Not Just Detroit; Cities That Filed For Bankruptcy Since 2010

by Low Income Housing

Detroit, Michigan made headlines recently when it filed for Chapter 9 bankruptcy. Although Detroit represents the largest municipal bankruptcy in U.S. history, it certainly isn’t the only U.S. city who has filed for bankruptcy protection. Since January 2010 alone, the following cities also filed for bankruptcy:

  • San Bernardino, California
  • Mammoth Lakes, California
  • Stockton, California
  • Jefferson County, Alabama
  • Harrisburg, Pennsylvania
  • Central Falls, Rhode Island
  • Boise County, Idaho

In addition to the above list, a slew of other cities are in financial trouble. Nine other California cities have declared financial emergencies, Camden, New Jersey is the poorest city in the U.S. and continues to struggle, and until recently, Pontiac, Michigan turned to the state to help get them back on their feet.

State intervention

Some cities are able to get help from their state. However, fewer than 19 of all U.S. states have laws that allow them to intervene. Alabama and California, for example, are two states that do not provide financial assistance to local governments. Those states that do have intervention programs vary in limitations. Texas, for example, provides no emergency financing but will supervise the city’s finances and assign a financial manager.

What’s different about recent municipal bankruptcies?

City and municipality bankruptcies are not new. But what is new are the number of bankruptcies filed by cities and municipalities in a short time frame. As one California bankruptcy lawyer, Franklin C. Adams, stated, “What’s different and quite troubling is that larger economic conditions seem to be the cause, and we haven’t seen that since the Great Depression.”

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