NLC official refutes ’60 Minutes’ report on municipal insolvency
A financial expert quoted in a recent report by the CBS news show "60 Minutes" exaggerated when she claimed the municipal sector would be increasingly insolvent going into 2011, says an expert with the Washington-based National League of Cities (NLC). In his blog, NLC Director of Research and Innovation Christopher Hoene calls the "60 Minutes" report "sky-is-falling media coverage" about cities' fiscal conditions.
Hoene refers to statements by Wall Street analyst Meredith Whitney in a report by "60 Minutes" correspondent Steve Kroft in which Whitney says she expects to see a "spate of municipal bond defaults," perhaps as many as 100. "The overwhelming majority of local and state governments are balancing their budgets and meeting their debt obligations," Hoene says in his blog. "The careless statements of Ms. Whitney and the sky-is-falling media coverage are painting an inaccurate and misleading picture of the municipal sector."
Hoene goes on to say that the municipal bond market remains strong, thanks to low local and state debt levels, longer-term and predictable borrowing, and the balanced budget requirements that local and state governments must meet. The "60 Minutes" report distracts from larger issues, such as cuts in services by local and state governments and public sector job loss, he says. "Declining revenues have many local governments canceling or delaying infrastructure projects," Hoene says. "At a time when the country needs these jobs-producing projects more than ever, why are we wasting time focusing on the potential for a few, idiosyncratic municipal defaults?"