Michigan Sen. John Gleason tried to save the credit ratings of cities that are taken over by an emergency financial manager. Earlier this month, he introduced an amendment that states they “will not have its bond rating downrated.”
The problem? That’s not the government’s call, said Jack McHugh, legislative analyst for the Mackinac Center for Public Policy.
“Municipal bonds’ credit worthiness ratings are provided by independent private agencies over which a state legislature has absolutely no control,” McHugh wrote in an e-mail.
Gleason, D-Flushing, didn’t return a call seeking comment.
His amendment of March 9 to House Bill 4214 failed by a vote of 26-12.
"This appears to be an example of legislative 'magic thinking,' comparable to the king ordering the tides not to rise,” McHugh wrote in an e-mail. “In this case, the miracle would be for potential lenders looking to put their precious capital at risk — and their agents at independent credit rating agencies — to ignore the messes created by fiscally reckless local government officials now wanting to borrow even more. There's no magic required if local officials want to protect their credit rating; all they have to do hold current spending and future liabilities — including retirement benefits — below expected current and future revenue."
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.