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Report Examines Why Cities Struggle Financially

Detroit, Chicago and three other U.S. cities fell into financial distress for a variety of reasons, according to analyses of financial data released on Thursday.

Detroit, Chicago and three other U.S. cities fell into financial distress for a variety of reasons, according to analyses of financial data released on Thursday.

The Center for State and Local Government Leadership at Virginia's George Mason University examined a handful of the most troubled cities, along with Baltimore, which despite a population drop and high poverty levels is on a solid financial footing.

Detroit, which made the biggest municipal bankruptcy filing in U.S. history on July 18, wound up in bankruptcy court due largely to its steep population drop, cuts in state aid and collapsing real estate values, the report said.

Chicago's issues leading to steep cuts to its credit ratings are rooted in large measure in its high labor costs, while San Bernardino in California is seeing tight times chiefly because of a flawed city charter and inhospitable state politics, the study found.

Caroline Cournoyer is GOVERNING's senior web editor.
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