More California Towns Face Bankruptcy - WSJ.com: "Isleton and Rio Vista, small towns roughly 50 miles northeast of San Francisco, say they have begun consulting with bankruptcy lawyers as they draw up plans to deal with their mounting budget crises. The towns' leaders say they hope to avoid bankruptcy, but concede the move may eventually be their only option.

'We're strapped for cash and by the end of March or early April we may not have enough money to pay for payroll,' says Hector De La Rosa, Rio Vista's city manager.

California's troubled towns can't expect much help from the state. A state board voted Wednesday to shut off $3.8 billion in financing to hundreds of infrastructure projects to preserve cash, as the nation's most populous state struggles under a budget deficit that officials say could balloon to more than $40 billion over the next two years.

'California's fiscal house is burning down,' State Treasurer Bill Lockyer said..."
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The photo is from Rio Vista, showing a new residential development that stopped construction last month. I don't know if the libertarians are jumping with joy to see municipalities go under. Maybe the fact that CIDs are tanking as well has tempered their enthusiasm.