credit rating agencies

Steven Depolo / Creative Commons

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.

Steve Carmody/Michigan Radio

National credit rating agencies are warming to the state of Michigan.

Today, Fitch and Standard & Poor’s joined Moody’s in upgrading the state’s credit rating.

An improved credit rating may help the state get more favorable rates when it needs to borrow money.

John Nixon is the state budget director. He says the state has cut its long-term liabilities and taken other steps to get its ‘house in order.’

“We’ll continue that….it’s a slow process…we didn’t get to where we were overnight….we got downgraded over a series of years,” says Nixon.

Steve Carmody/Michigan Radio

Michigan’s credit rating is getting a boost.

The state of Michigan’s credit rating has taken a bit of a beating in recent years.

But the credit rating agency Moody’s this week revised its opinion of Michigan bonds from ‘stable’ to ‘positive.’

Moody’s is giving the state credit for rebuilding its financial reserves and running structurally balanced budgets. 

A State Treasury spokesman says the hope is the change may help the state get a better rate for an upcoming $200 million school bond issue.