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The U.S. Securities and Exchange Commission moved to require states and local governments to disclose bank loans and privately placed debt, seeking to address concerns that bondholders are being left in the dark about a fast-growing segment of public finance, Bloomberg News reported. The SEC adopted amendments to a rule, known as 15c2-12, that obligates securities dealers to ensure that municipalities report updated financial information and material events to bondholders. The amendments will force the disclosure of loans incurred by municipalities, loan defaults and changes to financial covenants that affect bondholders within 10 business days.

Many cities and states can no longer afford the unsustainable retirement promises made to millions of public workers over many years. By one estimate they are short $5 trillion, an amount that is roughly equal to the output of the world’s third-largest economy, the Wall Street Journal reported. Certain pension funds face the prospect of insolvency unless governments increase taxes, divert funds or persuade workers to relinquish money they are owed. It is increasingly likely that retirees, as well as new workers, will be forced to take deeper benefit cuts. In Kentucky, a major pension plan covering state employees had about 16 percent of what it needs to fulfill earlier promises, according to the Public Plans Database, which tracks state and local pension funds, based on 2017 fiscal year figures. A fund covering Chicago municipal employees had less than 30 percent of what it needed in that fiscal year, according to the same database. New Jersey’s pension system for state workers is so underfunded it could run out of money in 12 years, according to a Pew Charitable Trusts study.

California is notorious for its hands-off approach to distressed cities, but Fiona Ma wants to fundamentally change that if she becomes state treasurer, Bloomberg News reported. Ma, a Democrat who’s running against Republican Greg Conlon in November, said that she would establish a website that would list credit ratings and key financial metrics for local governments. As part of that effort, municipal officials seeing fiscal straits ahead could ask for assistance from the treasurer’s office, she said in an interview in San Francisco. “Local governments have to balance every year. They are very limited in what they can do," said Ma, a certified public accountant who currently serves on the state’s board of equalization, which administers some taxes. "We should be looking out for them.” That would mark a shift for California, home to four of the six biggest bankruptcies filed by municipalities in the past quarter century. While the state, through legislation or voter initiatives, has foisted limits on local governments such as on their taxing power and mandated spending, it has no system for monitoring cities that fall in distress. Providing a central portal for local financial information could spur more investment in lesser-known cities by making it easier for bond buyers to assess conditions and risk, said Ma, who has also served in the state Assembly and on the San Francisco board of supervisors.

Many U.S. states have been slow to improve their finances nine years into the economic expansion. That raises a risk they won’t be prepared when another downturn hits, making them susceptible to big spending cuts that make that next recession worse, according to a Wall Street Journal analysis. State governments have been grappling with tepid revenue growth and heavy pension and Medicaid costs. In many places that has resulted in smaller reserves. Measured as a share of spending, 21 states had smaller rainy day funds in 2017 than they did in 2008, according to data from the National Association of State Budget Officers compiled by the Tax Policy Center. Rainy day funds help states preserve spending levels when their revenues plunge. Those reserves are especially important because, unlike the federal government, states don’t run budget deficits in downturns. Most states rely primarily on income and sales taxes to fund their budgets. That makes them particularly vulnerable during recessions, when layoffs result in lost incomes and scaled-back purchases. At the same time, recessions put pressure on state spending as demand for government services, such as unemployment insurance and Medicaid, soars. In previous recessions, the federal government stepped in with spending to keep states afloat. That may be harder to do next time because federal debt is rising rapidly. “There are levers that all the states could think about in terms of preparing for the next economic downturn,” said Federal Reserve Bank of Boston President Eric Rosengren. “It doesn’t seem like there is that much movement in that direction right now in many states.”

For the first time since 2000, no city or school district in Michigan is under such control, a sign the state has put the auto industry’s downturn and other financial woes in the rearview mirror, the Wall Street Journal reported. Gov. Rick Snyder, who appointed 22 emergency managers — more than all his predecessors combined — credits his use of emergency managers with controlling costs and resolving issues like unfunded liabilities of cities. Last week, he released the Highland Park School District from receivership, the most-recent case in which the state has handed control back to elected officials. Michigan has been more aggressive in its use of emergency managers compared with other states. The state law authorizing the governor to appoint emergency managers has existed since 1988 but became controversial after Snyder expanded their authority in 2011. After voters overturned the law in 2012, the governor signed another version that couldn’t be challenged by referendum. At the time, the state was still reeling from the 2007 financial crisis and the downturn of the auto industry, including the bankruptcy of Detroit-based General Motors in 2009. Most states allow for some fiscal oversight of municipalities, but Michigan grants managers the most authority, experts say.