First came the US sub-prime mortgage meltdown. Now entire towns are declaring bankruptcy
Photo:parade.com
“They were hanging up the bunting in Mammoth Lakes this week, celebrating Independence Day in the traditional small-town fashion. First, locals queued up for an eat-all-you-can-eat "pancake breakfast". Then they took part in a fiercely contested "hot-dog-eating contest". Finally, after witnessing the annual town parade, the community oohed and aahed over a short but patriotic fireworks display.
Yet behind the show of civic pride lay a palpable sense of unease. For all the conspicuous consumption of junk food, and the proudly worn stars-and-stripes paraphernalia, locals were grimly aware that their picturesque resort, in California's Sierra Nevada mountains, was making headlines for all the wrong reasons.
The previous day, local councillors voted unanimously to seek bankruptcy, after Mammoth Lakes found itself facing a bill of $43m (£28m) from a botched property deal. The town, in winter a popular ski destination, became the state's second municipality in a less than a week to suddenly declare itself insolvent. Officials issued a statement claiming "bankruptcy, unfortunately, is the only option left", after a court ordered it to immediately pay the $43m to its largest creditor. It remains unclear how local police, firefighters, and core services will continue to be funded.”…
The towns left in financial ruin
Stockton, California
The biggest city in the US to run out of money so far, it listed a debt of $1bn in its bankruptcy application last month
Mammoth Lakes, California
The ski town filed for bankruptcy this week after losing a legal fight costing twice its annual budget
West Fall, Pennsylvania
The economy was doing well in this small town yet its $20m debt still proved too big for it to cope with
Jefferson County, Alabama
Failure to restructure $3.1bn bonds on its sewers sent its finances down the drain
Central Falls, Rhode Island
Went broke last year due to its massive pension bill for the baby boomers among its 18,000 citizens
Vallejo, California
Debt led to police officers being laid off, fire stations being closed, and cuts imposed on other services in 2008
Moffett, Oklahoma
Raised 78 per cent of its income from speeding tickets – until a state-imposed ban on the fines made it insolvent in 2008
Pritchard, Alabama
When town ran out of money for pensions in 2009, it simply stopped paying them, but that was not enough
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Broken America: The towns left in financial ruin