It is illegal for a city to file for bankruptcy in Indiana, where it can instead apply to the state’s Distressed Unit Appeals Board for tax relief.Republican governor Mitch Daniels aims to allow municipal bankruptcy with a bill introduced yesterday, according to Bond Buyer. A new option for struggling cities will become necessary in 2011 as Indiana institutes caps on property tax, limiting fiscal options for cities.
Daniels likes the idea of bankruptcy because it is a relatively cheap option for the state. Moreover, it allows beleaguered cities like Gary to fix structural problems like union contracts and pensions.
What other governors support bankruptcy? Incoming Michigan Governor Rick Snyder has warned there may be hundreds of Michigan bankruptcies by 2015. That would be a better outcome for him than loaning out money like the current government did with Hamtramck.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.