Cleveland: 35 years ago, city was in Detroit's shoes

7:47 PM, Jul 19, 2013   |    comments
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CLEVELAND -- Some people here and in many other American cities are gloating "at least we're not Detroit."

But 35 years ago, cities were saying the same thing about Cleveland.

Detroit's in a much bigger financial mess with $18 billion in debt.

But in 1978, Cleveland became the first big American city since The Depression to default on financial obligations.

It owed investors, mainly big banks, almost $16 million.

Young Mayor Dennis Kucinich refused to yield to pressure to sell Muny Light. The mess was a mix of finance and politics.

The city went into default.

The resulting turmoil ruined the city's credit rating and gave its reputation a black eye.

Eventually, new Mayor George Voinovich, with help from business and civic leaders, righted the financial ship.

Today Cleveland is on a solid financial footing.

Mayor Frank Jackson takes a very conservative approach, making five-year advance plans, and trying to prepare for possible financial issues.

The city's budget is balanced. It has solid bond ratings A1 from Moody's and AA from Standard and Poor's.

Of course, state budget cuts and reductions in federal funding could always pose problems.

But for now, Cleveland has no worries about being the next Detroit.

But perhaps its previous experience should keep us from gloating.


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