Bankrupt, USA: Why our cities aren't too big to fail
 

Bankrupt, USA: Why our cities aren't too big to fail - Sep 2010

http://i2.cdn.turner.com/money/2010/..._pa.gi.top.jpg

FORTUNE -- Harrisburg, Pennsylvania, has dodged a debt bullet. The only problem is that the gun is still loaded.

The Keystone State's cash-strapped capital was scheduled to default on a $3.3 million bond payment on Wednesday. It avoided that debilitating fate when Pennsylvania's governor, Ed Rendell, pledged to resolve the problem with $4.4 million from the state's own challenged coffers. This gives Harrisburg a chance to fight again another day. But its problems are far from over, and that's bad news for investors in the $2.8 trillion muni-bond market.

States from California to Illinois have been in deep crisis since the recession began, hammered by drastic cuts in tax revenue and inflexible spending demands for things like health care, debt service and pension plans. Forty-eight states grappled with fiscal shortfalls in their 2010 fiscal budgets. Totaling $200 billion, or 30% of state budgets, this fiscal shortfall is the largest gap on record.

Some cities are in even worse shape than Harrisburg. Central Falls, Rhode Island, recently went into receivership when it couldn't pay its bills. San Diego is said to be considering bankruptcy to get out from under its pension obligations. Miami's city council, hoping to avoid Harrisburg's fate, recently used emergency powers to slash city salaries and pensions and is now instituting hefty traffic fines and garbage fees. This year, ratings agencies have cut the debt in several cities -- including Littlefield, Tex., Detroit, Mich. and Bell, Calif. -- to junk.

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:2 cents: I've seen cities around here quietly filing bankruptcy. Looks like it's gaining popularity. (as it is the only choice left for many cities.) State bankruptcies will be next.

:(

How about losing your pension cause your money's been mismanaged? ugh.

yeah,.. that's the no-lube method.

The state of Kentucky borrowed 500 Mil last year to keep paying pension and next year they will be doing the same. And Kentucky is not even a big state so think about how bad some of the larger states are doing.

interesting article
I can see California having to make some big cuts, if Meg Whitman gets in there, which it looks like she will, she'll have to cut a lot

what do you think she will cut that hasn't been already cut?

I'm hoping she goes after all the money spent on welfare for anchor babies, but that won't happen. State workers make too much and their retirement is a joke. I just looked for her website and the server was down. LOL

it will take radical unpopular cuts that i have no faith in her making. (or Jerry Brown either).

It appears Harrisburg, Pennsylvania - Comprehensive Annual Financial Report for 2009 has not been released, for some reason. But they do have 2008 and they have plenty of money and more than enough to shift/move and make up for anything they need.

http://www.harrisburgpa.gov/Download.../2008_CAFR.pdf

They may fall short hitting the "2010 fiscal budgets" but they have plenty of money to make up for any short falls.

Nothing is ever too big to fail.