It’s a question many in local governments across the state have been asking themselves lately.
There are a couple ways Detroit’s bankruptcy could have a bad influence on other local governments.
The simple way: not so good national media attention
The simplest way is all that bad press the nation’s biggest municipal bankruptcy will bring. But Detroit’s finances have been screwed up for decades. That’s not news. Economists that track indicators in West Michigan say it won’t help, but they do not expect this to be a big factor.
The more important way Detroit’s bankruptcy could affect small governments is much more complicated.
The complicated way: “unprecedented” threats to municipal bonds
First, you’ve got to understand these bonds are really important to local governments.