Toa Baja, a mid-sized city in Puerto Rico, shut down last Monday after failing to pay municipal employees for several weeks. All public services have been suspended indefinitely. Could this be the future for other cities across Puerto Rico and on the U.S. mainland?
Toa Baja, with a population of about 80,000 people, reported more than $175 million in long-term debt in its fiscal year 2015 financial statements. This excludes $5.7 million in “Matured Bonds,” which were evidently in default. Meanwhile, the city’s general fund — essentially its checking account — ended the fiscal year with a negative balance of $14 million.
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