U.S. Muni Bankruptcies: But Is It Different This Time?

Not according to the Globe.

"...Accusations of gross mismanagement and dysfunctional politics have been laid against the municipal governments of the bankrupt California cities, which reportedly overspent on salaries and pensions and didn’t heed repeated warnings of impending doom.
In San Bernardino, for example, the city charter pegged police and firefighter pay to wages offered by other California cities, an obligation that became untenable as the unemployment rate surged to 15 per cent.

But most city managers and politicians will try to make major changes before bankruptcy is a possibility..."

Sure, but look at how vicious it played out in Wisconsin. It takes lots of courage to do it.

The article continues:

"...But the best way to avoid bankruptcy, experts say, is responsible financial management. “If you don’t have the money, do not try to spend it. Do not kick the costs of current services off to some future date,” said Prof. Mikesell. “Do not promise lucrative retirement benefits to employees unless you, at the same time, put aside money now to cover the ultimate cost.”

Aside from TWO paragraphs beginning with 'but' I will add, Duh! Or is D'oh! more appropriate?

"...Municipal bankruptcy in the U.S., as The Sacramento Bee sardonically declared last week, is “trendy.” But it may not be catching.

Only about 650 municipalities have filed for bankruptcy since the mid-1930s, when it first became an option, according to John Mikesell, an expert in municipal finance at Indiana University.

There are about 89,000 municipalities in the U.S., and municipal bond watchers are bullish that the news out of California is not a signal of a rush of filings to come. “They are so rare that analysts haven’t paid much attention to them,” said Prof. Mikesell..."
Whatever the reasons, austerity measures should be put in place in good economic times, but bad ones. That's why people push back and don't accept offers. They want what they fairly earned but that which should not have been given in the first place in some cases.

Anyway. San Bernadino, Calif. recently filed.

A list of other muni's filing with a brief explanation.

Here's a report from Bloomberg's (home of the Nanny-King himself) about Central Falls, RI filing.

Excerpt:

"...I still can’t understand why a city this size can’t run on $15 or $17 million,” said Jerauld Adams, 41, chairman of the Board of Trustees of Adams Library, which volunteers keep open three days a week after Flanders fired all the paid workers on July 1. “And they don’t even have to take care of their own school system...”

Good question but the article (as one of the links I provide) answers the question, retirees rejected a proposed cut to its benefits. This is what set it all in motion.

Canada isn't in great shape either.

It's a problem across Western nations.