Dip in bond rating the latest hit to city budget - WMC Action News 5 - Memphis, Tennessee

Dip in bond rating the latest hit to city budget

The City of Memphis' budget problems lowered the city's bond rating, and that dip is going to cost you.

Last week, the Mayor's staff announced last year's budget was more than twice as bad as previously thought and that next year's budget will require massive cuts. Tuesday we may get our first glimpse at those cuts. In the meantime, the country's major bond rating agencies are making it more expensive for Memphis to do business.

Two of the three major rating agencies have downgraded the City of Memphis.

"I think we're in for some challenging times. I think the administration has had a wake up call. The council, I think, is going to be more proactive," said Councilman Jack Sammons.

A dip in the bond rating is like a hit in your credit rating. When the city goes to borrow money it now has to pay more to get more.

"Well, there has been mismanagement clearly. And yeah, of course, the taxpayers are going to pay a price. They're going to pay a price in that it does cost more to borrow money so there's less things we're able to do for the citizens with the money that we have," said Councilwoman Carol Chumney.

Council members are bracing for sweeping cuts, possibly announced as soon as this week.

The cuts will strike a double-blow. They save money, and they show the bond rating agencies that the city is actively working on its problem.

"Sometimes you got to hit a mule over his head to get his attention. And I think it's a very efficient market and the market's telling us it's broken, you better fix it and I expect that's what we'll do," said Sammons.

No one knows yet how dramatic the cuts will have to be.

Again, Tuesday we are expecting a presentation from the new finance staff at city hall about cuts to the capitol improvements budget. Action News 5 will be there.

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