Chapter

Introduction: Roots of the Bankruptcy

Mark Baldassare

in When Government Fails

Published by University of California Press

Published in print January 1998 | ISBN: 9780520214859
Published online March 2012 | e-ISBN: 9780520921368 | DOI: http://dx.doi.org/10.1525/california/9780520214859.003.0001
Introduction: Roots of the Bankruptcy

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Orange County, California, became the largest municipality in U.S. history to declare bankruptcy when it filed for Chapter 9 protection on December 6, 1994. Municipal bankruptcies are rare events that generally occur only in rural places. Large cities had always sidestepped bankruptcies when their state governments came to the rescue. Three factors are at the heart of the Orange County financial crisis: the political fragmentation in local government, voter distrust of local government officials, and the condition of fiscal austerity in the state government. This introductory chapter presents a framework for understanding the unique nature and outcome of the Orange County financial crisis. It traces the events that led up to the bankruptcy, through the local officials' response to the fiscal emergency and the road to fiscal recovery, to the local government reforms implemented in response to the crisis. It also examines the New York City fiscal crisis and contrasts it with the Orange County bankruptcy.

Keywords: Orange County; California; Chapter 9 protection; bankruptcy; New York City; fiscal crisis; fiscal recovery; political fragmentation; fiscal austerity; local government reforms

Chapter.  12852 words. 

Subjects: Social Research and Statistics

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