Global Interdependence Center (GIC) “Banks, Central Banks and Policies” October 9-11, 2013 Hamilton, Bermuda Dennis W. Archer Can Cites Be Saved? Given my professional experiences, I can declare, “Yes, Cities Can Be Saved!” But they cannot be saved without recognizing, and addressing, the causes of their financial distress. “A moment’s insight is sometimes worth a life’s experience.” -- Oliver Wendell Holmes (1809-1894) In 1975 the City of New York was $14 billion dollars in debt and had a deficit of about $2.2 billion dollars. New York City was facing bankruptcy. Congress and President Gerald Ford approved $2.3 billion dollars in short-term loans and required dramatic fiscal restructuring to get the city’s books in order. Through those federal actions, the threat of a bankrupt New York was avoided.1 Today, we do not have a Congress like the one in 1975. A number cities are currently facing fiscal challenges. Cities such as Chicago, Los Angeles, and Baltimore are reportedly facing major financial problems in part because of large unfunded liabilities in pension and health care payments to retirees.2 According to the New York Times, the pension fund for retired Chicago teachers is on the brink of collapse. Moreover, “the city’s four funds for other retired city workers are short by $19.5 billion,” and “at least one of the funds is in peril of running out of money in less than a decade.” Worse yet, starting in 2015, the city will be required by the state to make far larger contributions to the funds, which could leave it hundreds of millions of dollars in the red – as much as it would cost to pay 4,300 police officers to patrol the streets for a year.”3 Time magazine’s August 5, 2013 issue focused on “Detroit’s fight to survive” and asked “Is Your City Next?” It reported that Fresno had a budget shortfall of $4.2 million; North Las Vegas had a budget deficit of $18.8 million; Philadelphia had a debt obligation of $9 billion; Birmingham had a budget deficit of $30 million; and New Orleans a debt obligation of $1.9 billion.4 According to James Spiotto of the law firm of Chapman and Cutler, there have only been 302 local government Chapter 9 filings in the United States since 1954. 62 were by cities, towns, villages or counties and the rest involved special tax districts, utilities, hospitals and school districts.5 1