“Ideas in public finance blow in from the West”

This market axiom reflects the explosion in the various revenue-supported securities that were created in California after voters in 1978 approved the Proposition 13 property tax cap, some of which structures were later adapted to use in other states. “Proposition 13 was one of the most significant events to affect the structure of the municipal securities market and the activities of the Municipal Securities Rulemaking Board,” Christopher Taylor explained in 2006. “Prior to Proposition 13, bonds were typically backed by the ability of the political jurisdiction to raise property taxes. In California, many bonds had two sources of revenue to be used for debt service payments—a use tax or fee ...

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