Houston's Credit Rating

Standard & Poor's has followed its U.S. debt downgrade by cutting the credit ratings of several state and local government bodies. While Houston avoided the knife, its troubles may not be over yet.

City of Houston seal and moneyMore than three years into their worst fiscal crisis in decades, the last thing state and local governments need is for their costs of borrowing to go up.

Steven Craig teaches public sector economics at the University of Houston.

“The reality is that many of our state and local governments are — I'll say — following the lead of the federal government, in the sense that they’re following unsustainable fiscal paths, and unfortunately the city of Houston is one of the leaders in that.”

Craig says Houston has run up a tab of more than $2 billion over the past eleven years, largely due to unfunded city pensions.

“Whatever we do to try to pay that money back means that taxpayers in the city will be paying a dollar in taxes for less than a dollar worth of services.”

S&P has already downgraded its ratings for Miami, Florida and Tacoma, Washington, as well as for a number of state and local government agencies.

Bio photo of Andrew Schneider

Andrew Schneider

Business Reporter

Andrew Schneider joined KUHF in January 2011, after more than a decade as a print reporter for The Kiplinger Letter...