Wednesday, July 27, 2011

Are the costs of our transportation and capital projects about to go up?

Maybe. That's the word from State Treasurer Jim McIntire who sent a letter this week to Washington's congressional delegation asking them to move swiftly on a solution on raising the national debt limit to avoid a major default.

Why is our state treasurer worrying about the national debt talks?
"...our state's access to capital and our credit rating may soon be threatened by federal gridlock on the debt ceiling. Turmoil in the U.S. Treasury market will surely move investors in municipal credits to the sidelines if there is uncertainty about the impact of federal paralysis on each state's credits. And it will not be possible to finance major construction projects or execute refundings to save taxpayer dollars without an adjustment in the federal debt ceiling.
Essentially, if the federal government fails to strike a deal on the debt ceiling, it could make it harder and more costly for state and local governments to finance projects.

State and local governments use various financing tools to pay for things like new schools, bridges, and major freeway projects. Bonds are one of the most essential tools for state and local governments. The Pew Center on the States points out that state and local governments issued $433 million in long-term municipal bonds just in 2010. The Center also describes how some of the targeted spending cuts could adversely impact state- and municipal -run programs related to housing, higher education, homeland security and more.

Congress has one week left to reach an agreement.