13. Wenatchee, Wash. > Credit Rating: Ba2 >  2011 general fund revenues: $22.4 million > 2011 general fund debt: $13.2 million > Median income: $44,156

In December 2011, the Greater Wenatchee Public Facilities District defaulted  on $42 million of debt associated with the Town Toyota Center, a multi-purpose  arena. In order to help pay off that debt, the city imposed a 0.2% regional  sales tax in July 2012. Bonds also went on sale in September to further  alleviate the debt. Despite these plans, Moody’s noted in its May downgrade that  any long-term plan to pay off the city’s debt “would further stress city  finances … operational flexibility and ability to invest in infrastructure.” Moody’s also pointed out the city faces financial  risk  associated with litigation following the arena’s default.

12. Le Center, Minn. > Credit Rating: Ba2 > 2011  general fund revenue: $1.1 million > 2011 general fund debt: $8.3 million > Median income: $41,481

On Feb. 1, Moody’s downgraded Le Center, Minnesota, from A1 to Ba2, with a  negative long-term outlook. This small town, located in the south central part  of the state, had to borrow to pay debt due in February 2012 , and received an  extension on loan payments due December 2011. Besides the payment deferral,  Moody’s cites the city’s very small tax base and “weak management practices” to  explain the low rating. City management used unrealistic budgeting. In  particular, it overestimated the amount of cash it would bring in from a new  real estate project. The ratings agency projects that if these trends continue,  the city will remain dependent on costly short-term loans to pay its debts.

11. Strafford County, N.H. > Credit Rating: Ba2 > 2011 general fund revenue: $52.8 million > 2011 general  fund debt: $19.9 million > Median income: $57,809

Strafford County’s financial  state improved in fiscal 2011, when it eliminated a general fund deficit of $7.2  million from fiscal 2010 and ran a small surplus. Still, because of its tight  budget, the county has had to regularly borrow money to cover short-term cash  needs. Moody’s described Strafford’s ability to reduce its future borrowingas a “key factor” in determining its poor rating. According to Moody’s, Strafford  County has no plans to issue any more long-term debt, and will shed an estimated  83.8% of its existing debt within 10 years. Moody’s altered its outlook from  last year for the county from “negative” to “stable.”

10. Menasha, Wis. > Credit Rating: Ba2 > 2011  general fund revenue: $16.2 million > 2011 general fund debt: $43.4 million > Median income: $45,897

In 2007, the city of Menasha defaulted on bonds it had issued to fund a steam  plant. The utility operation closed down several years later. The fallout from  this venture has left the city permanently in the red. As of 2011, it brought in  just over $16 million in general fund revenue, but had $43.4 million in  outstanding general fund debt. In 2010, nearly 20% of the city’s budget was  devoted to paying off debt, which was the second-largest expense on the balance  sheet  in 2010. The city recently repossessed the abandoned steam plant, and is  currently deciding whether to repurpose it or demolish it for scrap.

9. Harrison, N.J. > Credit Rating: Ba2 > 2011  general fund revenue: $36.8 million > 2011 general fund debt: $113.8 million > Median income: $51,193

In 2006, Harrison guaranteed $39.4 million in bonds  to buy land for the Red Bull Arena, the stadium used by the New York Red Bulls.  The deal has not been profitable for Harrison. Condominium developments,  expected to help pay off the stadium, were not finished as of last June.  Additionally, for several years the  Red Bulls refused to pay property  taxes. In July, the franchise paid the town $5.6 million in overdue taxes after  a judge ruled the arena was taxable. In late 2011 the state of New Jersey  created a $1 million reserve fund to help pay off the city’s debt. Since last  October, the town’s credit rating has improved from Ba3 with a negative outlook  to Ba2 with a positive outlook.

Read more:  Thirteen American Cities Going Broke - 24/7 Wall St. http://247wallst.com/2012/10/25/thirteen-american-cities-going-brok...