In the opinion of Dan Walters of the Sacramento Bee, California municipalities may begin declaring bankruptcy more frequently. His position draws on the recent public warning from Moody’s Investment Services.
Citing the continued distress suffered by cities and other local government agencies, the debt-rating firm may issue an unusual large-scale credit rating downgrade for California. Should that happen, new debt will become more expensive to assume.
Already, three cities have declared bankruptcy and Atwater appears to be teetering on insolvency. One school district has been taken under a receivership by the state as part of a fiscal stabilization plan.
Many cases of crumbling finances stem from decisions with long-term implications. Most had to do with government-funded development projects, others with long-term personnel costs. In either case, the negative impacts came into play after the decision makers left office, leaving today’s leaders to deal with their problems.
Read the full story at the Sacramento Bee.