Moody's has downgraded Kansas City in the bond markets, lowering its outlook from "stable" to "negative."
Why? Mostly because the city under former Mayor Kay Barnes took on a lot of variable rate debt, especially hundreds of millions with no dedicated tax to pay it off.
Can you say "Power & Light District?"
More bad news: All of KC's suburbs have relied for years on Kansas City's stable bond rating. Take a look, for example, at the recent sales by Lenexa and Raymore of their cities' bonds.
In both cases, the bonds benefited from being sold within the KC market, where the region's biggest city has long had a "stable" rating.
Now that KC's outlook has been downgraded to negative, all the financial managers in suburban cities will have to hope that KC hangs on and its actual Aa3 bond rating is not lowered as well by Moody's.
If that were to happen, all of a sudden this region would not be as attractive to bond buyers.
And in the topsy-turvey bond market of today's world, that could boost the interest rates on bonds sold by the cities, costing taxpayers more money in the long run.
but available financing for government entities may be harder to find as I have read recently thru other sources. Also many cities are purchasing insurance to make sure the bonds are paid resulting in more costs to the taxpayers.
Our whole economy to me is walking on shaky ground. The good ole U.S. needs all the brilliant (sp???) minds out there.