Decade after decade, Chester, Pennsylvania, has fallen deeper and deeper into a downward financial spiral, Bloomberg News reported. As the city’s population dwindled to half its mid-century peak, shuttered factories near the banks of the Delaware River were replaced by a prison and one of the nation’s largest trash incinerators. A Major League Soccer stadium and casino did little to turn around the predominantly Black city just outside Philadelphia, where 30% of its 33,000 residents live below the poverty line. Debt piled up. The government struggled to balance the books. Now, with its police pension set to run out of cash in months, a state-appointed receiver is considering a last resort that cities rarely take: filing for bankruptcy. “The alarm that we’re sounding is very real,” said Vijay Kapoor, who does economic analysis for cities and is serving as the chief of staff for Chester’s receiver. “Chester is by far — and I mean by far — in the worst condition that any of us have ever seen and ever had to deal with.” Few U.S. cities are contending with financial strain as dire as Chester, which has been overseen by Pennsylvania’s program for distressed local governments for nearly three decades. But in another sense it’s far from alone: Like Chester, governments nationwide have failed to save enough to cover all the benefits promised to retirees, turning it into the latest cautionary tale about the reckoning when the bills finally come due. In the years after the housing-market crash, three California cities, Detroit and Puerto Rico all went bankrupt, in large part because of retirement-fund debts. Such pensions are now being tested again, with the S&P 500 Index tumbling over 20% this year and bonds pummeled by the worst losses in decades.
