Massachusetts legislators are debating if the state should award $35 million to stabilize the finances of bankrupt Lawrence, a city of about 70,000 on the Merrimack River. The city faces a budget deficit of $25 million and the current mayor has come under criticism for holding two public sector jobs while the city faces insolvency. Lawrence would remain under state control until it pays back the loan.
It’s not the first time the state government has taken over a locality in fiscal distress. In 2004, Springfield, Mass. received a $50 million bailout, giving control of its finances to a state-appointed panel. It’s unclear if the measure dealt with root causes. A second bailout was considered last January,while the oversight board was abolished in June. The state will forgive Springfield this year’s $11 billion loan repayment.
Another such case is Camden, New Jersey.The state’s 2002 takeover of the city’s finances, (which included $175 million in extra aid to spur economic revival), ended two weeks ago. The verdict: while Camden now enjoys an Aquarium on the Delaware River, the city’s neighborhoods remain impoverished.