Metros Across The Country Seek Financial Help From Embattled States

Across the country, a growing number of towns, cities and other local governments are seeking refuge in havens that many states provide as alternatives to federal bankruptcy court.

The increasingly common pleas for state assistance - after two relatively quiet decades - reflect the yawning local budget deficits that have appeared in the last two years. The problem is due in large part to dramatically reduced tax income which used to fund labor-intensive public goods such as schools and policing.

Public finance experts worry that the states, mired in their own financial problems, "will not force communities to attack their problems head-on and solve them. If states let towns keep borrowing, without acknowledging the magnitude of the towns' existing debts - like the pensions they owe retired public workers - they might never solve their problems and just keep drawing on the states."

"It's like throwing you a life preserver but never pulling you into the boat," said Daniel Miller, a certified public accountant and the city controller in Harrisburg, PA. He says he believes that the city might be better off in federal bankruptcy court after it asked for emergency funds at the start of the month.

Full Story: Cities In Debt Turn To States, Adding Strain


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