[scoofy]

Yes, the problem is that our cities are already leveraged up to their eyeballs. At some point, the actual humans buying those bonds start becoming skeptical of the city’s ability to pay them back.

LA currently has about a billion dollars of outstanding general obligation bonds (edit: but that does not include all their future liabilities). They're still rated AA, but I presume that is because the credit writing agencies understand how many untapped revenue streams LA has, but again, those will require unpalatable political change. You can’t keep refinancing forever.

Philadelphia, Miami, and Chicago are getting close to junk bond status, and when that happens, the option to refinance starts evaporating very quickly.

[Spooky23]

LA County has a bigger economy than many European countries, and would displace Illinois by GDP if it were a state.

LA is fine.

[scoofy]

I also think LA will be fine in the long run, I just think that their tax structure will force significant changes. The tax base is able to cover the cities liabilities, it's just that the residents don't want to pay those extra taxes, and don't want to change in ways that let other people pay them.

The city has a billion dollar deficit right now. Trivial for residents to afford ($83 per person), but difficult to actually implement politically.

[ndriscoll]

Wikipedia says the GDP of the LA metro is ~1.5T. I think they could handle 1B in bonds. If they choose not to, it's not because it's some impossibility. Certainly not because roads are impossibly expensive.

[scoofy]

I said general obligation bonds, not general liabilities. These technically are what makes this discussion so difficult.

My point is that much of what the city can tax has little to do with the city's GDP. Either the landscape of the city will have to change or the current taxation paradigm will have to change.