Municipal Problems

Mauricio Merino on Mexico's local governments:

[W]e have become aware that local expense also rose for reasons that are simply unacceptable: the rise in salaries and in current expenses that were used in many cities to finance whims and kickbacks for the functionaries that were on their way out or, even, to filter public funds to the electoral authority. No one talked about this "financial hole" before the elections, when it seemed more than likely that governments would have sufficient funds. And nobody knew precisely the magnitude of the problems that were hanging over them until the new governments began to arrive, with the surprise that the bank accounts were already exhausted. It's not a coincidence that the documents that the Hernández and Alvarado [two El Universal reporters] investigation referred to came about only until the end of July, when the electoral party was already over.

Nevertheless, the bankruptcy of the municipal or state governments is an impossible supposition. Mexico's local governments can't close (although some have done so during summer vacation, as in Guerrero), because they aren't family businesses or maquiladoras or a publicly traded company. If they come to declare themselves in financial bankruptcy, they'd still have to continue carrying out their basic obligations and paying their debts. It would be a gigantic disaster if, suddenly, the governments in the cities stopped worrying about trash or public lighting; if public transportation shut down; if the service windows for filing administrative forms closed until further notice; if the local police and firefighters when to their houses to look for new jobs, et cetera.

It seems like this is more of a dystopian fantasy than a reality. I wonder why is everyone looking to the federal government to solve this; wouldn't it be simpler for Mexican cities, who best know the scope of their difficulties, to issue municipal bonds? Do Mexican cities do that? I've never heard of one doing so, but is there any reason that they couldn't?