Washington

WASHINGTON — Claims that states and localities are facing massive budget gaps, unfunded pension liabilities, and health care costs that will lead to bond defaults and bankruptcy filings are greatly exaggerated, and mask the need for states to overhaul out-of-date tax systems and make other structural changes, a new report warns.

The Municipal Securities Rulemaking Board held an informal roundtable with market groups late last week and is planning another one in September as well as two teleconferences, leading some to compare the discussions to the former Muni Council.

WASHINGTON — The Financial Industry Regulatory Authority has censured and fined Merrill Lynch, Pierce, Fenner & Smith Inc. $500,000 for failing to establish and maintain written supervisory procedures to ensure that its representatives considered customers’ state income-tax benefits in their suitability analyses of 529 college saving plans.

WASHINGTON — The Financial Industry Regulatory Authority fined TD Ameritrade Inc., Scottrade Inc., and Fidelity Brokerage Services LLC $35,000 each for failing to disclose the underlying ratings of insured bonds, which it said constituted material information that customers purchasing the bonds needed to know.

State and local government voluntary contributions to the Governmental ­Accounting Standards Board were $1.2 million in 2009, far less than the $6.6 ­million GASB needed to meet expenses, the Government Accountability Office told Congress in a report released Tuesday.

WASHINGTON — Voluntary contributions from states and localities, one of two key revenue streams for the Governmental Accounting Standards Board, have dropped precipitously in recent years as localities cut back on funds.

WASHINGTON — The House Ways and Means Committee will hold the first of a series of hearings on tax reform on Thursday.

WASHINGTON — The Municipal Securities Rulemaking Board is expected early Friday to propose extensive pay-to-play restrictions for municipal advisers, the first significant rulemaking proposal for advisers since the MSRB began to oversee them on Oct. 1.

WASHINGTON — The Securities and Exchange Commission will hurt state and local entities if it adopts rules requiring their appointed board members to register with the SEC and possibly the Municipal Securities Rulemaking Board, market participants are warning.

The American Bar Association’s tax group is urging the Treasury Department and Internal Revenue Service to publish guidance confirming that bond counsels’ long-standing practices for bonds issued to finance grants comply with tax law requirements.

The American Public Power Association and two other groups are urging Obama administration officials to authorize more funds for clean renewable energy bonds, which can be issued as direct-pay as well as tax-credit bonds.

Moving money market funds to a floating net-asset value would cause investors to flee the funds and ultimately deprive state and local governments of needed capital, several municipal market groups are warning in a letter to the Securities and Exchange Commission.

The Internal Revenue Service ­withheld $707,757, or 15%, of the District of Columbia’s Dec. 1 Build America Bond subsidy payment because of payroll taxes, making the city the latest issuer caught by surprise with an offset.

WASHINGTON — Senate Budget Committee chairman Kent Conrad said Friday that his panel needs to come up with a plan to help states that approach Congress seeking ­assistance because of serious financial troubles.

The Securities and Exchange Commission on Friday charged two former portfolio managers with defrauding a tax-free mutual fund that invests primarily in municipal debt issued in Utah. It appears to be the first such case in which portfolio managers for a registered investment adviser were charged with taking fees from municipal bond issuers, sources said.

The Internal Revenue Service is auditing $250 million of Build America Bonds issued by Denver School District No. 1 in December 2009 to finance construction, renovation, and repair of school ­facilities.

WASHINGTON — The District of Columbia’s chief financial officer warned the city’s new leaders against writing a fiscal 2012 budget that draws on the general fund balance to pay for operations, saying that balancing the budget in this manner for the fifth straight year could threaten the district’s credit rating and reputation with bond ­investors.

WASHINGTON — The federal debt limit must be raised by the end of March to avoid the suspension of federal programs such as state and local government series securities that municipal issuers purchase for advance refunding escrows, Treasury Secretary Timothy Geithner warned Thursday.

WASHINGTON — House members voted 240 to 191 Wednesday to adopt Republican-approved rules for the 112th Congress that transportation and business groups claim will hurt funding for programs and possibly curb the ability of states to finance projects with bonds.

WASHINGTON — Issuers and their attorneys are fighting a provision in the Securities and Exchange Commission’s proposed rules for municipal advisers that would require appointed board members of municipal entities to register with both the SEC and the Municipal Securities Rulemaking Board if they advise on the issuance of municipal ­securities.