Buena Vista, Virginia, a small city near the Blue Ridge Mountains,is in default. The Wall Street Journal reports they are only the latest municipality to find themselves drowning in debt. Central Falls, Rhode Island can’t pay its debts and has handed its finances over to a receiver. Harrisburg, Pennsylvania’s incinerator project has pushed the municipality to the brink of bankruptcy.
These cities all share something in common. They raised too much debt and are now collecting too little in revenues. What is even more telling is what municipalities have been getting into debt for. In the case of Buena Vista, the city borrowied $9.2 billion million to refinance a municipal golf course. As collateral they pledged City Hall and the police station.