Vt. Towns Worried Over Downgraded U.S. Credit
08/08/11 2:57PM By Kirk Carapezza
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Some Vermont towns say their confidence in an economic recovery has been undermined by the national debt-ceiling debate and the downgrading of U.S. credit.
Standard & Poor's lowered the U.S. credit rating. The company says political brinkmanship has endangered the government's ability to make sound financial decisions. S&P says the differences between political parties have proven to be extraordinarily difficult to bridge.
"The growing debt is not a Democrat or Republican issue. I mean we're really in the hole," says John O'Keefe, town manager of Manchester.
O'Keefe says Manchester is still planning to build a $4 million traffic roundabout in town, which is supposed to be paid for by the federal government.
"You have to question is that going to be affected by the debt ceiling debate. I don't know whether that's going to hit Manchester or not."
O'Keefe says he does know the markets are jittery enough to change the way the town conducts its business.
"Today, we're in no worse position than we were three months ago, but we've talked about it so much that we've whipped everybody up into a frenzy," O'Keefe says.
With interest rates so low, over the last few years Manchester has borrowed money and asked contractors to do business with very little overhead.
In St. Albans, the City Council is preparing for a pair of projects. A connector road would help trucks get through Main Street, and the city's wastewater treatment plant needs to be upgraded.
City Manager Dominick Cloud says St. Albans needs Washington's help to pay for that work.
"Those large projects have always been out of the reach of local governments and it's important the federal government stay involved in critical infrastructure," Cloud says. "Some are seeking to walk away from our infrastructure obligations, but that's a macro concern that is certainly heightened by some of the dialogue recently."
Both Manchester and St. Albans say they'll have to change their approach because they won't be able to borrow as easily.
How might S&P's downgrading of the U.S. credit rating affect your town? Let us know in the comments section below.