Government One-Shots Raising Taxpayers’ Debt Costs: Muni Credit

Nassau County, New York, is planning to auction its sewer system. Yonkers, the state’s fourth-biggest city, spent $131 million from its reserves and refinanced its library. The next time those municipalities need that revenue to balance their budgets, it won’t be there.

U.S. local governments have increasingly relied on so-called one-shots to close budget gaps rather than fixing the chronic imbalances that cause them, Standard & Poor’s said in a report last month. The moves are hurting taxpayers and investors. Nassau, whose finances were taken over by a state board in 2011, has seen the penalty it pays over top-rated securities rise by more than 50 percent.