Join the Debate over California’s Fiscal Future

For most of the past two decades, the communications between the municipal finance markets and California’s lawmakers have been a one-way street, with municipal-market investors and other lenders jawboning about the state’s need to achieve long-term fiscal balance … and then, invariably, devising creative financing structures to help the state bridge its recurring budget gaps.

But this year, as the state faces its most serious budget crisis in decades, the conversation is more of a dialogue than ever before. While some players in the municipal market reacted in time-honored fashion – the rating agencies that judge municipal creditworthiness slapped California with rounds of downgrades that left it the lowest-rated state in the nation – others have been notably silent, as the global liquidity crisis tied investment bankers’ hands.