Cities And counties are now seeing their finances collapse. Many are on the verge of bankruptcy or in bankruptcy. During the ‘hay day’ of good times, city governments overspent (as did nearly everyone else), and now the loans are coming due. The problem always is… governments (and people) leverage their paychecks to the maximum – leaving no wiggle room. When their income drops or their expenses increase (without a corresponding pay increase), they suddenly are in deep trouble to pay off their loans and promises. Society itself really is to blame. The system does its best to train us to spend it all – to leave nothing in reserve. It becomes ‘normal’ to leverage every cent. Well now it’s time to pay…
This list just scratches the surface of city troubles out there in America. While as you can see that California is in the worst shape, there are cities all across America that are barely hanging on.
Stockton filed for the largest bankruptcy of any U.S. city in history on June 28, due to the decline in the once hot housing market and intake of debt during its boom years.
Mammoth Lakes, California
On July 3, Mammoth Lakes filed for bankruptcy.
San Bernardino, California
On July 11, San Bernardino filed for the second largest bankruptcy of any city in the history United States. San Bernardino opted to head toward bankruptcy rather than making expansive cuts to its police and fire departments as Stockton had.
Rockland County, New York
The city’s deficit is expected to grow to $95 million, and the belief is that the city may be headed toward bankruptcy.
Scranton is now roughly $16.8 in the hole on its fiscal year budget. To help cut costs, the city has slashed nearly 400 public employees to $7.25 per hour, due to an inability to pay workers their standard salaries.
Providence, Rhode Island
At the end of May, a former state Supreme Court justice and current state- appointed receiver for bankrupt Central Falls, stated that “I don’t see how they can get out of it without going there [bankruptcy].” The city has a budget gap of at least $20 million.
Detroit’s economy has been crushed for due to continuing declines in business and the recent housing crisis. The city is under watch of a nine-member advisory board as part of an agreement with Michigan to prevent it from seeking bankruptcy (too big to fail?).
Santa Ana, California
Santa Ana’s credit rating is rated just one above junk stats by Moody’s.
Long Beach, California
Long Beach has renegotiated contracts with its police and fire unions to reduce pension costs, in an effort to cut spending and help the city’s $18.5 million budget deficit. While Long Beach is in better shape than Stockton, it is not far from finding itself in a similar fate.
Costa Mesa, California
In order to save money, Costa Mesa has sold police helicopters, slashed payrolls from 611 to 450. Now, the city is investing 15 percent of its total budget toward capital improvements, doubling what it spent last year.
San Diego, California
San Diego has faced pension issues for many years, and most of the proposed solutions do little to alter the debt that is on mounting on the books.
Los Angeles, California
Los Angeles faces a budget shortfall of $238 million, and has enormous unfunded pension liabilities. It is difficult to foresee a city as large as Los Angeles, the second largest in the United States, going bankrupt. Even so, it faces serious problems.
Oakland is yet another city experience serious pension issues. The city announced that it plans to borrow $211 million to pay for its pension problems.
data from www.businessinsider.com
What difference does this make to me (us)? To KNOW that we are not out of the woods, so to speak. In fact, we are just entering the forest with a long way to go until this all unwinds.
Entire nations and most of the western world has OVERSPENT and now it is time to pay.
There are no creative solutions that will avoid the unavoidable (payment of debt).
We are all in an authentic debt crisis which the world is now experiencing, and it can only be ultimately cured in two ways: 1) default on it, or 2) print more money in order to inflate it away. ~ Jim Sinclair
…and that’s the way it is.