Fed’s Important, Supportive MLF Offered to Public Finance Entities & Municipal Bond Market Should Be Extended
The Federal Reserve’s Municipal Liquidity Facility (MLF) should be extended past its Dec. 31, 2020 expiration date.
We examine arguments against and for extending the Fed’s MLF.
Illinois may tap a second loan from the Fed’s MLF if the income tax vote fails to get enough support. Suffolk County, New York may use the Fed’s MLF at the end of the month.
General fund revenues are forecast to be down over 10% in several states in FY21. Uncertainty about the path of the virus continues, and the length of time these revenue shortfalls will linger remains questionable still. “Normal” still may be at least a year off. The MLF would also be an important crutch if significant shutdowns are needed again.