More than three years into their worst fiscal crisis in decades, the last thing state and local governments need is for their costs of borrowing to go up.
Steven Craig teaches public sector economics at the University of Houston.
“The reality is that many of our state and local governments are — I'll say — following the lead of the federal government, in the sense that they’re following unsustainable fiscal paths, and unfortunately the city of Houston is one of the leaders in that.”
Craig says Houston has run up a tab of more than $2 billion over the past eleven years, largely due to unfunded city pensions.
“Whatever we do to try to pay that money back means that taxpayers in the city will be paying a dollar in taxes for less than a dollar worth of services.”
S&P has already downgraded its ratings for Miami, Florida and Tacoma, Washington, as well as for a number of state and local government agencies.