[troutman]

Cleveland nearly did 35 years ago.

http://www.usnews.com/news/national/...on-budget-woes

Cleveland narrowly avoided filing for bankruptcy in 1978. Since 1980, there have been approximately 40 bankruptcy filings by cities, villages, or counties, and only another 150 or so by other municipal entities, like utility or hospital districts.

Take Cleveland in 1978. The city's problems were partly because of a population decline—it lost 24 percent of its citizens in the 1970s—as well as the recession and auto industry layoffs. But other factors were more avoidable. Some budget-balancing moves had been dubious, including selling assets and using the proceeds from bond sales to pay for daily operating expenses, as well as simply postponing paying bills. And the city council turned down a last-ditch proposal to raise the local income tax from 1 percent—one of the country's lowest rates—to 1.5 percent.