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Before Stockton: five other big financial crises for US municipalities

Stockton, Calif., recently became the largest US city in history to declare bankruptcy, and it may not be the last. A perfect storm of a low tax receipts, high retiree obligations, cash-strapped state budgets, and ill-advised fiscal decisions has swamped towns this year, big and small, from coast to coast. The result is an unprecedented number of municipalities up against severe financial difficulties.

Here’s a look at some of the most notable financial collapses and near-collapses for US municipalities over the years.

This October 2006 photo provided by the Birmingham Regional Chamber of Commerce shows the skyline of Birmingham, Ala., whose county in 2011 filed an estimated $4.1 billion bankruptcy, the largest municipal bankruptcy in US history.
Dennis Lathem/Birmingham Regional Chamber of Commerce/AP/File
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1. Jefferson County, Ala.

Home to Birmingham, Alabama’s largest city, Jefferson County sought to reorganize its finances in fall 2011 under Chapter 9 of the federal bankruptcy code. A failed overhaul of its sewer system and other bad decisions left the county reeling under more $4 billion of debt and unable to raise taxes, fees, or payments for bonds issued by Wall Street banks. An earlier decision by the state Supreme Court striking down a local income tax has forced county officials to try to persuade the state Legislature to authorize another tax or warn of new budget cutbacks.


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