The nation’s largest city had run repeated budget deficits for a decade because of declining tax revenues, generous labor contracts, and increased welfare rolls. By 1975, creditors and potential lenders had forced a premium on new debt, and the city was close to running out of money altogether. The situation stabilized after the state effectively took over the city’s finances and Congress agreed to give the city $2.3 billion in short-term loans. But it wasn’t until 1981 that the city could again borrow money from the bond market.
Before Stockton: five other big financial crises for US municipalities
Here's a look at some of the most notable financial collapses and near-collapses for US municipalities over the years.
4. New York City
