Tim Skubick: Bond sales could be a political problem for Snyder - Boston News, Weather, Sports | FOX 25 | MyFoxBoston

Tim Skubick: Bond sales could be a political problem for Snyder

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LANSING, Mich. (WJBK) -

This is one of those ticking time-bomb stories that may never go off, but if it goes boom, it will cause some consternation in the Re-Elect Rick Snyder campaign.

Bond sales.

What?

From time to time local governments sell bonds to finance local projects from building a new sewer system to refinancing existing debt hopefully at a lower interest rate.  There's nothing like a local mayor telling his or her citizens, "I just saved you a bundle of money."

In the wake of Detroit possibly headed for bankruptcy, however, the mayors may be muzzled because the hope of "lower" interests rates may be just that, a hope.

Already three cities have withdrawn from the bond market because they feared they'd get whacked in the pocketbook because of the financial uncertainty in Motown.

A New York investor told the Detroit Free Press, "For a while there's been a Detroit penalty for bonds in the Detroit area, but now it's really pronounced" and impacting non-Detroit entitites.

Saginaw County, Genesee County and the governor's home town of Battle Creek were ready to buy bonds but pressed the pause button instead.

The schools in Ypsilanti, Sandusky, and Detroit are headed for the market soon and the Detroit bankruptcy hangs over all of them.

On the upside, the state transportation department just saved $817,000 by securing a 1.78% interest rate on a $10 million refinancing sale.

The sale of bonds creates local jobs and stimulates local  economies.  Without them, the quality of life could be damaged. And who helped to create this uncertainty by trying to shove Detroit in Chapter 9?

Yep, the governor.  Will citizens take it out on him?  

One guy who won't is L. Brooks Patterson who enjoys an enviable AAA credit rating in Oakland County.  Under normal times as he prepares to enter the bond market, he'd be fat and sassy regarding lower interest rates.

But he knows he'll pay more now yet he is not going to criticize the governor for creating this situation.

"He didn't have an alternative," the sympathetic Mr. Patterson describes the challenge the governor faced.  "I'm not holding him responsible," but he sure as heck is holding the "failed leadership and corruption" of the city accountable and Oakland County taxpayers could take a hit.

So far in out state Michigan, the governor has earned high marks for pulling the bankruptcy trigger.  You can almost hear a collective, "Enough was enough" from the citizenry beyond Eight Mile.

But if the governor's decision results in more cities seeking to improve their lot by selling bonds and being stymied from doing so, is that a potential political problem on the eve of his re-election bid?

Republican Patterson, who knows a thing or two about political  sink-holes, answers in the affirmative.

All of a sudden,  if local residents who need a new water system or want to improve their schools, can't get them because Detroit is on the ropes, maybe the Democrats will suggest Gov. Snyder is to blame.  

At this early juncture there is not even a hint of that as this situation has not reached critical mass and maybe it won't go boom but maybe it will.

Would it be like the D's to exploit this if they thought it would cost the governor some votes?

You know the answer to that…and so does he.

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