Richard Mattoon, senior economist and economic advisor at the Federal Reserve Bank of Chicago, contends that while 2011 will be a tough year in local government finance, the likelihood of municipal bankruptcies and credit defaults is low. Mattoon maintains that despite the challenging fiscal conditions, very few local governments will default on their debt or end up in bankruptcy. He credits this to (1) relatively stable property tax revenues, (2) manageable debt levels, (3) the disadvantages of bankruptcy and (4) corrective budgetary actions.
You can watch Mattoon discussing his article here:
