Other Municipalities

  • What About Atlantic City?

    Strong state oversight is helping the New Jersey gambling town stay out of bankruptcy court despite a 64 percent loss of its tax base and declining gaming revenues, write the authors of a new report from The Pew Charitable Trusts. Former Detroit Emergency Manager Kevyn Orr had been consulting for the appointed emergency management team there, and the restructuring efforts have so far kept the East Coast city from a Chapter 9 filing since Gov. Chris Christie named an emergency manager in January.

    The Pew report is titled “Atlantic City’s Watchdogs: How strong state oversight helps municipalities avoid bankruptcy,” and details the current financial situation in Atlantic City as well as the history of New Jersey’s state oversight and intervention in local finance.

    Among Atlantic City’s financial issues: Gambling revenues cut in half in the last eight years. Property values declining. A third of its casinos shutting down. “Unsustainable bond issuances” funding pension payments. “Imminent danger of running out of cash.”

    Here’s a comparison on Detroit and Atlantic City, compiled by NextChapterDetroit.com in January:

    Detroit Atlantic City, New Jersey
    Population (2010 U.S. Census) 714,000 39,500
    Median Household Income $26,300 $29,200
    Current Annual City Budget $1 billion $258 million
    Approximate No. of City Employees 9,400 1,100
    Monthly City Revenue from Casinos $16 million $18 million
    Financial Situation at the time of Emergency Manager Appointment $327 million budget deficit in FY 2012. Decades of population decline.  $35 million budget shortfall. Loss of 8,000 casino jobs




  • Lawmaker: State Should Make Income Tax Collection Easier for all Michigan Cities

    Some state lawmakers say Michigan should make it easier for cities to collect income taxes. Legislation making its way through the state House would help Detroit collect delinquent taxes. It would also require employers outside of Detroit to withhold income taxes for city residents. Here’s more from the Michigan Public Radio Network.

  • After Detroit: Fiscal lessons learned for other U.S. municipalities

    Detroit’s bankruptcy did not set off a national wave of municipal Chapter 9 filings, but the case continues to draw attention and serve as a warning to cities, villages and townships across the United States to keep their fiscal houses in order. That’s according to Mary Murphy, manager on The Pew Charitable Trusts’ state fiscal health and economic growth project. She was one of the authors of the new report “After Municipal Bankruptcy: Lessons from Detroit and other local governments.” She spoke with WDET’s Sandra Svoboda.

  • In Bridge: Lessons for other municipalities from Detroit’s Chapter 9

    Detroit’s financial problems have not been of the one-size-fits-all variety, so state and local governments across the U.S. should take care not to assume the city’s historic Chapter 9 filing is the only solution for distressed municipalities. That said, Detroit is a good case study for the importance of early state intervention when community fiscal troubles become evident. That’s the conclusion of researchers with Philadelphia-based Pew Charitable Trusts in a new report. Read about it in Detroit Journalism Cooperative partner Bridge Magazine here.

  • Detroit’s Bankruptcy Judge Advising Puerto Rico

    Officials in Puerto Rico are hearing from Detroit’s former bankruptcy judge about how Chapter 9 works and how it allowed Detroit to restructure its debt, including pensions. Now-retired Judge Steven Rhodes is advising the Commonwealth about federal bankruptcy law. With its roughly $70 billion in bond debt and $35 billion in unfunded pension obligations, Puerto Rico has nearly five times the obligations Detroit did when the city filed for bankruptcy two years ago. Rhodes spoke with WDET’s Sandra Svoboda.

  • Catching up on Detroit’s bankruptcy news…and Puerto Rico’s

    Detroit’s blight

    The Detroit Land Bank Authority will receive nearly $12 million from the city’s general fund, following a split City Council vote last week. Land bank officials say they needed the monies to operate and continue demolition of vacant and abandoned properties.

    The council also transferred nearly 38,000 city-owned residential properties to the Land Bank, which seeks to put them back into productive use or clear them.

    The Detroit News reported:

    Council President Brenda Jones, who along with members Raquel Castaneda-Lopez and Janee Ayers voted against the subsidy, said she’s reluctant to take on the financial responsibility.

    Detroit, she said, is operating under the oversight of a Financial Review Commission that will go away if officials budget responsibly and avoid deficits for three years.

    “My concern is this; we just emerged from a bankruptcy,” Jones said. “The city looks pretty good. I don’t want a deficit to occur in three years because the city is going to be responsible for what the land bank does if the land bank doesn’t have any money.”

    The city’s blight was a major issue of the bankruptcy case, with several city officials testifying it was one of the top concerns as they looked to revitalize Detroit.

    Orr’s pay in Atlantic City

    Former Detroit Emergency Manager Kevyn Orr collected a higher hourly wage in his consulting role in Atlantic City than most of the attorneys who worked on the Detroit bankruptcy case, according to published reports.

    Orr, who was appointed by New Jersey Gov. Chris Christie as a consultant for the financially challenged casino town, charged $950 an hour during his three months of work. His total collected: about $70,000, the Press of Atlantic City reports.

    Bankruptcy watchers have sights on Puerto Rico

    Like Detroit did two years ago, the sunny island of Puerto Rico is facing a debt crisis: $73 billion owed to financial creditors, NPR reports. With four times the debt that purged Detroit into bankruptcy, the sunny paradise destination is looking for any solution out.

    With a junk status rating, Puerto Rico is trying to negotiate a new bond sale with Wall Street investors. At the same time, the island’s troubled energy company, PREPA, is desperately trying to stave off default. … To deal with its debt, Puerto Rico passed a law that would allow troubled agencies like the state-owned power company to seek bankruptcy protection. A federal judge struck down the law, though, ruling it violated the federal Bankruptcy Code. The commonwealth is appealing that decision. It’s also pushing for a law in Congress to amend the Bankruptcy Code to include Puerto Rico. In the meantime, the island needs to find money to pay its creditors. And that means raising taxes.








  • Atlantic City’s EM Report: Recommends cuts and layoffs, not Chapter 9

    Like Detroit, the casino town on the Jersey Shore faces declining revenues, retiree obligations and other expenses it can’t pay for. Gov. Chris Christie appointed an emergency manager earlier this year, and former Detroit Emergency Manager Kevyn Orr is advising. The duo released a report Tuesday (see below), calling for layoffs and cuts but not a bankruptcy filing. Here’s the Philadelphia Inquirer’s story, which begins:

    Warning of a liquidity crisis through 2015 and a revenue decline “a lot more severe” than they had anticipated, Atlantic City’s emergency managers on Tuesday recommended $10 million in budget cuts, hundreds of layoffs, and mediators to negotiate with casinos and unions. The 60-day interim report by Kevin Lavin and Kevyn Orr, appointed by Gov. Christie, highlighted a $101 million budget shortfall for the city and a $47 million shortfall for the school district, but was short on details of how the city’s long-term financial woes can be solved.

    The Wall Street Journal wrote in this piece:

    Releasing a much-awaited report on the city’s future, the emergency managers laid out about $130 million in proposed cuts to close the shortfall. They anticipated further challenges for the struggling gambling resort, saying Atlantic City “simply cannot stand on its own” and probably would need significant state help for the foreseeable future.

    And the local newspaper, The Record,  weighed in with this:

    Hundreds of Atlantic City’s full-time workers could be laid off to close a multi-million dollar budget gap and address a fiscal crisis that is “a lot more severe than we thought,” a financial expert hired by Governor Christie said Tuesday.

    As a finale, we bring you PhillyMag.com’s “5 Charts That Show Just How Screwed Atlantic City Is.”

    City of Atlantic City 60-Day Report of the Emergency Manager

  • Wayne County Finances: Here’s the report

    Wayne County has a $70 million structural deficit on a roughly $550 million annual budget, says County Executive Warren Evans. Here’s the report, produced by Ernst & Young, that Evans distributed this week showing the dismal state of the county’s finances.

    Wayne County Financial Report

  • Next Chapter: Wayne County?

    Newly elected Wayne County Executive Warren Evans delivered the news: a $70 million budget deficit on the county’s roughly $550 million budget.

    Evans yesterday publicly discussed a report that’s been circulating privately for weeks. Done by Ernst & Young, a firm that’s been one of Detroit’s financial consultants, the report shows a “bad cash picture,” Evans said at a news conference.

    Immediately the discussion turned to the potential options of emergency management and bankruptcy, such as in this Daniel Howes column in The Detroit News:

    Public Act 436, the state’s emergency manager law, is more difficult to apply to counties with more than one constitutionally elected office with claims on public funds, say Evans and state officials who have studied the situation.

    “The read I get from the governor is he has no particular desire to come in and manage Wayne County affairs,” Evans said. “I don’t want an emergency manager. I don’t want bankruptcy. If we can fix it short of that, that’s what we want to do.”

    Here’s more media coverage:

    Warren Evans addresses Wayne County’s $70 million budget deficit

    Evans: Wayne County debt crisis worse than expected

    Evans: Jail project may wait until deficit fixed

    Wayne County must reduce pension, health care costs

    Wayne County exec warns on state takeover, bankruptcy

    Evans: Jail project may wait until deficit is fixed



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