The city of Detroit filed bankruptcy this past week. Are they a harbinger of things to come?

Detroit may be alone among the nation’s biggest cities in terms of filing for bankruptcy, but it is far from the only city being crushed by a roiling mountain of long-term debt.

At the heart of Detroit’s problem is a growing unfunded debt on benefits owed to current and future retirees — some $3.5 billion, according to its emergency manager, Kevyn Orr — which mirrors a circumstance being seen across the U.S.

From Baltimore to Los Angeles, and many points in between, municipalities are increasingly confronted with how to pay for these massive promises. The Pew Center for the States, in Washington, estimated states’ public pension plans across the U.S. were underfunded by a whopping $1.4 trillion in 2010.

For years, watchdog groups and public-sector analysts have warned of the threat posed by unfunded liabilities. Much like the legacy pension costs that weighed on Detroit’s automakers before the Chrysler and General Motors restructurings of 2009, the worry is that revenues can’t keep up with growing debt and that rosy predictions for market returns downplay the actual financial risk.

As examples of the results: Chicago recently saw its credit rating downgraded because of a $19-billion unfunded pension liability that the ratings service Moody’s puts closer to $36 billion. And Los Angeles could be facing a liability of more than $30 billion, by some estimates.

It’s no surprise — given the pressure public pensions are putting on municipal budgets — that any move to ease those liabilities, especially through a bankruptcy court order like what’s happening in Detroit, is being watched carefully nationwide by state and municipal officials, union leaders, bond traders and retirees.

“We’re just at the front of the line here,” Michigan Treasurer Andy Dillon said Friday. “It could be a landmark case.”

One of those cities who are having money problems is my hometown of Memphis, TN. However, just like the Egyptian city it’s named after, Memphis’s Leadership is in denial (Get it? That’s a pun, son.)

Memphis Mayor A C Wharton Jr. is rejecting comparisons between his financially challenged city and Detroit, the largest U.S. city to file for bankruptcy.

Wharton told reporters Friday he reluctantly called a news conference to address questions about Memphis ending up like Detroit, which filed for bankruptcy this week. He said Memphis is not in denial about its financial challenges, but stressed that they are not as bad as the Michigan city.

“I’ve gotten a number of questions and they just get straight to the bottom line of, ‘Well, is Memphis like Detroit?” Wharton said. “My initial reaction was to say ‘I’m not going to dignify it by starting to try to make that kind of comparison.'”

He added: “I do hurt for what has happened in Detroit. This is not a time for piling on and saying how bad they are. After all, it’s not a government that will suffer. It will be citizens that will suffer.”

In June, Memphis received a letter from the state comptroller that warned the city about its practice of delaying debt payments year after year. Comptroller Justin Wilson said failure to address long-term debt could lead to state action.

Wilson also said the city needed to deal with low fund reserves, a shrinking tax base and budgetary imbalance.

The City Council passed a budget in June that addressed long-term debt payments, fund reserves and other concerns. Still, the state continues to keep a close eye on Memphis’ finances.

Wharton said it is frustrating to be compared with Detroit, whose situation has been blamed on a long, slow decline in population and auto manufacturing. He said Memphis $2.2 billion city pension plan is adequately funded, and recent changes in the pension systems will make them more manageable.

Wharton said Detroit was “basically a one-industry town.”

“When the auto industry went down, Detroit went down,” he said. “Fortunately, we have a diverse economy” that includes manufacturing, tourism and the health care industry, he said.

Wharton said Memphis is doing a good job of attracting new businesses. Large companies such as Electrolux and Mitsubishi Electric agreed to build factories in Memphis, though they were lured to the area by large tax incentives.

Memphis, a city of about 650,000, has seen population decline by about 3,000 since the 2000 Census. Its unemployment rate in April was 10.3 percent, compared with 16 percent in Detroit, according to the Bureau of Labor Statistics.

Memphis also has been beset by home foreclosures and a relatively high poverty rate that have caused blight in several parts of the city. Crime also has been a problem.

Wharton says Memphis is the only city facing financial and social challenges.

“What makes a difference between this city, Memphis, and others, is that we recognize it, we’re straight up-front about it,” Wharton said.

Uh huh.

Several years ago, Former Mayor W.W. Herenton , during a push to raise taxes, injected race into the matter, as he always did, and told Memphis’ White Citizens that, if they did not like the absurdly high tax rate, that they should leave town.

And, sure enough, we did.

Both Detroit, and my beloved hometown of Memphis, have been gutted by decades of poor financial stewardship, brought about by Democratic Leadership, who never saw a dollar they couldn’t spend, or a relative or friend that they couldn’t give a job with the city to.

And now, Detroit has filed for Bankruptcy, and Memphis is struggling with its budget, and sparring with the police and fire unions, who are justifiably concerned about the future of their pension plans.

And, what is amazing to me, the Mayor and City Council act like they don’t know why this is happening.

Let’s see, you raised taxes on the people who pay your “public servant” salaries, you then tell them to leave town, and you expand your municipal government to the size of a small city.

Gosh, Memphis, Detroit..where did all that money go?

Until He Comes,

KJ