What happens when a municipality can’t pay its bills?
Just like in regular Bankruptcy Court, lawyers on both sides will go before a judge and argue their case. Without a settlement, a judge will render a decision that both plaintiff and defendant will have to comply with. The difference with a municipal bankruptcy ruling is taxes and city services will be impacted by decision. Today’s decision that allows Stockton, CA to enter bankruptcy protection is a part of a growing trend of municipal default both in the US and overseas. This trend will continue and accelerate as more cities, counties, and states confront their finances. The economic reality of low revenues and high expenditures (ex. pensions, health care costs, wages) will force governments at all levels to adjust their commitments.
So what does this mean regarding preparation?
The result will be less government services. There will be fewer garbage trucks to pick up the trash, fewer maintenance crews to repair the roads, fewer fire fighters to respond to emergencies, and fewer police units to respond to crimes. The remaining government employees will have higher workloads and be under more stress too as they are forced to do more work with fewer resources.
In an emergency situation, it will mean longer response times when you call 9-1-1. Individuals will need to be more self-reliant when it comes to both protecting themselves and taking care of their needs when things go wrong. This means taking steps like:
- Owning firearms and learning how to use them
- Learning First Aid and having supplies on-hand
- Having tools ready to make emergency repairs
- Storing additional food and water for emergency use
- Working with your friends and neighbors to help them get prepared
The key concept is increasing self-reliance as a bulwark against the unexpected. Bad things are going to happen regardless of your city’s financial situation, its wise to not rely upon municipalities that are in default for salvation during an emergency. Think about what you can do TODAY that will make you more resilient in the face of adversity tomorrow.