Jennifer DePaul

States have moved beyond the recession-driven liquidity crisis but there are sources of ongoing weaknesses such as unfunded pensions that make states unable to rely on economic growth alone to mitigate risks of default and future structural budget stability, Morgan Stanley concludes in a report.

A group of conservative grass roots organizations sent a letter to lawmakers urging them to pass the Marketplace Fairness Act online sales tax bill in order to "close a tax loophole that punishes small businesses."

Treasury Secretary Jacob Lew urged Congress to act swiftly on raising the debt ceiling saying it was necessary to preserve the nation's credit rating and citing uncertainty over how long the U.S. will be able to continue to pay its bills.

The municipal bond market may benefit from the shake-up at the Internal Revenue Service as the newly named acting commissioner Daniel Werfel has close ties with state and local governments and is viewed by market groups as a strong ally.

The National Governors Association published a report Thursday summarizing governors priorities as outlined in their annual state of the state addresses in 48 states and two territories.

Mortgage revenue bond issuance jumped 13.5% in 2011 compared with the previous year, according to the recently released National Council of State Housing Agencies factbook.

Beginning Friday, the Treasury Department will suspend the sales of State and Local Government Series securities until further notice, the first maneuver to avoid hitting the federal debt ceiling.

The Senate Finance Committee released the sixth in a series of tax reform discussion papers Wednesday on economic and community development that included a proposal to repeal all governmental and private activity municipal bonds and replace tax-exempt bonds with direct-pay and tax-credit bonds.

The Treasury Department has made no decision about whether to continue or halt sales of State and Local Government Series Securities when the suspension of the debt ceiling expires on May 19, but in either case would honor any subscriptions received before that date, an official said.

Cliff Gannett, acting director of government entities at the Internal Revenue Service, will retire at the end of June, he announced at a recent American Bar Association tax-exempt financing committee meeting.

Former Internal Revenue Service official Nancy Lashnits will take over as chair of the Committee on tax-exempt financing with the American Bar Association.

Sen. Pat Roberts, R-Kan., expressed concern that when comprehensive tax reform occurs, it should be carefully structured so that existing industries and investments are not harmed such as on municipal bonds. He also opposed the proposed 28% cap on itemized deductions including tax exemption.

President Obama's former top tax official Michael Mundaca said that raising the government's statutory borrowing authority could be key in determining how the White House and Congress proceed on tax reform.

The two lead tax-writing lawmakers have teamed up and launched a campaign seeking the public's input for a simpler tax code.

Despite a recent 37% surge in federal non-withheld income tax revenues, a new Rockefeller Institute study warns that the tax data may be deceiving and not equate to a rapidly recovering economy.

Approximately 3% of all state and local government spending is used to fund public pension benefits, a small increase from previous reports, according to a new study from the National Association of State Retirement Administrators.

Speaking at the Peterson Foundation fiscal summit Tuesday, House Budget Committee chairman Rep. Paul Ryan, R-Wis., said that the House will push forward on tax reform regardless if the Senate follows or not.

State and local groups overwhelmingly praised the Senate passage of the online sales tax bill late Monday night but it still remains uncertain whether it can clear the House, where Republicans view it as a new tax.

The Senate is expected to easily pass an online sales tax bill Monday but it may face a larger hurdle in the Republican-controlled House, where many members view it as a new tax.

The highly anticipated Joint Committee on Taxation tax reform report recommends repealing tax exemption for municipal bonds as one option for overhauling the tax code.