Thursday, April 09, 2009

Local Taxes--Going Up Beyond Doylie's Dreams

Yes, it actually can get worse.

Moody’s Investors Service assigned a negative outlook to the creditworthiness of all local governments in the United States, the agency said Tuesday, the first time it had ever issued such a blanket report on municipalities.

The report signaled how severely the economic downturn was affecting towns, counties and school districts across the nation

...In a special report made public on Tuesday, the agency cited revenues that are falling almost everywhere as a result of the economic downturn. But it also discussed the problems some municipalities had created for themselves by using complex financial products that seemed to be saving money at first, only to send costs soaring during the credit crisis.

Assuming that locals will be able to float debt in the first place, the cost of such debt is going up, no question about it. (Recall that even Elmbrook School District had trouble getting a rate it liked for its bonds.)

HT: Ticker


J. Strupp said...

I find it ironic that Moody's is downgrading local governments all over the nation becuase they were using complex financial instrumentation in order to value property taxes.

This is the same Moody's that relied on the same "complex financial instrumentation" to issue corporate bond ratings right?

That being said....they probably paint a pretty accurate picture in this case.

Dad29 said...

Yah, well, Moody's got religion in time for Holy Week, anyway...