As Stimulus Cash Dries Up, Local Towns Look for Relief

by KYW's Michelle Durham

With so many people across the country struggling financially as a result of the nation's economic meltdown, it stands to reason that local municipalities would take a hit too. But one local expert says it's far worse than that.

Ballard Spahr partner Bill Rhodes says there are many distressed municipalities in the Keystone state. Those governments who have been relying on stimulus funds and reserves and those are starting to run out:

"There are officially about 20 municipalities in the state who are under the distressed municipalities statute. Our state capitol which is facing perhaps the most high profile fiscal meltdowns."

Chester and Allentown are having fiscal difficulties too. Rhodes says there are two legal options these governments can exercise. Act 47, where they can receive low-interest loans and state oversight, and Chapter 9 -- actually filing for bankrupcy protection. Rhodes says he expects more local governments to take advantage of both.