A year ago, banking analyst Meredith Whitney predicted 50 to 100 (or more) sizable municipal bond defaults. The facts are in: between 1970 and 2011, there were 65 rated municipal bond defaults; only five rated city or county governments defaulted during this period, according to Moody's Investment Services.

Eleven national organizations including ICMA, National Governors Association, National Conference of State Legislatures, The Council of State Governments, National Association of Counties, National League of Cities, U.S. Conference of Mayors, National Association of State Budget Officers, Government Finance Officers Association, National Association of State Auditors, Comptrollers and Treasurers, and the National Association of State Retirement Administrators, have released a 2012 fact sheet, Facts You Should Know, to set the record straight. 

Facts You Should Know goes into detail to provide the facts on state and local finances. Major themes include:

·        Defaults on municipal bonds are unique, and rare.

·        Debt service remains a small part of municipal budgets.

·        Most state and local pension systems have the assets to weather the economic crisis.

·        State and local governments are taking steps to improve their financial situations.

While cities and counties have faced ongoing fiscal constraints, the vast majority of them are handling their debt service and pension obligations without breaking the budget. More than 40 states have made changes to benefit levels, contribution rate structures, or both since 2009. Many local governments have made similar fixes to their plans.

"Not a single governor or local elected official has sought any new form of federal bankruptcy protection," notes ICMA Deputy Executive Director Elizabeth Kellar.  "But our local government leaders would welcome targeted assistance from the federal government to help strengthen our nation's regional economies."

Some revenue recovery has occurred at the state level, although revenues have not returned to 2008 levels.  Local and state governments remain concerned about how the federal deficit will be addressed.

Municipal bankruptcy, bonds, and state and local pensions have been the target of increasing scrutiny from a variety of sources, most notably the U.S. federal government, which has considered the possibility of intervention in state and local financial matters.

Facts You Should Know stresses that federal intervention in matters of state and local finance are unwarranted and unwelcome, and that state and local governments differ in function and scope and should be examined and treated differently under those inherently unique conditions.

About ICMA

ICMA, the International City/County Management Association, advances professional local government worldwide. Our mission is to create excellence in local governance by developing and fostering professional management to build sustainable communities that improve people’s lives. ICMA provides member support; publications; data and information; peer and results-oriented assistance; and training and professional development to nearly 9,000 city, town, and county experts and other individuals and organizations throughout the world. The management decisions made by ICMA's members affect millions of individuals living in thousands of communities, from small villages and towns to large metropolitan areas.