Local governments closely watching debt debate

HENRICO, VA (WWBT) – Officials in Central Virginia are keeping a close eye on Capitol Hill. Local governments, especially in Virginia and Massachusetts, could feel the repercussions of the fight. In fact, Hanover, Chesterfield and Henrico are just some of the counties that could lose their superior bond rating, which could affect your wallet.

Moody's Investors Service issued a warning to almost two hundred local governments, saying if the feds can't come to an agreement on the debt ceiling, its credit rating and possibly the credit rating of our localities will be in jeopardy.

The agency said the AAA ratings we earned in Henrico, Hanover and Chesterfield is at risk. That bond rating is basically a credit score for localities. It measures the ability to pay back debt and dictates the interest investors can charge when loaning money to localities for projects, like building schools and firehouses.

In Henrico, officials are holding detailed talks about the county's finances. One told NBC12 there are no immediate consequences. Over the next two years, however, the county does plan to finance projects with bonds and it will not do so in an unstable market like we have right now. They'll have to exercise flexibility there.

Chesterfield said it's in "fact finding mode" and holding discussions on what this might mean for the county's spending plan. One official told us conversations, which could give them a better idea of where they stand, are set for Monday.

A budget writer with Hanover, on the other hand, said it has no plans to borrow money for projects until at the earliest next spring.

It's safe to say all counties are just relieved whatever happens in Washington will not impact their existing debt.

Just last week, Governor Bob McDonnell sent a letter to the president and the state's congressional delegation, urging them to reach a compromise after Moody's also listed Virginia as at risk for a downgrade in its credit rating.

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