Municipal Bankruptcies and more on the way
James Hall
BATR.org
September 30, 2015
Even to the casual observer, the financial condition of government budgets are under severe stress. Taxes have gone up consistently and have outpaced any meager adjustments in income for most taxpayers. No one can reasonably expect that municipal financing is assured by simply raising assessments and rates to keep their bloated bureaucracies solvent. Since the middle class has never recovered from the money centered meltdown, the average community struggles with diminished resources.
Add into this equation the prospects of an even worse financial collapse, the question needs to be asked, just how municipal jurisdictions will cope with the reality that even more properties will go off the tax rolls.
A measure of last resort might well be bankruptcy, assuming your state allows for such relief. Chapter 9 – Bankruptcy Basics seem straight forward.
“The purpose of chapter 9 is to provide a financially-distressed municipality protection from its creditors while it develops and negotiates a plan for adjusting its debts. Reorganization of the debts of a municipality is typically accomplished either by extending debt maturities, reducing the amount of principal or interest, or refinancing the debt by obtaining a new loan.”
The resources on Bankrupt Cities, Municipalities List and Map, provides valuable information.
Overall bankrupt municipalities remain extremely rare. A Governing analysis estimated only one of every 1,668 eligible general-purpose local governments (0.06 percent) filed for bankruptcy protection from 2008 through 2012. Excluding filings later dismissed, only one of every 2,710 eligible localities (not all states permit governments to file for bankruptcy) filed since 2008.
The Rest…HERE
