What happens if a county or city goes bankrupt?

Published: Apr. 19, 2019 at 9:06 AM CDT
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State and federal funding for local communities after Hurricane Michael remains uncertain. So what will happen to our cities and counties if more money doesn't come our way?

Some leaders in Tallahassee are confident a bill will be passed in the legislature soon, but in Washington D.C. several attempts to pass a bill have faced gridlock. That could mean big problems for local counties and cities.

Getting a federal disaster supplemental relief bill would fill the gaps that FEMA cannot fill.

Under the current disaster cost share, FEMA pays 75 percent of relief bills while the remaining 25 percent is split between the state and local governments. For Bay County that means it would have to foot an $84 million bill if a federal bill isn't passed.

While County Commissioner Philip "Griff" Griffitts doesn't anticipate it will happen for Bay County, he says bankruptcy is always a possibility for local governments

"When those bills are two, three, four, five, six times the operating budget of cities and the county it doesn't take an economist to know that that's going to cost financial troubles in the future and that's primarily the focus of the disaster supplemental bill is to help those communities that are really suffering," Griffitts said.

"The way FEMA works with the funding, it might be three or four years down the road before we get our reimbursement, but we might get it in the next 90 days. We don't know. So if we got the emergency funding that would carry us through until the FEMA money started coming through," Springfield Mayor Ralph Hammond said.

A new emergency disaster supplemental bill was introduced in the House on April 9th, but the House is currently on recess on until the end of next week.