Before Stockton: five other big financial crises for US municipalities
Stockton, Calif., recently became the largest US city in history to declare bankruptcy, and it may not be the last. A perfect storm of a low tax receipts, high retiree obligations, cash-strapped state budgets, and ill-advised fiscal decisions has swamped towns this year, big and small, from coast to coast. The result is an unprecedented number of municipalities up against severe financial difficulties.
Here’s a look at some of the most notable financial collapses and near-collapses for US municipalities over the years.
People walk past shuttered businesses in downtown Stockton, California in June. The city manager of Stockton signed Stockton's bankruptcy filing a week ago, saying that the decision to provide free healthcare to retirees left the city with a whopping $417 million liability.
Jefferson County, Ala.
Dennis Lathem/Birmingham Regional Chamber of Commerce/AP/File
This October 2006 photo provided by the Birmingham Regional Chamber of Commerce shows the skyline of Birmingham, Ala., whose county in 2011 filed an estimated $4.1 billion bankruptcy, the largest municipal bankruptcy in US history.
By Mike EckelContributor
Home to Birmingham, Alabama’s largest city, Jefferson County sought to reorganize its finances in fall 2011 under Chapter 9 of the federal bankruptcy code. A failed overhaul of its sewer system and other bad decisions left the county reeling under more $4 billion of debt and unable to raise taxes, fees, or payments for bonds issued by Wall Street banks. An earlier decision by the state Supreme Court striking down a local income tax has forced county officials to try to persuade the state Legislature to authorize another tax or warn of new budget cutbacks.