Bankruptcies, defaults, and other local government financial emergencies Page: 1
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DEVELOPMENTS SINCE THE
1973 FINANCIAL EMERGENCIES REPORT
The New York City note default in 1975 created apprehension
that a rash of municipal defaults and financial
emergencies could be imminent. The default by Cleveland
on its notes in December 1978, and the Washington
Public Power Supply System (WPPSS) default in 1983,
added to this perception. Questions were raised about
whether the country was in the midst of another series of
government financial emergencies or whether New
York, Cleveland, and WPPSS were merely isolated
A searching review by the Advisory Commission on
Intergovernmental Relations (ACIR) finds no evidence
that local governments generally are experiencing increased
financial emergencies, or that they are likely to
do so in the future. In the 1972 to 1983 period, only three
instances of general-purpose government bankruptcy
filings, and one long-term general obligation bond default
were found. Government defaults on general obligation
notes, while large in dollar amount because they
involved New York and Cleveland, were also a rare occurrence
over this period. Defaults on revenue bonds
and notes issued to finance government activities, such
as water supply systems or low-income housing, occurred
more often, but most of these, except for WPPSS,
involved small special-purpose issues. While a variety
of financial emergencies not involving bankruptcies or
defaults occurred, most of them were successfully alleviated
by actions of the governments themselves, or by
state intervention. In short, the 1972 to 1983 period was
not characterized by unusual numbers of government
SCOPE OF THIS STUDY
The balance of this chapter sets forth a classification
of financial emergencies, research highlights, the devel
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United States. Advisory Commission on Intergovernmental Relations. Bankruptcies, defaults, and other local government financial emergencies, book, March 1985; Washington, D.C.. (digital.library.unt.edu/ark:/67531/metadc1317/m1/11/: accessed November 20, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.