As we prepare to say goodbye to 2018 and welcome a new year, we thought we’d take a moment and revisit a few of our favorite stories from the last twelve months that we’ve followed on the McNees Public Sector Blog.
- Impact of the Tax Cuts and Jobs Act: TCJA’s elimination of tax-exempt advance refunding bonds greatly affected the markets and left municipalities scrambling to find alternatives to accomplish their refinancing goals – although some advance refundings were preserved. However, it was perhaps the law’s reduction of the federal corporate income tax rate, from 35% to 21%, that had the greatest impact. The drop in the rate caused an overnight increase in interest rates offered by lenders to municipalities – and not just in connection with new loans. Early in the year, many municipalities fretted over the prospect of their lenders sending notices of adjustment of their existing loans’ interest rates, under commonly included “yield protection” provisions. Combined with rising interest rates and a booming economy, many municipalities saw declining interest from banks for privately placed debt after years of high demand.
- Continuing Disclosure: What a year it was for this topic! The SEC finalized amendments to the continuing disclosure rules in August, which go into effect in February. Any issuer of municipal bonds that goes to market after the effective date will be affected by the new rules – and they aren’t exactly black and white.
- Labor Unions: Not a great year for public sector labor unions. Even before the United States Supreme Court issued its ruling in the Janus decision, unions were preparing for its expected impact. With the ability to impose “fair share” fees now gone, public sector unions’ financial clout is expected to weaken.
- Sports Betting: Placed any bets at Pennsylvania casinos on football this season? You can thank (or, depending on how your bet turned out, blame) the United States Supreme Court for that. In May it issued its long-awaited decision in Murphy v. NCAA, which essentially opened the door the legal sports betting throughout the country. Thanks to the foresight of the Pennsylvania General Assembly, which preemptively legalized the practice in 2017, the state was ready to implement sports betting as soon as the decision came down. When do the playoffs start?
- Environmental Rights Amendment Gets New Lease on Life: The Pennsylvania Supreme Court’s landmark decision in Pennsylvania Environmental Defense Fund v. Commonwealth in 2017 will have ramifications for years to come for municipalities, municipal authorities, property owners and developers. The lower courts are just getting started in determining the proper application of the Environmental Rights Amendment post-PEDF. Expect more on this issue in 2019 and beyond.
To all our readers – thanks for following the McNees Public Sector Blog this year! May you all have a happy holiday season and a prosperous 2019!