US Cities Going Bankrupt
by Stephen Lendman
In past decades, many US municipalities declared bankruptcy. Since 1981, 42 cases were filed. Ten came in the past four years.
Given hard times getting harder, what's happening now is unprecedented since the Great Depression.
Cities occasionally declare bankruptcy. In America, they're coming more often. Others in dire financial straits may follow.
San Bernardino, CA is the latest. On July 11, The New York Times headlined "Third City In California Votes to Seek Bankruptcy," saying:
Officials have no choice. They can't meet payroll obligations through summer.
"Faced with a budget shortfall of $45 million and city coffers that have already been drained, the San Bernardino City Council voted on Tuesday to file for bankruptcy."- Advertisement -
Interim city manager Andrea Travis-Miller said:
"I am concerned about our ability to make payroll, not only in the next 30 days but also in the next 60 to 90 days. A major restructuring of this organization is needed."
California cities have two Chapter 9 bankruptcy options. They can either hire a third-party mediator to negotiate with unions and creditors or declare a fiscal emergency.
San Bernardino chose the latter way. Depression conditions ravage the city. Many others face similar problems. Stockton and Mammoth Lakes declared bankruptcy earlier. Other financially strapped cities and towns around the state and country may follow.
It's hard keeping up with many troubled municipalities, counties, school systems, and other public services potentially facing bankruptcy.
In December 2010, financial analyst Meredith Whitney told 60 Minutes that over 100 US cities could go bust in the next year.
"There's not a doubt on my mind that you will see a spate of municipal bond defaults. You can see fifty to a hundred sizeable defaults -- more. This will amount to hundreds of billions of dollars' worth of defaults," she said.