The Changing Cost of Municipal Bonds & Prop 1 (ST2)
In a New York Times article titled: “Under Strain, Cities Are Cutting Back Projects” , the changed economic situation for cities and agencies is outlined:
“Analysts said the dysfunction in the municipal bond markets appeared to signal the end of an era of relatively cheap money for governments and, probably, the start of an era of tough choices for communities.
When the market starts moving again, they said, it will look a lot like the municipal bond market of 10 years ago, before the arrival of financial wizardry in the form of structured-finance products, which lowered borrowing costs but added big new risks. Instead, governments will probably be issuing plain-vanilla bonds with fixed rates of interest, higher than they are accustomed to.
And higher rates suggest some degree of belt-tightening, especially difficult in places where tax revenues are being squeezed because of falling real estate values and the slowing economy.”
How will this difficult market for credit affect the ultimate cost of large projects like Sound Transit 2 (Prop 1)?
How might that affect the price of the Prop 1 tax proposal and subsequent tax burden on families?
Read the article at: “Under Strain….”
