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Contributors in Minnesota: Jennifer Brooks, Baird Helgeson, Mike Kaszuba, Patricia Lopez, Jim Ragsdale, Brad Schrade and Rachel E. Stassen-Berger. Contributor in D.C.: Kevin Diaz.
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Washington's debt wrangling could hit Minnesota taxpayers
Posted by: Brad Schrade Updated: July 29, 2011 - 3:40 PM
Minneapolis, Hennepin and Ramsey counties as well as eight other local goverments and school districts in Minnesota face potential downgrades to their bond rating as a result of the debt limit controversy in Washington.
Moody's rating agency began notifying 177 local entities across the U.S. on Thursday that their AAA ratings could be in jeopardy if the U.S. government bond rating is lowered. The bond rating for local governments impacts the cost of borrowing for projects like schools, roads, affordable housing and other infrastructure.
All told, the potential downgrades in districts across the country could affect $69 billion in oustanding local debt. Other AAA rated local governments in Minnesota that have been notified include:
Dakota County, Edina School District, Maple Grove, Minnetonka Schools, St. Louis Park, Washington County, Wayzata city and school district.
A Moody's spokesman said the review is part of the agency's review of government credit ratings that started earlier this month as a result of the controversy in Washington. The agency is reviewing the federal AAA rating and it's unusual for a subordinate goverment, like a state or local entity, to have a higher rating than the sovreign government.
The Treasury Department has said that if the debt ceiling is not raised by Aug. 2, the federal government will not be able to repay its debt obligations.
"We'll see what happens in Washington this next week," said Moody's spokesman David Jacobson. He said a lot of depends on the outcome in Washington and the review could take up to three months.
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