If I were a municipality, I’d be borrowing as much as I could, since its interest free. You could put it into an arbitrage, if nothing else.
Why doesn’t Toronto, Canada just borrow a lot of money, turn around and put it in government bonds? I don’t know, I suspect somewhere along the line, the Canadian politicians are going to change the rules. That’s the trick that politicians have done throughout history when things really go against the politicians, they just change the rules on you, in nearly every country in the world at some time in history.