Why Cities and Counties Need to Monitor the Sagging Retail Sector

Route Fifty: Stress and transformation in the U.S. retail sector threaten to undermine local government revenues from sales taxes in the coming years, a credit rating agency cautioned this week.

Standard & Poor’s Global Ratings issued a report Monday that characterized shifts happening in the nation’s retail sector as “foundational,” adding that these changes could create difficulties for local governments planning to repay debt with sales tax collections.

The report says credit ratings for bonds backed by sales taxes will likely remain stable in the short-to-medium term and that “sales tax revenue bonds have always incorporated the ebbs and flows in local retail sales.” But the report adds: “A storm looms on the horizon.”

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