Midterm elections are just over a week away. While not teeming with the excitement of a presidential election year, there are a few things worth watching as it relates to the municipal market.
Implications of One-Party Dominance in the Senate
Come Nov. 4, 36 states will hold gubernatorial elections and 46 states will hold state legislative elections. Midterm elections are unique in that Republicans usually have a greater voter turnout. That’s particularly noteworthy this year, when the odds of the GOP gaining a majority in the Senate seem greater than not.
Senate Republicans currently hold 45 seats and need to gain a net six seats to win a majority. This is meaningful to state and local governments, as one-party congressional control could lead to more getting done. That said, we do not believe individual tax reform is likely to be one of those items.
Single-party dominance at the federal level would match the trend we’ve seen in state government. The map below shows that, currently, 36 states are controlled by one political party.
Ones to Watch: Illinois and Pennsylvania
At the gubernatorial level, it’s Illinois and Pennsylvania that matter most. Current polls suggest a party change leading to split control could be in the cards in both cases. Given the fiscal problems and recent ratings downgrades in these two states, their gubernatorial and legislative races are important to municipal investors.