American Cities Teeter on Brink of Bankruptcy

The pain spreads across the nation: • Harrisburg, Pennsylvania's capital, owes $68 million in bond interest payments this year, a sum larger than its annual budget. The $68 million is part of $288 million in outstanding debt from an incinerator project. The Harrisburg Authority, the state body that issued the bonds for construction of the municipal trash incinerator, has been unable to make payments. The county, which picked up the bill last year, is now suing for the funds. In addition to the incinerator debt, Harrisburg must deal with a $9 million deficit in the current budget. The city is considering layoffs in its 537-member workforce. It has assigned AARP volunteers to man police stations in order to have all officers on the streets. Mayor Linda Thompson has said the city won't declare bankruptcy. The city is sifting through assets to see whether anything can be sold, including western artifacts purchased by former Mayor Stephen Reed for nearly $8 million. Bought with public funds, the wagon wheels, rifles and other memorabilia were destined for a Wild West Museum that never opened. "It's unclear whether all of the items are authentic," city spokesman Jim Penna told

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• Jefferson County, Alabama's most populous county, is saddled with about $5 billion in debt stemming from the overhaul of its sewer system in the mid-1990s. Merit increases for county workers were frozen; building and road repairs halted. A brand new jail sits vacant because there are no funds to hire workers or pay utilities. Officials have said bankruptcy is a possibility.

• The impoverished city of Central Falls, Rhode Island, near Providence, last month agreed for a receiver to take control of its finances and consider the rewriting of contracts and cutting of pension benefits. A city of 19,000, Central Falls has a budget of about $18 million and projects a $3 million deficit this year and a $5 million gap in fiscal 2011. The city also has $4 million in a pension fund that has $35 million in unfunded liabilities.

• Detroit, Michigan, is one of seven American cities assigned junk bond status by the nation's leading debt-rating agencies. The city made up for a 2010 budget deficit of $280 million by issuing $250 million of 20-year municipal notes. Earlier this month, Detroit revealed plans to close 77 public parks in a cost-cutting move by Mayor Dave Bing. Roughly 1,400 acres of parkland will be closed on Thursday. Bing has won concessions from more than half of the public-sector unions but the city council has pushed for deeper cuts. Detroit has closed dozens of schools in recent years and cut other city services, such as busing, as it grapples with population declines. When Bing took over in May 2009, the city had about 13,000 employees and a deficit of more than $300 million. He has let go more than 2,000 people since then and forced roughly 1,500 nonunion workers to take pay cuts. The city also instituted furloughs for employees.

In Maywood, the city is eliminating all positions except the city manager, city attorney and a handful of elected officials. All services would be contracted out. Maywood's $10.1 million general fund budget has a deficit of about $450,000. Compounding the problem, the city can't obtain insurance because of a long history of lawsuits, mostly against the police department.

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