic underground pipes buried down to 10 feet below ground. The device, developed for the U.S. Dept. of Energy, was adapted from a landmine detector that CyTerra Corp. developed for the U.S. Dept. of Defense.
No Room for Wildfire Funds in Supplemental Appropriations
The Senate passed a $983 million supplemental funding bill for federal disaster relief Thursday, despite concerns that the bill does not include money to fight wildfires.
The Bush administration had requested an additional $289 million to fight wildfires, but the House did not include the money in its version of the bill. Both the Forest Service and the Bureau of Land Management (BLM) are expected to run out of money for wildfire measures before September 30, 2003, when the fiscal year ends.
The Federal Emergency Management Agency (FEMA) will also run short of money, but the agency can not borrow money from other funds, while the Forest Service and BLM can. Source: Environmental News Service
NEWS OF THE WEIRD: Bizarre but true stories about real people. http://www.govpro.com/GPRONewsletter/Article/29204/
LINKS
ORIX Public Finance, a leading provider of innovative financing for state and local municipalities, offers flexible terms, expedient processing and time-tested expertise. Let an ORIX professional help you today. http://www.orixfin.com
Federal Signal will accelerate your response time with electronic and mechanical outdoor warning sirens, software, and the Informer tone-alert radio. http://www.federalwarningsystems.com
PPI Modular Structures Inc. is a construction company that provides modular and pre-manufactured buildings. Custom applications are our specialty! http://www.ppimod.com
OLYMPIA! The only name you need to know for your office machine requirements! Paper Shredders, Typewriters, Calculators, Paper Handling Equipment. http://www.olympia.to
As a global leader in office furniture, Haworth offers a comprehensive line of furniture and service solutions for any office. http://www.haworth.com
Dawn Enterprises, a long time GSA choice for ultra-secure trashcans, planters, benches and bollards manufactured in either concrete or stone, in the colors of your choice. http://www.trashcans.com
GEM is the zero-emission transportation solution for your fleet needs. This Low Speed Vehicle is ideal for those everyday short distance trips. http://www.gemcar.com/gsa
John Deere. Better machines, greater choices. Lower prices, fewer hassles. Our complete online catalog brings the John Deere showroom right to you. http://www.JohnDeere.com/GovSales
Newark InOne is the only electronics distributor to have a catalog-wide GSA Schedule (GS-06F-0044M) exclusively for the supply of over 150,000 electronic components and supplies. Visit http://www.teamgov.com or contact 1.800.TEAM.GOV (832.6468) for a FREE catalog or to place your next order.
SimplexGrinnell: Your OneStop* provider for integrated fire, security and communications. Serving you via the GSA Schedule. To learn more, visit: http://www.simplexgrinnell.com/gsa
Custom-designed Meyer snow plows fit exact vehicle frame and weight specifications for exceptional performance in all applications. Visit: http://www.meyerproducts.com
KI is an award-winning, international furniture producer. Products include office seating, stacking and guest chairs, tables and wall systems. http://www.KI.com
Polythane Systems and the affiliated companies sell spray polyurethane foam for roofing, walls and tanks and the coatings necessary to complete the system. http://www.polythane.com
Alamo Industrial is the world's largest manufacturer of tractor-mounted vegetation management equipment. Built Sharper to give you the edge you need! Visit http://www.alamo-industrial.com
Installed in over 100 military and government facilities around the world, Onity provides superior electronic locking systems, e-safes and energy management solutions. Visit http://www.onity.biz
Skatewave Modular Skatepark Systems is a division of Landscape Structures Inc. Skatewave was founded in March 2001 and since then has installed more than 350 parks across the United States, Canada and Southeast Asia. Visit http://www.skatewave.com
Electric Eel Mfg. produces a full range of sewer cleaning equipment for the municipal market. Pipeline inspection and location equipment also available. Visit online at http://www.electriceel.com
Rubbermaid Commercial Products: Material handling, transport, sanitary maintenance, safety, waste systems, food service products, and healthcare products. Visit http://www.specialmade.com
Government fleets - comply with EPAct and Executive Order 13149, and meet petroleum reduction goals with help from FuelMaker and NGVs. http://www.fuelmaker.com
For over 60 years, C&H has been a leading supplier of industrial products such as material handling, shop equipment, maintenance equipment, material storage, shipping supplies, safety products, dock equipment and more. Contact C&H at 1-800-558-9966 or visit our website at http://www.chdist.com
Safety Storage, the first choice for custom and pre-fabricated hazardous storage buildings. http://www.safetystorage.com
Crown Equipment designs, manufactures, distributes, services, and supports material handling products that provide customers with superior value. http://www.crown.com
You may qualify for a FREE Magazine Subscription
Complimentary subscriptions to Government Product News, a product-driven resource, and Government PROcurement, editorial targeting the public sector purchasing professional are available to those who qualify. To subscribe to Government Product News visit: http://www.submag.com/sub/gn To subscribe to Government Procurement visit: http://www.submag.com/sub/gp
Copyright 2003 Penton Media, Inc.
Welcome to the GovPro Newsletter brought to you by the Penton Government Media Group. Look forward to news, resources, product and supplier information, and links relating to the government market.
If this message was sent in error or you wish to unsubscribe, see the unsubscribe information below.
Sponsored by MSA
CONTENTS
Bond Ratings Fall Below Average States Receive Royalty Checks Detector Locates Buried Plastics Wildfire Funds Wash Up News of the Weird
FEATURE
Bond Rating Drop Another Of States' Fiscal Woes
State bond ratings have taken a beating over the past two years, costing state governments hundreds of millions of dollars in higher interest payments and adding to long-term budget problems.
California is the most recent state to take a hit. Its bond rating was downgraded last week by Standard & Poor's, one of three major bond rating agencies. California is now the lowest rated state.
California Treasurer Phil Angelides said the downgrade could cost the state $1 billion over the next 30 years, because California will have to pay higher rates on its bonds to attract investors. The same budget-busting logic applies to other states facing lower ratings.
"Interest rates of course reflect risk. A lower bond rating means there is a higher credit risk, so consequently, interest costs tend to be higher. As a result, state borrowing costs will increase," said Robert Kurtter, senior vice president for state ratings at Moody's Investors Service, a bond rating agency.
The California legislature completed action late Tuesday night on a budget that pushes much of the state's $38 billion deficit into the future through heavy borrowing.
Moody's has lowered the bond ratings of nine states since July 2001 -- California, Connecticut, Illinois, Minnesota, New Jersey, North Carolina, Oregon, Tennessee and Wisconsin. Thirteen states have negative outlooks, according to Moody's.
Standard & Poor's has lowered ratings for five states over the past two years -- California, Colorado, Kentucky, New Jersey and Wisconsin. The agency said 11 states have negative outlooks.
"There have been a bunch of downgrades, which is pretty unusual. We haven't seen that since the recession of the early 1990s," Kurtter said.
Louisiana is the only state to have its bond rating upgraded during this period, although its current rating is still low relative to other states.
The reason for the recent spate of downgrades and warnings is that many states are on shaky fiscal ground due to the wobbly economy. As a result, they are finding it difficult to generate enough tax revenue to pay for state programs.
The choice facing states: cut program or raise taxes. Bond analysts generally don't care which course of action states follow. What they don't like to see is excessive borrowing or gimmicky accounting to paper-over serious problems.
"What [bond raters] have tried to stress, to somewhat depoliticize the process, is that they are looking for what they call structural balance. Simply put, that means roughly having your revenues match your expenditures with a reasonable margin of error included. It's a simple concept that is not easy to achieve in practice," said John Hallacy, managing director of municipal research at Merrill Lynch.
Despite the great fanfare that usually accompanies state bond rating downgrades, Hallacy said state governments, even California, generally remain good investment options, provided the investor can tolerate a little more risk.
"This is a case where we have a state that is at the investment grade edge. So it may not be suitable for everyone, but for a portfolio that can tolerate a little more risk it's an opportunity to buyand avail themselves of some outsize returns," Hallacy said.
The reason state bonds are generally considered solid investment options is because states have the ability to raise money and cut spending in ways that private corporations, and even local governments, can only dream of.
"States are sovereign, they have large tax bases, they are not like corporations, they can't go out of business and they have largely good management," said Moody's Kurtter.
In fact, Kurtter said he doesn't know of any state that has ever nose-dived into junk bond territory, despite recent warnings that California may be flirting with such an event.
"I don't recall a time, and I don't know that in our recordkeeping, at least the recordkeeping that goes back to 1973, and I don't know of any earlier time where we've actually had a state rating that was junk bond status," he said. Source: stateline.org
MSA
Since 1914, MSA has been offering a complete line of personal protection equipment. MSA has over 2,000 products on GSA schedules covering Respiratory/Head/Eye/Face/Hearing/Fall Protection and Portable Instruments for Gas Detection. http://www.msanet.com
NEWS
MINERAL ROYALTY SHARING
The Interior Department's Mineral Management Service distributed more than $548 million to 35 states during the first six months of 2003, their share of mineral and oil and gas lease payments. The lion's share of the money--$262.1 million--went to Wyoming. The smallest check, just $54, went to Georgia.
SWORDS INTO PLOWSHARES
A Waltham, MA-based company demonstrated a lightweight device that can detect metallic and plastic underground pipes buried down to 10 feet below ground. The device, developed for the U.S. Dept. of Energy, was adapted from a landmine detector that CyTerra Corp. developed for the U.S. Dept. of Defense.
No Room for Wildfire Funds in Supplemental Appropriations
The Senate passed a $983 million supplemental funding bill for federal disaster relief Thursday, despite concerns that the bill does not include money to fight wildfires.
The Bush administration had requested an additional $289 million to fight wildfires, but the House did not include the money in its version of the bill. Both the Forest Service and the Bureau of Land Management (BLM) are expected to run out of money for wildfire measures before September 30, 2003, when the fiscal year ends.
The Federal Emergency Management Agency (FEMA) will also run short of money, but the agency can not borrow money from other funds, while the Forest Service and BLM can. Source: Environmental News Service
NEWS OF THE WEIRD: Bizarre but true stories about real people. http://www.govpro.com/GPRONewsletter/Article/29204/
LINKS
ORIX Public Finance, a leading provider of innovative financing for state and local municipalities, offers flexible terms, expedient processing and time-tested expertise. Let an ORIX professional help you today. http://www.orixfin.com
Federal Signal will accelerate your response time with electronic and mechanical outdoor warning sirens, software, and the Informer tone-alert radio. http://www.federalwarningsystems.com
PPI Modular Structures Inc. is a construction company that provides modular and pre-manufactured buildings. Custom applications are our specialty! http://www.ppimod.com
OLYMPIA! The only name you need to know for your office machine requirements! Paper Shredders, Typewriters, Calculators, Paper Handling Equipment. http://www.olympia.to
As a global leader in office furniture, Haworth offers a comprehensive line of furniture and service solutions for any office. http://www.haworth.com
Dawn Enterprises, a long time GSA choice for ultra-secure trashcans, planters, benches and bollards manufactured in either concrete or stone, in the colors of your choice. http://www.trashcans.com
GEM is the zero-emission transportation solution for your fleet needs. This Low Speed Vehicle is ideal for those everyday short distance trips. http://www.gemcar.com/gsa
John Deere. Better machines, greater choices. Lower prices, fewer hassles. Our complete online catalog brings the John Deere showroom right to you. http://www.JohnDeere.com/GovSales
Newark InOne is the only electronics distributor to have a catalog-wide GSA Schedule (GS-06F-0044M) exclusively for the supply of over 150,000 electronic components and supplies. Visit http://www.teamgov.com or contact 1.800.TEAM.GOV (832.6468) for a FREE catalog or to place your next order.
SimplexGrinnell: Your OneStop* provider for integrated fire, security and communications. Serving you via the GSA Schedule. To learn more, visit: http://www.simplexgrinnell.com/gsa
Custom-designed Meyer snow plows fit exact vehicle frame and weight specifications for exceptional performance in all applications. Visit: http://www.meyerproducts.com
KI is an award-winning, international furniture producer. Products include office seating, stacking and guest chairs, tables and wall systems. http://www.KI.com
Polythane Systems and the affiliated companies sell spray polyurethane foam for roofing, walls and tanks and the coatings necessary to complete the system. http://www.polythane.com
Alamo Industrial is the world's largest manufacturer of tractor-mounted vegetation management equipment. Built Sharper to give you the edge you need! Visit http://www.alamo-industrial.com
Installed in over 100 military and government facilities around the world, Onity provides superior electronic locking systems, e-safes and energy management solutions. Visit http://www.onity.biz
Skatewave Modular Skatepark Systems is a division of Landscape Structures Inc. Skatewave was founded in March 2001 and since then has installed more than 350 parks across the United States, Canada and Southeast Asia. Visit http://www.skatewave.com
Electric Eel Mfg. produces a full range of sewer cleaning equipment for the municipal market. Pipeline inspection and location equipment also available. Visit online at http://www.electriceel.com
Rubbermaid Commercial Products: Material handling, transport, sanitary maintenance, safety, waste systems, food service products, and healthcare products. Visit http://www.specialmade.com
Government fleets - comply with EPAct and Executive Order 13149, and meet petroleum reduction goals with help from FuelMaker and NGVs. http://www.fuelmaker.com
For over 60 years, C&H has been a leading supplier of industrial products such as material handling, shop equipment, maintenance equipment, material storage, shipping supplies, safety products, dock equipment and more. Contact C&H at 1-800-558-9966 or visit our website at http://www.chdist.com
Safety Storage, the first choice for custom and pre-fabricated hazardous storage buildings. http://www.safetystorage.com
Crown Equipment designs, manufactures, distributes, services, and supports material handling products that provide customers with superior value. http://www.crown.com
You may qualify for a FREE Magazine Subscription
Complimentary subscriptions to Government Product News, a product-driven resource, and Government PROcurement, editorial targeting the public sector purchasing professional are available to those who qualify. To subscribe to Government Product News visit: http://www.submag.com/sub/gn To subscribe to Government Procurement visit: http://www.submag.com/sub/gp
Copyright 2003 Penton Media, Inc.
