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New Problems Faced By The Great Cities Of, new food sources, new medicine--even an entirely new economic system. With COVID requiring residents to stay home and stores to shutter, the bulk of this reduction comes from a slump in local sales taxes. Declines will continue into State revenues are heading in the same directionso many U. Aid to cities may be part of the next pandemic Facfd package now being discussed by members of the House and Senate. The pandemic has hit budgets so hard that even cities in relatively this web page financial health—including those with rainy day funds to help them through an emergency—will face significant changes to staffing and services. Bankruptcy is a legal process where people, companies, and governments who cannot pay their debts seek to reduce Problems Faced By The Great Cities Of.
Which debts get paid during a bankruptcy are important decisions. City bankruptcy was created by Congress after the Great Cigies, in response to 4, different units of city government going belly up. Twenty-seven states now allow their cities to file for bankruptcy. Those states that do not allow city bankruptcy—Georgia and Iowa explicitly prohibit filing, with the other 21 states having no specific allowance or prohibition—manage the problem of city indebtedness in various ways, ranging from strict budget oversight to the disbanding of heavily indebted cities.
Sincecity bankruptcy has been used around times. For cities, bankruptcy is used to reduce debts, not sell off things—such as public roads and buildings—to pay off debts.
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We are Problfms who research changes in how cities go about budgeting. Our work has showed that the city bankruptcies that followed the Great Recession of and were not uniform. If you were in a big city, your government owed money to lots of people. The converse was true in small cities.
As the number of participants in a bankruptcy increases, the task of deciding how much different creditors should get repaid becomes more complicated. Westfall Township, PA, home to about 2, people, declared bankruptcy in after losing a lawsuit to New Jersey real estate developers David and Barbara Katz.
The city would also raise property taxes and delay the repayment of other debts. Inthe city lost around one-quarter of its revenues as local sales taxes and real estate development fees collapsed. Vallejo suddenly found itself unable to pay all of its bills.
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The City Council voted unanimously to file for bankruptcy. In its bankruptcy filing, the city estimated it had between 1, and 5, creditors. Vallejo argued that its bankruptcy should include the option of reducing employee wages and benefits, and changing working conditions, if necessary, without union consent. The judge agreed and, in doing so, expanded what types of debt could be reduced in bankruptcy. This was, and remains, controversial.
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The city emerged out of bankruptcy solvent but struggling. But no creditor would walk away unscathed. Wages, pensions, and healthcare for city employees were all cut. The bigger the city, the more complicated and expensive the bankruptcy. It also makes the process of picking winners and losers more complex and something that can involve testing the limits of bankruptcy law.
When these limits Or, just what going bust means can change dramatically. Things that once seemed untouchable, like pensions, can become vulnerable in bankruptcy courts.]
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