City on the Brink

Squeezed by budgetary woes and urban ailments, Philadelphia teeters on the edge of bankruptcy

By Thomas Mccarroll Monday, Jan. 07, 1991

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    As this week's deadline neared, Goode seemed to be counting on a last-minute reprieve that had yet to materialize. His harried attempts to persuade local banks and pension funds to purchase city bonds have so far found no takers. Meanwhile, the city is drawing up contingency plans that would go into effect if it declares bankruptcy. Wages of city workers could be slashed by as much as 60%, and all payments to suppliers could be canceled — bitter medicine, to be sure, but possibly unavoidable.

    Philly Is Not Alone

    Though Philadelphia is the most extreme case, many other major cities are faced with severe financial hardship. Twenty-nine of the nation's 50 largest cities, mainly in the hard-hit Northeast and Midwest, will be forced to prune services, raise taxes or do both to close budget deficits this year. Among them:

    NEW YORK CITY . Confronting a $1.3 billion shortfall in the 1992 budget, Mayor David Dinkins is planning painful spending cuts. Up to 35,000 jobs may be eliminated.

    WASHINGTON . Departing Mayor Marion Barry has bequeathed a $200 million deficit to his successor, Sharon Pratt Dixon. To cover a gap that could reach $700 million within five years, she has been urged to fire at least 6,000 municipal + employees.

    DETROIT . The Motor City's unemployment rate is 10.9%, almost double the national average. Fifth-term Mayor Coleman Young is considering massive layoffs of city workers that will be needed to close a $35 million budget gap.

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