A federal judge has ruled that the destitute town of Vallejo, California, which filed for Chapter 9 municipal bankruptcy last year, can petition the bankruptcy court to allow it to void and renegotiate labor agreements with local unions. (more…)

[See update at end of item.]

Buried in one of the nine state budget bills now pending in Albany is what looks like a $1 billion federal stimulus aid slush fund, which could be “suballocated” by the governor to “to any state department, agency or public authority” consistent with the purposes set forth by Congress in the stimulus law (officially entitled as the American Recovery and Reinvestment Act of 2009).

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Ratings agency Moody’s has put the state-run Metropolitan Transportation Authority in a sort of purgatory, noting (but more diplomatically than I will) that Albany’s utter failure to solve a relatively simple problem “puts the MTA on an operating path that may not support the current A2 rating.”

The bond analysts are much clearer than anyone among the supposed “transit advocates” that Albany and that authority must deal with looming pension obligations. (more…)

As Albany seems to give up altogether over finding a new revenue source for the state-run Metropolitan Transportation Authority, the MTA released some numbers this morning showing that its budget situation is getting worse by the minute.

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Attorney General Andrew Cuomo handed down an indictment yesterday against former political consultant Hank Morris and former pension-fund chief investment officer David Loglisci. Both men, Cuomo alleges, were involved in a Hevesi-era state pension fund scandal.

In one way, the scandal can be viewed as alleged garden-variety Albany corruption. Scheming politicos and patronage employees allegedly took money from private interests to do bad things with the taxpayers’ money. Yawn.

But dig deeper, and there are real lessons for state pension reform.

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Supporters of a massive increase in New York State’s marginal income tax rates are crowing over an article in today’s New York Times, headlined “Taxes Not Seen as Making the Rich Flee New York.”  The article (in which I’m quoted) focuses on whether higher income tax rates will cause more “rich” New Yorkers to “flee” – rather than on the broader economic impact of tax hikes — because that’s how Governor David Paterson and Mayor Michael Bloomberg have framed the issue.

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Famous pretend insurance company AIG, responding to popular demand, has released a list of its major structured-finance counterparties — that is, those banks, municipalities and the like that stood to lose the most if AIG had gone under without massive government support last year. New York State was nowhere near the top of the list, nor were other big New York borrowers like the city, the Port Authority, or the MTA. (more…)

A friend in Washington, D.C., passes along this helpful visualization.   Sneak preview: you can’t fit it in a suitcase.

Governor Paterson and state legislative leaders announced today that they’ve agreed to use most of New York’s unfettered federal stimulus money to restore spending to the governor’s budget and to avoid any further spending cuts.  The result will be to partially re-inflate an unsustainable budgetary baseline and to expand the budget gap in future years.

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March isn’t half over yet — but we already have a winner!  Even with the state budget unsettled (with all that implies, bad ideas-wise), the worst idea of the month is surely a proposal by state Sen. Carl Kruger for avoiding East River bridge tolls by arbitraging a bond issue through the state pension fund.

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