Vallejo, California was the largest American city to declare bankruptcy back in 2008. Its neighbor to the east, Stockton, Califo., has since claimed that mantle, when it went bankrupt last week.
Police were laid off, firehouses were closed and funding for libraries and other city services were slashed. Now things are turning around in Vallejo. For the first time in five years the city has money to do things like fill potholes.
Bankruptcy is seen as a last resort for several local governments that are struggling to pay off growing debts.
North Las Vegas, Nevada has declared a state of emergency so it can suspend union contracts and avoid paying raises that city workers were slated to receive.
Baltimore is considering putting corporate logos on its fire trucks to raise some cash.
Atlanta Suburb Goes Private
Privatizing is another option for cities and towns. The Atlanta suburb of Sandy Springs has chosen to privatize, but the wealthy community is not bankrupt.
It runs on what is called "the model," which is a public-private partnership, with heavy emphasis on the private.
As the New York Times recently reported, Sandy Spring residents must contact a company in England to get a business license. If they want to build a new deck on their homes, they need to contact a company in Massachusetts. And there's no garbage collection.
The city still does run police and firefighting. But critics say "the model" walls off wealthy Sandy Springs from poorer areas.
- Sandy Springs: 'When Pigs Fly' Blog Of Mayor Eva Galambos
- Stephanie Gomes, Vallejo city councilor
- Eva Galambos, Sandy Springs mayor
This segment aired on July 2, 2012.