Muni attitudes toward debt defaults may jeopardize their low-interest borrowing

Several recent Wall Street Journal articles have discussed (possible) municipal debt defaults.

The Muni Blues article included pictures of Wenatchee (Washington) city officials in a legislative hearing last session. Two related WSJ articles discuss Berkshire Hathaway trimming its muni holdings and the SEC seeking to exercise greater control over municipal bond markets.

The upshot is that public utility districts (PUDs) and other local municipalities will experience increased financing costs, as markets begin to reflect more accurately the investor risks associated with emerging attitudes and practices of municipal finance under fiscal pressure.

In seeming support of these concerns that Utah Auditor has released its audit findings on the muni-broadband of 11 cities of that state, UTOPIA. In this Fierce Telecom article today

[Implementing better fiscal controls and following generally accepted accounting standards], the newspaper said, might not be enough to save a project that is “bleeding the budgets of 11 Utah cities to pay its bonds” and that lost $18.8 million in 2011 with a business that “continues to show a negative cash flow.”

Sound familiar?

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