Issuers PAB Volume Up 5.1% to $32.441B

WASHINGTON — State and local governments will be able to issue a total of $32.441 billion of private-activity bonds under a national volume cap next year — 5.1%, or $1.584 billion more than in 2010.

Click here for a list of the caps by state.

The increase is based on new population figures released Tuesday by the U.S. Census Bureau and a new PAB cap formula published by the Internal Revenue Service.

The Census Bureau estimates that the U.S. population, including Puerto Rico, will grow to 312.471 billion in 2010, up from 310.974 billion the previous year. The IRS formula for determining the caps — $95 per capita or $277.820 million, which ever is greater — was released by the agency in October in Revenue Procedure 2010-40. The new formula is more generous than the $90 per capita and $273.775 million minimum level in place for 2010.

The higher population figures and greater formula will raise the national PAB cap to $32.441 billion in 2011 from $30.857 billion the previous year.

However, states rarely issue the maximum amounts of PAB cap they receive for a given year. They are permitted to carry forward unused amounts for three years.

All of the state caps will be higher in 2011, with eight states showing gains of 7% or more. Only Puerto Rico's PAB cap will decline, according to the population estimates and IRS formula.

Oklahoma's cap will grow the most — to $356.378 million. That's a 7.4% jump over its $331.835 million cap for 2010.

The seven other states showing cap growth of 7% or more include North Carolina, with a 7.3% increase to $905.871 million, and Connecticut, with a 7.2% gain to $339.539 million. Four states each received 7.1% increases: Alabama, at $454.075 million; Florida, at $1.786 billion; Texas, at $2.389 billion; and Virginia, at $760.097 million. South Carolina's cap will grow 7.0% to $439.41 million.

Puerto Rico's PAB volume cap will decrease by 0.9% to $353.950 million in 2011 from $357.056 million the previous year. The Census Bureau estimates the territory's population will decline to 3.725 million, from 3.967 million in 2010.

The Census Bureau estimated population losses for nine other states, including Arizona, Georgia, Illinois, Massachusetts, Michigan and New York. However, none of the forecast declines are large enough to trigger reductions in their PAB caps.

Three of the nine states losing population — New Hampshire, Rhode Island and Utah — have populations so small that they will receive the minimum cap level of $277.820 million. The other states with the minimum $277.820 million PAB volume cap are Alaska, Arkansas, Delaware, Hawaii, Idaho, Kansas, Maine, Montana, Nebraska, New Mexico, North Dakota, South Dakota, Vermont, West Virginia, Wyoming and the District of Columbia.

California will remain the state with the largest PAB volume cap, which is projected to rise 6.4% to $3.539 billion in 2011 from the prior year. Texas will have the next highest cap at $2.389 billion — 7.1% more than in 2010.

Those two states are followed by: New York, whose PAB cap will rise 4.7% to $1.841 billion in 2011 from 2010; Florida, up 7.1% to $1.786 billion; Illinois, up 7.1% to $1.219 billion; Pennsylvania, up 6.4% to $1.207 billion; and Ohio, up 5.5% to $1.096 billion.

The PAB volume cap figures for 2010 do not include four U.S. possessions — American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands. They are not included in the Census Bureau's estimates.

The four possessions are treated like states by the IRS, but their populations are so low that they receive the small-state minimum volume caps. These low-volume issuers rarely, if ever, reach their PAB caps, according to market sources.

Puerto Rico is included in the Census Bureau figures because it has a large population, sources said.

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