Talk about the long reach. Florida may see credit rating downgrades as a result of of oil spill.

[Statistical]

Florida and Gulf Coast cities in Louisiana, Mississippi and Alabama may see credit ratings cut because of the BP Plc oil spill if tourism falls and property values drop, Moody’s Investors Service said.

The spill may have “severe” effects if it reaches coastal communities in Florida’s northwestern panhandle, since they rely on tourism and the state depends on sales taxes from the region, Moody’s analyst Edith Behr said today in a report.

“Cities, towns, school districts and counties will likely experience a decline in property-tax values, which will necessitate a reduction in services or an increase in other revenue to maintain current rating levels,” Behr said.

Lower ratings may raise borrowing costs for state and local governments in the region as investors in the $2.8 trillion municipal-bond market demand higher yields to compensate for increased risk. Moody’s has a negative outlook on Florida’s general-obligation credit rating, partly because of the state’s reliance on sales taxes, which have fallen during the deepest economic downturn since the Great Depression.

http://www.businessweek.com/news/2010-05-18/florida-gulf-cities-credit-may-suffer-from-bp-spill-update1-.html

I mean talk about indirect consequences. If bond ratings fall and as a result interest rates on muni-debt rises imagine how much that ends up costing taxpayers in a "stealth" payment.

[rzemanfl]

1. My idea for revenue. Give each muncipality a BP exec and

then charge folks to shoot at them with BB guns.

[Joanne98]

2. Who died and made Moodys gawd?