Pub15-2020-2021-Issue5

NEBRASKA BANKERS ASSOCIATION 23 According to LinkedIn, New York City and the San Francisco Bay Area both recently experienced steep declines in their inflow-to-outflow ratios with both cities losing more people than they gained while smaller cities like Jacksonville and Salt Lake City experienced net gains in new residents. Looking forward to the 2021 fiscal year, many questions linger. Cities and states are anticipating an even larger de- cline in general fund revenues than they experienced dur- ing 2020, reserve levels have lessened from pre-pandemic levels, and it is not clear when or if events and gatherings may resume regular schedules. Investors must continue to diligently monitor their holdings for potential credit dete- rioration as outlined in our earlier Municipal Credit Update concerning the COVID-19 pandemic.  (link: https://www.gobaker.com/municipal-credit-update-managing-credit-risk- amid-the-covid-19-pandemic/) Since 1857, Cline Williams has devoted attention to the unique needs of the banking and nancial services industries. Since then, we have provided our clients with the resources they need in the areas that are most important to them – from lending and collections, to regulatory compliance, to mergers and acquisitions, and so much more. We’re more than a law rm. We’re a partner for your bank. | | | | | Also, the National League of Cities reveals that all major local tax revenue sources slowed with severe declines in sales and income tax receipts. Sales tax revenue dropped by 11% on average in the 2020 fiscal year. Property tax revenue con - tinued to grow, but the growth rate slowed compared to 2019 and may continue to slow and even decline in 2021 and 2022 depending on economic conditions. Property tax trends are slow to follow economic fluctuations because assessed valua - tions are typically set well in advance of the actual bills being due, and changes in assessed valuations are often more muted than changes in market value due to caps on assessed valuation increases and other calculation considerations. However, the longer the economy remains depressed, the more likely it is that home prices will deteriorate and cause declines in property tax revenue absent rate increases. Certain downtown areas and other once busy areas that are now much emptier because of people working from home may be particularly susceptible to property tax revenue declines as demand for those expensive commercial spaces lessens, especially if the work-from-home trend remains after the pandemic ends. Some large cities may even experi- ence de-urbanization if people choose to relocate to smaller cities in favor of more space and, in some cases, less taxes. Dana Sparkman, CFA, is Senior Vice President/Municipal Analyst in The Baker Group’s Financial Strategies Group. She manages a municipal credit database that covers more than 150,000 municipal bonds, providing clients with specific credit metrics essential in assessing municipal credit. Dana earned a bachelor’s degree in finance from the University of Central Oklahoma as well as the Chartered Financial Analyst designation. Contact: 405-415-7223, dana@GoBaker.com .