Thursday, May 26, 2011

Straight Outta Compton: Possible Insolvency

Pour out a 40 on the curb, Dre: the LA Times is reporting that the city of Compton is facing potential insolvency as it grapples with a $25 million general fund deficit without any reserves. Layoffs are likely, but this is yet another case in a troubling trend of municipal insolvency in Los Angeles County.


  1. The trend is only troubling if municipalities fall into the "too big to fail" category and are bailed out using money from people who don't live there.

    But of course no state government would ever be so ludicrously careless with taxpayer money. Especially California.
  2. Not so sure that an outright bailout could happen. If the situations in Vallejo and Chowchilla are any indication, bailouts aren't going to happen if the money doesn't exist. (Setting aside the fact that bailouts are the norm in public finance in post-Prop 13 California.)