Other cities on municipal bankruptcy watch.
Detroit captured national headlines by declaring bankruptcy, but the Motor City is not the first -- and probably not the last -- American metropolis to face financial ruin.The other eight are Portland, Oregon, Omaha, Nebraska, Minneapolis, Cincinnati, Providence, R.I., Trenton, New Jersey, Santa Fe, New Mexico, and Charleston, West Virginia. I think the biggest surpise on the list is Omaha. Like most of the other cities the biggest culprit is unfunded pension liabilities. It si what haunts not only Detroit, but states like Illinois and California. These places are making promises for futer politicians that will leave them struggling.
It's a fact even the mayor of Detroit, Dave Bing, acknowledged July 20 when he predicted his city was the first of "many dominoes that will fall."
The situation in Detroit is the result of a unique mix of civic corruption, poor financial planning and economic collapse. But one of the driving factors in Detroit's bankruptcy is an unsustainable public pension crisis, similar to what many other cities are facing.
In which cities will the next dominos fall? It's hard to tell exactly, but the signs are there.
In April, Moody's Investors Service, a bond-rating agency, issued a report identifying 29 municipalities selected for review over concerns of credit-worthiness.
Their chief concern: Some municipalities are underreporting pension liabilities; the ways in which those large costs are reported can vary widely from place to place.
"The purpose of the adjustments is to provide greater transparency and comparability in pension liability measures for use in credit analysis," said Timothy Blake, a Moody's managing director.
Cities on the list for review aren't necessarily facing imminent downgrade, though their mere presence on that list makes it more likely.
Moody's, as we speak, is re-examining these nine cities:
Yes, one of the nation's largest cities could soon be headed down the same black hole as Detroit. Moody's downgraded The Windy City's credit rating by three notches last week, as a result of $19 billion in unfunded pension debt.
But that's only one of several dark clouds on the horizon.
Another? How about Mayor Rahm Emanuel, President Obama's former chief of staff, telling city employees they should sign up for the federal health insurance exchanges. It's almost as if he might have known the city was running out of money to fund employee health care.
Sure enough, Pew reports Chicago's retiree health benefits are exactly 0 percent funded. As in, not a single dollar against a $1 billion liability.
And there doesn't figure to be much help coming from the state level. Illinois is grappling with a $97 billion unfunded pension liability of its own.