Amid the recession and dropping revenues, there’s already been an uptick of bankruptcy filings by cities, towns and rural districts across the country over the past two months and there could be more if Washington follows through on its promise to slash spending as soon as possible.
“The cities and counties that already in bad shape — they’re the first ones to go,” White said.
Even if state governments hold special sessions to cut spending further, their cuts will still “filter through to the local government,” he added. “Public-sector workers get laid off. There’s higher employment and lower spending.”
Local governments will try to raise property taxes to raise revenue, which could be yet another drag on a housing market that’s yet to recover. Those who fail to meet their fiscal obligations could see their credit downgraded, making it even harder for them to borrow money to build basic local infrastructure, while both the president and the GOP have threatened to pull funds for state infrastructure. What was once an ideological abstraction — “austerity” — will have very real effects on everyday life for average Americans.
via:
http://crooksandliars.com/susie-madrak/surprise-any-debt-ceiling-deal-will-khttp://www.washingtonpost.com/blogs/ezra-klein/post/why-any-debt-ceiling-deal-will-squeeze-the-states/2011/07/30/gIQArZYjjI_blog.html?wprss=ezra-klein
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