Far West

WASHINGTON — The economy will continue to grow next year, municipal bond yields will rise — though not as much as Treasury yields — and the threat of inflation will remain low, according to most economists and market participants.

State and local governments will be able to buy and temporarily hold their tax-exempt bonds, including auction-rate securities, for another year without causing the bonds to be considered reissued for tax purposes, the Internal Revenue Service said yesterday.

The top taxwriters in the Senate promised yesterday that legislation that would extend a number of tax provisions slated to expire at the end of the year, including the New York City Liberty Bond program, will be one of the first things they address in 2010.

Now that the first shoe has dropped in the Justice Department's criminal investigation of alleged anti-competitive activities in the municipal derivatives and investment markets, what comes next in 2010?

Municipal market participants want Congress to provide more assistance for muni bonds next year by extending or expanding many of the bond-related provisions in the American Recovery and Reinvestment Act, especially those authorizing the Build America Bond program.

Gary Bornholdt, tax counsel for Nixon Peabody LLP and former legislative counsel to the Joint Tax Committee, died Saturday as he was shoveling snow. He was 42 years old.

The Municipal Securities Rulemaking Board on Friday filed with the Securities and Exchange Commission a revised proposal that would temporarily give issuers more time to voluntarily disclose annual financial information to EMMA for special designation.

Guidance issued by the Internal Revenue Service Friday allows the governors of nine Midwestern and Gulf Coast states to determine which natural disaster recovery projects can be financed with special tax-exempt private-activity bonds.

Bond lawyers told the Treasury Department recently that proposed regulations on bond-financed solid-waste disposal facilities are a significant improvement from an earlier 2004 version, but contain some aspects that would be unworkable for issuers.

Standard & Poor's affirmed its AA rating and stable outlook on Montana's $183 million of general obligation bonds.