The Municipal Credit Crisis may not be as bad as the media is reporting. While problems are in fact real, many governments are already reacting, which is positive news.

This commentary highlights how the recession has impacted municipal financial positions both negatively and positively. Many will continue to be under pressure for the near term, as certain revenues continue to fall, but that will not likely lead to widespread defaults. One example of revenues at risk is property taxes, which typically lag home price declines by 1-2 years, and are still expected to fall in many places. At the same time, the demand for services may be growing and governments will need to get their expenditures and future liabilities, like pensions and Other Post Employment Benefit's (OPEB's), in line with their resources.

Please contact me with any questions or if Mesirow Financial can be of further assistance.

Peter Bianchini
Managing Director, Senior Municipal Strategist
+1 925.386.0262