“The current global financial market crisis could have serious implications for New York’s local governments if access to the credit markets remains constrained,” says a research brief issued today by the office of state Comptroller Thomas DiNapoli.
Until the current credit crisis abates, local governments and school districts should anticipate that access to the market will be more constrained and that issuing short-term debt could be more costly. To the extent possible, municipalities and school districts should review their cash flow needs and develop contingency plans in the event that market conditions delay a note sale. These contingencies should include exploring competitive, negotiated or private placement sale options, temporarily borrowing from other funds (where legally permissible), or restructuring expenditure patterns for cash flow relief. Local officials should also ensure that the revenues in anticipation of which RANs [revenue anticipations notes] are issued remain adequate, and that an alternative source of repayment is available for BANs [bond anticipation notes] maturing in the near future if they can no longer be rolled over. Finally, localities should make sure that debt service costs are budgeted conservatively and budgets are modified to reflect accurately any higher costs.