Can Towns or Cities in Washington State Go Bankrupt?

Can Towns or Cities in Washington State Go Bankrupt?

I was reading a recent article in the Seattle Times about Cle Elum’s possible bankruptcy, and it got me thinking: Can towns and cities in Washington State go bankrupt?

I was surprised, as it hadn’t occurred to me. Not to say it’s impossible, but you usually don’t think towns and cities go bankrupt, but even little Mabton near Prosser has had some financial problems.

So how does it work?

Municipal bankruptcy occurs when a city or town is unable to meet its financial obligations.

Under Chapter 9 of the U.S. Bankruptcy Code, cities can file for bankruptcy to restructure their debts and continue operating critical services.

The backbone of any town or city is its local economy. When factories…