Free Republic

Harrisburg City Council answered the state’s takeover threat by voting to seek Chapter 9 municipal bankruptcy protection Tuesday night, essentially adding the courts and more turmoil to the fight over the capital city’s fate. The same majority who voted down the state-sponsored Act 47 plan and Mayor Linda Thompson’s followup fiscal-recovery plan voted 4-3 to hire Philadelphia-area lawyer Mark Schwartz to fight the takeover and then 4-3 to file for bankruptcy as soon as possible. ... "Wake up, Harrisburg. Wake up and look around,” Smith said. “I’m tired of being bent over and spanked in the corner. We should have...

Harrisburg Mayor Linda Thompson is warning that the city may run out of money unless a financial recovery plan is approved. Thompson told City Council on Tuesday night that the city must make a $3.3 million bond payment in mid-September. Without a plan in place, she said that would leave the city unable to pay its nearly 500 employees and provide basic services.

There is an 80% chance that Jefferson County, Alabama, officials will vote to file for Chapter 9 bankruptcy today, Commissioner Sandra Little Brown said before the panel was set to meet to consider the option. Is this just posturing to force the creditors to agree to the debtor's terms, or an actual reflection of the truth, we shall fund out this afternoon

The tiny, cash-strapped town of Central Falls, Rhode Island, is expected to know Monday whether it is officially bankrupt. Robert Flanders, the town's state appointed receiver, will work through the weekend to decide whether he will file for bankruptcy on behalf of Central Falls... ... Central Falls faces a $4.9 million budget shortfall. The real financial problem, however, is the city's $80 million public pension debt and it's public safety worker pension fund is on track to run out by October. A Chapter 9 municipal bankruptcy filing would give Central Falls the opportunity to change it's union agreements. But it...

Prior to the 1930s, it was not legally possible for a U.S. municipality to declare bankruptcy as no legislation existed covering this event. The growing number of insolvent towns during the 1930s depression necessitated a change in the Bankruptcy Act. The act was amended by Congress in 1934 to cover municipalities... The majority of municipal bankruptcies are the result of two things, 1) economic problems, and 2) financial mismanagement by elected and/or appointed officials. No surprise here... Chapter 9 bankruptcies are not designed to forgive debt. Rather, their intent is to aid a municipality through reorganization ... There are two...

The county Grand Jury issued a report Tuesday reviewing the city’s troubled finances and recommending a slate of measures it says would avoid future fiscal crises. The report, available on the Grand Jury's web site, reviews the series of city officials’ missteps in 1996, 2000 and 2002 that led to a massive underfunding of the city’s pension plan, and proposes strategies that the current city administration could take. “The city leadership should acknowledge the financial crisis ...” Among the recommendations: Not allow any workers to join the deferred retirement option plan... The DROP plan has been decried as a source...

Two years after going broke, the California city still isn't free of its crushing pension obligations. In 2008, Vallejo, Calif., was nearly broke. Faced with falling tax revenues, rising pension costs, and unmovable public-employee unions, the city was unable to pay its bills and declared bankruptcy. Now, as it prepares to emerge from Chapter 9, officials in Los Angeles, San Diego and other cities across the state are looking to see if Vallejo has blazed a trail for them to get out from under their own crushing pension costs. What they're finding is that even bankruptcy may not be enough...

Just days after becoming controller of financially strapped Harrisburg, Pa., in January, Daniel Miller began uttering an obscure term that baffled most people who had never heard it and chilled those who had: Chapter 9. The seldom-used part of U.S. bankruptcy law gives municipalities protection from creditors while developing a plan to pay off debts. Created in the wake of the Great Depression, Chapter 9 is widely considered a last resort and filings under it are more taboo than other parts of bankruptcy code because of the resulting uncertainty for everyone from municipal employees to bondholders.

Thursday is the deadline for Harrisburg, Pa., to make a debt payment tied to a trash incinerator, and city officials aren’t optimistic. City Controller Daniel C. Miller said Wednesday it’s “very likely” that the city will miss the $637,500 payment ... The incinerator debt...threatens to send the city into Chapter 9 bankruptcy. The city is facing a $164 million budget gap... The city is also due to pay $4 million on its own debt and $1 million in payroll expenses Thursday, Miller told Dow Jones. The mayor of Harrisburg, Linda Thompson, hasn’t been receptive to the use of Chapter 9...

Just days after becoming controller of financially strapped Harrisburg, Pa., in January, Daniel Miller began uttering an obscure term that baffled most people who had never heard it and chilled those who had: Chapter 9. The seldom-used part of U.S. bankruptcy law gives municipalities protection from creditors while developing a plan to pay off debts. Created in the wake of the Great Depression, Chapter 9 is widely considered a last resort and filings under it are more taboo than other parts of bankruptcy code because of the resulting uncertainty for everyone from municipal employees to bondholders. The economic slump, however,...

When the city of Vallejo filed for bankruptcy protection in May, the logical question was: Is this a sign of things to come? Now two more California cities – Rio Vista and Isleton – are considering bankruptcy protection as an option as they face large budget shortfalls and staggering debt. While experts caution against ringing the alarm bells just yet, they do say tough economic times could push municipalities already on the brink over the edge. "I think it's quite possible municipal bankruptcies could become somewhat more common but will still be very rare," said Jason Dickerson, budget and policy...

Mayor Osby Davis, who has lived in this waterfront city across San Pablo Bay from San Francisco for 60 of his 62 years, says: "If you have a can that's leaking two ounces a minute and you put an ounce a minute in it, it's going to get empty." He is describing his city's coffers. ~snip~ ... a police captain receives $306,000 a year in pay and benefits, a lieutenant receives $247,644, and the average for firefighters — 21 of them earn more than $200,000, including overtime — is $171,000. Police and firefighters can store up unused vacation and leave...

Bad pension moves and accounting irregularities have made a mess of San Diego's finances, but is California's second-largest city on the brink of bankruptcy? Depends who you ask. Some pundits and some bankruptcy lawyers say it is. Not surprisingly, Mayor Dick Murphy and current and former top city officials insist it isn't, and some municipal finance experts agree. Meanwhile, Wall Street credit-rating agencies and other informed third-party observers show little sign of bracing for San Diego turning into the next Orange County, which became the largest municipal bankruptcy case in U.S. history in 1994. Standard & Poor's Ratings Services suspended...