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 SmokeyI'd rather be skiingPremium
join:2003-05-20
Wild West
 ·Verizon Wireless..
| reply to BosstonesOwn
Re: ?!?!?! Not so. Governments run on bonds. There is not a city in the US that dose not use bonds to fund items in the budget. If they default on one, they may never get a good rating again, and that means no money to build that fire station, or pave the roads. That means taxes go up to replace the needed revenues. Also, many bonds requires some level of payback even if there is a default, and be sure that the issuing agency is not going to be left holding its ****.
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 marigoldsGainfully employed, finallyPremium,MVM
join:2002-05-13
Saint Louis, MO
kudos:1 | said by Smokey:
Not so. Governments run on bonds. There is not a city in the US that dose not use bonds to fund items in the budget. If they default on one, they may never get a good rating again, and that means no money to build that fire station, or pave the roads. That means taxes go up to replace the needed revenues. Also, many bonds requires some level of payback even if there is a default, and be sure that the issuing agency is not going to be left holding its ****.
These bonds are issued against the muncipal utility, not the city.
Thanks to the slew of laws that private companies have pushed through, a city can no longer cross-subsidize between municipal utilities and the city budget and thus the bonds must be issued against the utility as the city cannot legally use general fund money to pay off the bonds. This means that if the utility fails, there simply is noone left who can legally pay off the bonds.
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