Moody’s Investors has been on a ratings downgrade rampage for Michigan’s school districts. Here is its explanation from the new sector comment report:
Lansing, Michigan is aflame with the anger of union workers who object to how state officials have rammed “right-to-work” legislation through the state house. “Right-to-work” would end the requirement that workers join a union in their workplace if it is unionized. Union workers are especially incensed that the legislation was pushed through during a lame duck session without hearings or debate. The Detroit Free Press reports:
If you were thinking of buying some of the city of Detroit’s bonds, you might want to tread lightly. Although the city was able to come to terms with the state and avoid the appointment of an emergency manager, it still faces enormous challenges. The biggest threat to Detroit’s fiscal stability is the risk that its derivatives counterparties will activate triggers in their interest rate swaps. If this happens, the counterparties will force a lump-sum payment, draining cash from an already shaky situation.
I was a little shocked to read a recent Bloomberg op-ed that eviscerated Detroit Mayor Dave Bing for his failure to agree to any real reforms, even as he petitioned Lansing for funds to avoid bankruptcy for the city. Written by Detroit resident Shikha Dalmia, a senior policy analyst at Reason Foundation, the op-ed basically implies that Mayor Bing doesn’t have the necessary skills or personality to engineer a soft landing for the city.
Michigan called on Citibank to help repay about $3 billion the state owed to the federal government for expenses racked up during the deepest part of the recession. Like many states, Michigan had to manage soaring unemployment insurance costs and borrowed from the feds to help workers who had lost their jobs. Washington had given these loans on very advantageous terms, but like a teaser rate for a credit card, those are expiring and interest costs will soon jump for borrowers. So Michigan, like Texas and Idaho, has refinanced these payments.
A post-Memorial day salute to all who have served our nation!
Grand Rapids shakes her booty
In Michigan, the decline of the U.S. auto industry has shrunk many cities. In January Newsweek highlighted the decline of American cities and identified Grand Rapids as a city on a downward spiral. Grand Rapids has fought back, producing the video above to show the vitality of their city. Good on you Grand Rapids. Your sense of caring and community shines through. (H/T CuriousityCounts.com)
Deficits at state-pension funds are the real monsters threatening municipal stability. Estimates of shortfalls at these funds range from $1 trillion from the Pew Center on the States to $3 trillion from Orin Kramer, the former chairman of New Jersey’s State Investment Council.