The Problem Grows: Another Michigan City Says It Has No Way To Balance The Budget

mount clemens


When Hamtramck, Mich. sought bankruptcy last week everyone said hundreds of local towns could be just behind.It’s happening already.

Mount Clemens, Mich. has mailed a letter to local nonprofits asking for donations to cover a staggering $1.5 million deficit for next year, according to the NYT. This is in a town with only 17,312 residents.

The city hasn’t sought bankruptcy protection yet, and as Hamtramck’s application was denied there are still zero Michigan municipalities that have gone bankrupt in history. That won’t last if more cities follow.

Taking donations to cover the deficit isn’t unprecedented, by the way. In fact, the federal government lets you donate to the national debt here. Unlike the federal government, however, a small town cannot ever run a deficit, and its borrowing options are limited. Pretty soon you’re talking bankruptcy or bailout.

Michigan gov.-elect Rick Snyder says this problem could keep getting worse until 2015.

Now check out 15 STATES that have bulging budget deficits for next year >

NOW WATCH: Briefing videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.