In their weekly outlook, Municipal Market Advisors (MMA) tries to dampen the hysteria over a “coming municipal market collapse,” saying that although “state and local credit quality is undeniably getting worse,” we’re unlikely to see mass-scale municipal defaults in this economic cycle.
Rather, MMA says, “pensions and OPEBs” — that is, the pension and retiree healthcare obligations that states and local governments continue to take on — “will, in the long run, divert tax revenues from infrastructure finance and service provision and thereby drag down economic growth prospects.”
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