Sale of $18.7M in notes calms officials' concerns

Toledo officials are more confident —— after the sale of $18.7 million in short-term notes for capital projects — that the city will weather the financial crisis and deterioration in credit markets better than some other cities across the nation.

The sale comes at a time when states and cities have delayed major improvements and scrambled to adjust plans in the wake of the credit freeze that has reduced the number of buyers of municipal securities. The $2.6 trillion market for state and city bonds has been frozen since the collapse of Lehman Brothers last month. 'A lot of the municipalities are having problems because they are in a variable-rate environment and they can see the variable rate double overnight,'

Toledo's finance director, John Sherburne, said. 'If you have gone from 5 percent to 7 or 8 percent, that reduces the amount you have to do projects with.'

http://toledoblade.com/apps/pbcs.dll/article?AID=/20081011/NEWS16/810119...

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It should NOT calm the concerns of the citizens that the city just loaded up on more DEBT to meet expenses.

Firstly, expenses are obviously overblown and should be reduced.

Secondly, debt is more expensive and results in excess taxes.

Since too many Toledoans don't live within their means either, there's little point in my pointing all this out. So I must be doing it for my own ego or something. :^(

...they know that "added" taxes aren't attractive. I think bonds are the biggest ripoff by any government. We sell bonds to raise X amount of dollars for a project (because supposedly it is cheaper now), and then pay X + y (principal plus interest) to pay off the "debt". If we would just pay the taxes rather than buy bonds we'd have more money in the long run. Now we have all this debt to pay down while we wait for the economy to boom, and inflation to pay all our debt. I don't think it is going to "boom" anytime soon, but we still have all that debt to pay. But Bush didn't raise taxes. And we still need to repair the "infrastructure" (which are what state bonds are usually for).

Old South End Broadway

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