Here is an interesting clip from MLive about the debate over Flint’s dire finances.   Michigan has a receivership program that has been used a number of times so municipalities cannot just file bankruptcy in federal court without going through the state.  The article poses the sensible, if painful and difficult, questions of concessions on salaries and benefits [...]

Chapter 9, fiscal stress, municipal bankruptcy

Looks like the city is making its best effort to try to resolve budget imbalance.  Ohio is one of the states that has a strong oversight/receivership program and municipalities may not file bankruptcy without approval of the state.  Local governments there do rely on income taxes, which is tough in the current economy, especially in [...]

Chapter 9, fiscal stress, municipal bankruptcy, municipal bond default

Here’s a clip from the California League of Cities concerning AB 155.  AB155 (and its parallel, SB88) briefly, would prevent California cities from filing bankruptcy without going through the state – California Debt Investment Advisory Commission (CDIAC).  Numerous other states have adopted similar provisions, which puts the state in the middle of helping with a workout [...]

California, Chapter 9, municipal bankruptcy

Harrisburg, Pennsylvania can’t really afford to pay for the Resource Recovery bonds that it guaranteed.  Their recently adopted 2010 budget does not include debt service for this guarantee (see prior post with link).  It is accepted practice for rating agencies to rate municipally (or state) guaranteed debt off the credit of the guarantor.  Unlike bond [...]

Chapter 9, fiscal stress, municipal bankruptcy, municipal bond default, state and local politics

See attached item from Reuters: http://www.reuters.com/article/idUSTRE61D27C20100214
Click on article title to get the link (sorry for the clunkiness)  Hat tip to Mayraj Fahim.

fiscal emergency

Several states are showing scary illiquidity.  New Jersey’s governor just yesterday impounded funds the legislature had already appropriated and announced a state of emergency.  He stopped short of “declaring” emergency, which would have given him special powers over contracts.  New Jersey comes up high on the list of states with big budget gaps, heavy pension [...]

fiscal stress, state and local politics, states

In a recent report about Mello-Roos Community Facility Districts (CFD’s) the California Debt and Investment Advisory Commission (CDIAC) stated:
Despite the potential impacts of evolving mortgage conditions, CFD’s have not reported higher default rates, at least through 2007-2008, but have reported a recent rise in the number of their draws on reserves.
(Mello-Roos bonds are post-proposition 13 [...]

California, municipal bond default, special district

This is a follow-up to the earlier post on October 14 about Prichard, Alabama when the city failed to make the October payment to their retirees.  According to the Press-Register city leaders do not expect to pay November either.  To protect themselves from the lawsuit that ensued they filed Chapter 9 (municipal) bankruptcy yesterday.  (Note to the municipal bond [...]

Chapter 9, municipal bankruptcy, Prichard Alabama

The check is not in the mail.  Prichard, Alabama, came out of Chapter 9 bankruptcy in 2002 and promised to make deposits into its public pension fund.  They didn’t and now they are simply out of money.  Retirees did not get their October 1 payment.    What’s next?  The retirees are suing.  The city is looking [...]

Chapter 9, municipal bond default, Prichard Alabama

At this point in the meltdown timeline, municipal bond defaults have not yet occurred in the traditional sectors we think about such as cities, towns, states, utility systems and school districts.  The few notable exceptions include Vallejo, California, currently working through a Chapter 9 bankruptcy and Jefferson County, Alabama sewer system, which is a heavily [...]

Chapter 9, municipal bankruptcy, municipal bonds