As many as 20 U.S. cities could ask for court protection and reorganization under Chapter 9 of the federal bankruptcy code this year, including Providence, Rhode Island, which is seeking to escape paying all the public-worker pension costs its politicians have promised but failed to fund over the years, according to participants at Bond Buyer's Philadelphia-based conference on "Distressed Municipalities" this week. Bloomberg story here.
Meanwhile the state takeover of Harrisburg's decrepit finances shows signs of unraveling. Dauphin County Judge Todd Hoover has told the city's creditors they can hire their own receiver to run the city incinerator, which has defauled on its loans -- raising questions about the ability of state-appointed receiver David Unkovic to solve the city's chronic financial incapacity using the city takeover law Gov. Corbett and Dauphin County legislators rushed through the General Assembly last year.
The state would have been better off letting the city file for Chapter 9, says Mark Schwartz, lawyer for the City Council that tried to resist the state takeover so it could boost taxes and trim fees to bond investors instead of having to sell city assets as the state proposes. Bond Buyer story here.