When Detroit filed for bankruptcy last week, it was the largest city to go belly up in U.S. history. But it was also a false flag of despair. Municipal bankruptcy is rare; Governing estimates that 0.06 percent of local governments have filed for bankrupcty protection in the last five years. And on the whole, according to the National League of Cities, the financial conditions of American cities have been on the rise. Cities like San Francisco, San Jose, and Joliet, Illinois, have eliminated or greatly reduced huge budget gaps in the last several years.
Another important note: the structure of cities is incredibly variable. Everything from the degree of the recession’s impact to the size of pension liabilities to the level of state aid is completely different from city to city.
That said, Detroit is not the only city struggling to pay its bills. These 13 cities have shown significant signs of distress. They may have risky debt ratings, a declining population, a large budget gap in the year ahead, high unemployment ... or all of the above. Many have already declared themselves in a state of fiscal emergency, which allows them to void union contracts, increase taxes, or other things they wouldn’t be able to do legally otherwise.
Bill Pugliano/Getty
Fiscal emergency declared?: Yes
Unemployment rate: 10.2%
Moody’s debt rating: Aa2
Population change 2010-2012: 1.72%
Budget gap FY 2014: $216 million
Budget gap as percent of general fund budget: 4.4%
Sign of distress: The city’s budget adviser warned in May that “the city budget's deficit for 2014-15 will grow by $108 million unless the city eliminates the 5.5 percent pay hike, addresses police overtime, and secures new concessions from city workers on health-care benefits.”
Joe Klamar
Fiscal emergency declared?: No
Unemployment rate: 10.7%
Moody’s debt rating: A3
Population change 2010-2012: 0.71%
Budget gap FY 2013: $298 million
Budget gap as percent of general fund budget: 3.60%
Sign of distress: To reduce the budget gap, officials said the city laid off 500 workers, closed police stations, and switched to a grid system for garbage collection.
Ann Hermes/The Christian Science Monitor/Getty
Fiscal emergency declared?: No
Unemployment rate: 17.1%
Moody’s debt rating: n/a
Population change 2010-2011: -0.08%
Budget gap FY 2011: $26.5 million
Sign of distress: This city has been struggling for years. There is a $174,000 surplus expected in 2014, but that comes after the crime-riddled city got rid of its police force last fall.
Spencer Platt/Getty
Fiscal emergency declared?: No
Unemployment rate: 7.6%
Moody’s debt rating: Aa2
Population change 2010-2012: -0.13%
Budget gap FY 2014: $35 million
Budget gap as percent of general fund budget: 10%
Sign of distress: To make its 2014 budget, the Queen City at first planned to lay off 200 police and firefighters, but extra income was created by raising property taxes and laying off 67 municipal workers. An initial plan to outsource parking to save the jobs of the cop and fire force for the was blocked by a county judge.
Ernest Coleman/MCT/Getty
Fiscal emergency declared?: No
Unemployment rate: 6.7%
Moody’s debt rating: Aa3
Population change 2010-2012: 2.37%
Budget gap FY 2014: $38 million
Budget gap as percent of general fund budget: 3.20%
Sign of distress: Hampered by pension obligations that left a new $20 million hole in the budget, San Diego has canceled plans to expand library offerings and recruit new police.
Gregory Bull/AP
Fiscal emergency declared?: No
Unemployment rate: 15.4%
Moody’s debt rating: Baa2
Population change 2010-2012: -0.67%
Budget gap FY 2012: $5.9 million
Budget gap as percent of budget: 2.6%
Sign of distress: New Jersey is known for its willingness to keep its cities out of bankruptcy, but Paterson hasn’t had it easy. The city laid off 400 municipal workers in 2011.
Fiscal emergency declared?: Yes
Unemployment rate: 11%
Moody’s debt rating: Ba1
Population change 2010-2012: 3.01%
Budget gap FY 2014: $19 million
Budget gap as percent of general fund budget: 1%
Sign of distress: After declaring fiscal distress last July, the city cut jobs, closed the jail, froze salaries of city workers, cut hours at libraries, and closed firehouses.
Jewel Samad/AFP/Getty
Fiscal emergency declared?: Yes
Unemployment rate: 13.9%
Moody’s debt rating: n/a
Population change 2010-2011: 1.63%
Budget gap FY 2014: $3.3 million
Sign of distress: A quarter of city employees were laid off last fall, and others were asked to take pension-plan concessions. The median home price in Atwater has dropped 40 percent since 2007.
Rich Pedroncelli/AP
Fiscal emergency declared?: Yes
Unemployment rate: 7.7%
Moody’s debt rating: Baa1
Population change 2010-2011: -0.71%
Sign of distress: The city of nearly 50,000 has cut every corner to get out of the red. Holiday pay was reduced, use of cellphones and letterhead for the mayor and staff was eliminated, street lights were dimmed, and city workers were laid off or furloughed.
Eric Thayer/Reuters/Corbis
Fiscal emergency declared?: Yes
Unemployment rate: 14.6%
Moody’s debt rating: n/a
Population change 2010-2011: 1.44%
Budget gap FY 2014: $2.5 million
Budget gap as percent of budget: 21%
Sign of distress: Adelanto declared fiscal emergency in late June. In order to pay for $7 million in services, the city is relying on a new tax hike to close the budget gap. It already sold its correctional facility in 2009 and laid off nearly half of its workforce.
Robyn Beck/Getty
Fiscal emergency declared?: Yes
Unemployment rate: 16.5%
Moody’s debt rating: n/a
Population change 2010-2012: -1.87%
Budget gap FY 2014: $19.1 million
Budget gap as percent of general fund budget: 36%
Sign of distress: Michigan’s seventh-largest city had been under a state-appointed emergency manager since December 2011. It has hundreds of million of dollars in unfunded pensions and health-care liabilities.
Carlos Osorio/AP
Fiscal emergency declared?: Yes
Unemployment rate: 7.6%
Moody’s debt rating: n/a
Population change 2010-2011: 3.06%
Budget gap FY 2014: $3.6 million
Budget gap as percent of general fund budget: 9%
Sign of distress: To help eliminate its budget deficit, Antioch is asking voters to agree to a half percent sales-tax hike, which will add $4.7 million to its budget annually. But that still won’t allow the city to reinstate its dwindling police force.
Paul Sakuma/AP
Fiscal emergency declared?: Yes
Unemployment rate: 10.9%
Moody’s debt rating: n/a
Population change 2010-2011: -1.00%
Budget gap FY 2014: $3.3 million
Budget gap as percent of general fund budget: 20.6%
Sign of distress: Last fall Hamtramck laid off half of its firefighters, and earlier this year it applied for a $3 million loan from the state.
