Politics

Eight Drowning Cities in Fiscal Trouble
Hit by shrinking tax revenue in the wake of the Great Recession, all eight of these cities have a junk credit rating from at least one of the three major credit ratings firms.

Intro Map Municipalities

Joining fellow California municipalities Stockton and Mammoth Lakes, San Bernardino this week became the second largest city in U.S. history to file for bankruptcy. What other drowning cities should be on watch for a bankruptcy filing?

Woonsocket, RI (Citi-Data)

Woonsocket, Rhode Island

This city of 41,186 (2010), which is tucked just below the border with Massachusetts, faces the threat of being taken over by a receiver that could authorize a bankruptcy filing. Woonsocket, the home of CVS Caremark (NYSE:CVS), has a per capita income of just $20,242 and 22.2% of its population is below the poverty line. The city’s credit rating from both Moody’s and Fitch remains in junk territory.

Photo Source: citi-data.com

Detroit Motor City

Detroit, Michigan

The Motor City and home of four major sports teams is the most prominent city on the verge of going bankrupt. Slammed by the near collapse of the auto industry and a shrinking population, Detroit faces a $260 million cumulative budget deficit and a whopping $7.9 billion in long-term debt. The home of General Motors (NYSE:GE) has 713,777 residents (2010), 34.5% of which are below the poverty line. Detroit is the only city in the U.S. with a junk bond rating from all three major credit ratings firms, including a lowly CC rating from Fitch that indicates a higher chance of default.

Photo Source: Reuters

Little Field, TX Detention Center

Littlefield, Texas

This West Texas cotton town of 6,372 (2010) is the home of the Bill Clayton Detention Center, which Littlefield borrowed $10 million to build. The town came under financial pressure after the jail lost a contract with the Geo Group (NYSE:GEO) in 2009 in the wake of a prisoner suicide. A 2011 sale of Clayton for a reported $6 million fell through. Littlefield has a per capita income of just $15,950 and in 2010 Fitch downgraded the town’s credit rating to junk territory.

Photo Source: littlefieldtexas.org

 

East Providence, RI Bowling Lanes

East Providence, Rhode Island

The fifth largest city in Rhode Island, East Providence has been teetering on the brink of a Chapter 9 bankruptcy. In March the state-appointed receiver acknowledged such a filing was likely and Mayor Angel Taveres had warned the town of 47,037 (2010) could run out of money this summer. Both S&P and Moody’s rate East Providence’s bonds in junk territory.

Photo Source: eastprovidencelanes.com

Camden, NJ Map

Camden, New Jersey

Ranked as one of the most dangerous cities in America, Camden’s murder rate has been dipping in recent years but its bond rating from Moody’s remains in junk territory. Camden, which had been a booming manufacturing town and is still the home of Campbell Soup (NYSE:CPB), has a population of 77,344 (2010). Many of its residents are impoverished as its per capita income is just $12,807 and 36.1% of the population is below the poverty level. Looming budget shortfalls prompted Camden to slash half of its police force and a third of its fire department last year.

Newburgh, NY

Newburgh, New York

This Hudson River town lies in between New York City and Albany and has a population of 28,866 (2010). Newburgh is rated at Ba1 by Moody’s, which is one notch below investment grade. Newburgh’s per capita income is $15,897 and 25.8% of its population is below the poverty line.

Photo Source: Reuters

Riverdale, IL (Citi-Data)

Riverdale, Illinois

A village of 13,549 (2010) just outside of Chicago, Riverdale’s per capita income stands at just $16,669 and 23% of its population is below the poverty line. Moody’s rates Riverdale at Ba2, which is two notches into junk status.

Photo Source: citi-data.com

Compton Crime Scene

Compton, California

Notorious for gang violence and poverty, Compton has 96,455 residents (2010) and a very low per capita income of just $13,542. Nearly 23% of its population is under the poverty level and S&P rates its bonds at BB, which is one notch into junk territory. Last year Compton, which is the hometown of rapper and music producer Dr. Dre, narrowly avoided a government shutdown.

Photo Source: Reuters

Eight Drowning Cities in Fiscal Trouble

Hit by shrinking tax revenue in the wake of the Great Recession, all eight of these cities have a junk credit rating from at least one of the three major credit ratings firms.

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