When a government defaults on debt, it’s usually because it can’t afford the payment — not because it doesn’t want to make the payment.
But that’s changing.
In Missouri, a judge ruled last week that Platte County, home to Kansas City, was completely within its rights when it opted six months ago to not pay a $765,000 bond payment due for a long-struggling shopping development. In his decision, Circuit Court Judge James Van Amburg noted there was “no promise or requirement” for the county to pay the debt on the Zona Rosa retail center, even if the county auditor’s proposed budget included a line item for the payment (which was the case last year).
The ruling validates a trend in the post-recession era — at least in Missouri — of municipal governments placing their obligations to taxpayers ahead of what they may owe to bondholders.
(Read more: GOVERNING.com)