I don’t know much about finance, but even I can get the ramifications of Wall Street’s meltdown after reading a lede graf like this:
Cities, states and other local governments have been effectively shut out of the bond markets for the last two weeks, raising the cost of day-to-day operations, threatening longer-term projects and dampening a broad source of jobs and stability at a time when other parts of the economy are weakening.
As the Tribune’s beat reporter for Tempe, I felt it necessary to ask if Wall Street’s meltdown was inflicting this sort of harm upon Mill Avenue.
Tom Duensing and Jerry Hart from the city’s finance department responded:
*-We only issue bonds for capital projects; therefore, day-to-day services should be relatively unaffected.
*-We typically issue bonds in the late part of each fiscal year and we believe the markets will settle down by the time we go to market.
*-We have always been and should remain a strong credit with highly rated bonds.
*-The main issue is not our ability to repay but a possible reduced demand for bonds; therefore, higher interest rates that would have to be paid.
*-We have a large capital projects’ budget in FY 2008-09 which depends on bond financing. A weak demand for our bonds could equate to higher interest rates when we go out to the market.
*-If, for whatever reason, there is not a market for our bonds (very unlikely), we would have to make tough choices on capital projects such as scaling back or delaying projects.
OK, then.
