Detroit's days were numbered in the 2000s under Mayor Kwame Kilpatrick when its debt load went vertical against its tax revenue, and its tax base got destroyed by the housing bust, Great Recession and its declining population. Below is a video of the animated debt/revenue chart from the article. On other charts in the article, they noted that Detroit's income tax revenue plunged 55% from 2000 to 2010 and "wagering tax revenues from city casinos surpassed property taxes for the first time" in 2008. It just shows how unforeseen economic events, a spike in debt, a spike in health care/pension liabilities and costs, and a declining population (tax base flight) can send a large muni to bankruptcy court in 20 years. That's why I think Chicago and Illinois will be interesting to watch in the next 10 years (read: Moody's Downgraded Chicago, Cook County and Illinois Because of Unfunded Pension Liabilities and Rising Costs; Illinois Lost $20.4 Billion of Annual Personal Income Between 2000 and 2010). Chicago is definitely not the next Detroit, but a similar situation could occur in the future if its fiscal problems aren't resolved.
Source: Detroit Free Press (Detroit bankruptcy: Debt explodes in 2000s; How Detroit went broke: The answers may surprise you - and don't blame Coleman Young)
Related articles on Detroit:
- DistressedVolatility: Detroit Defaults on Pension COP Debt, Kevyn Orr's Restructuring Proposal (Unsecured GO Bonds = Employment Liabilities in Restructuring, GO Bonds Downgraded on Bankruptcy Risk)