Overview
– Trump’s federal interventions in local governance, including military deployments and sanctuary city policies, have heightened municipal credit risk and triggered legal challenges.
– Credit agencies like Moody’s and Fitch have downgraded or placed jurisdictions (e.g., D.C., Kansas) on negative outlook due to federal overreach disrupting budgeting and governance.
– The 2025 OBBBA Act preserved tax-exempt bond status but introduced Medicaid cuts and delayed disaster aid, exposing municipalities to fiscal shocks in high-risk regions.
– Investors now prioritize states with fiscal discipline (e.g., Oklahoma) while avoiding politically vulnerable jurisdictions, as credit risk increasingly depends on policy shifts over pure financial metrics.
ainvest.com
by Isaac Lane
Saturday, Aug 23, 2025 10:01 pm ET