Financing local government debt in Canada: pooled versus stand-alone issues - an empirical study

Article Abstract:

Provincially legislated special-purpose bodies created to pool municipal bond requirements have operated in Canada for several decades. American states have also adopted this Albertan/Canadian innovation. The organizations use different titles, such as municipal bond authorities/corporations and bond banks; this paper uses the generic term municipal bond bank, or MBB. These banks are separate legal entities, and the paper discusses the use of internalization theory as an explanation for their creation and continued use. Several U.S. empirical studies comparing the cost of municipal borrowing under a pooled MBB issue versus stand-alone issues were undertaken in the 1980s. The American studies' results support the practice of pooling debt issuance through bond banks and conclude that savings from MBB participation are inversely proportional to unit credit rating and size. This paper presents the findings of the first Canadian empirical study that compares the cost of municipal funds for pooled versus stand-alone issues. The study uses data from the Province of Ontario, as it is a large province and quantitative data was available; Ontario does not currently have an MBB. The Canadian study results share some similarity with the results of previous American studies in that they show that pooled financing through an MBB results, in aggregate, in cost-savings to municipal borrowers, with the greatest savings to those units that are small and unrated and that borrow for longer periods. The Canadian study suggests that the few large, highly rated municipalities that would receive little or no benefit from MBB participation and certain small issuer units that have found economical, alternative methods of raising funds retain the option of issuing debt outside a provincial MBB. This paper concludes with a reference to the discussion on the impact of municipal borrowing arrangements on provincial credit ratings. (Reprinted by permission of the publisher.)

Public Finance Activities, Public Finance-Local, Local finance, Municipal bonds

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The case of government involvement in the management of cutbacks by public service organizations

Article Abstract:

The literature on cutback management does not address the role of government in inducing creative strategies to deal with retrenchment. As this paper argues, government should not limit itself to economizing but should also provide administrative leadership, especially with respect to developing interorganizational cooperation and evaluating effectiveness. Interorganizational theory and research suggest that organizations are reluctant to interact, a tendency which becomes intensified in periods of decline. Such literature also indicates that government is in a position to motivate priority planning at the network level and cooperation between the organizations it funds. An examination of the strategies of the Ontario Ministry of Community and Social Services illustrates that there is little interest in facing this challenge. Although the ideas expressed in this paper contradict the logic of pluralism, and the political safety it provides the government, adopting a stronger managerial position regarding cutback strategies will eventually gain legitimacy. (Reprinted by permission of the publisher.)

Organizational research, Downsizing (Management), Interorganizational relations, Public administration, Social work administration, Social services administration

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Fighting cutbacks: some issues for public sector administrators

Article Abstract:

Four case studies illustrate the components of a successful strategy to resist cutbacks of funds in the public sector. The components include: identifying relevant interest groups, building coalitions, and creating legitimacy. Those contemplating this course of action must be aware of the pitfalls as well as the advantages of resistance. The case studies are of a Montreal university and social services center, and two British health agencies.

United Kingdom, Case studies, Economic aspects, Budget, Budgeting, Budgets, Public finance, Corporations, Expenditures, Public, Public expenditures, Public institutions, Great Britain

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