Capitalism 2 and Capitalism Lab Forum

What should happen when a city government runs out of fund?

Please vote on the options in the poll or suggest alternative options if you have any ideas.

So there would be an IMF like (or maybe Detorit) solution where an government AI runs the city finances, set tax rates for Res, Businesses to a rate that within 24 months gets the city finances back in order.

I guess the trick here would be to put in a stop gate that once a city liabilities is greater than its income by 50-100 million (inflation adjusted of course) then its declared bankrupt so that the government AI won't have to institute drastic measures to get the city back on its financial footing within 24 months.

Update: not declared bankrupt but insolvent

maybe have the government default on bonds and suffer higher interest rates in the future or maybe have the government settle the debt by paying pennies on the dollar.

All services should be shut down until city has money and when that happens the mayors rating suffers

au8633 wrote:All services should be shut down until city has money and when that happens the mayors rating suffers

Shutting down all services will make the situation worst.

if city runs out of cash and credit rating is horrible, city should still be able to get funds in form of goverment loans at low interest rate, as you cant let a city die. of course tax rates should go up, fundings for public buildings reduced and if the major is a player, the player should loose control over town and independant AI major should take over. town should not be able to issue public bonds until finances back on track.

not sure about how its possible to realize the drop of expenses for community buildings, maybe shut down 1/3 of all community buildings i.e. close 1 out of 3 libraries, 1 out of 3 police station and so on) it will have a substantial impact yes but its a possible way of getting city finances back on track. if a player has major interest in this town and lots of appartments well i guess after screwing up the town financials he gonna have to open up the closed public buildings with its own corporation and pay for it in order to keep up the real estate profits.

cant really copy real life economics to it because real life economics do only run on more on more debts. if you stop loaning the world we know would end, goverments just declare bancrupt and get a deal with the debitors, cut the bonds by 50% and the next 20 years courts will be bussy fighting for investors that doesnt accept the bonds be cut (i.e. when brazilia went down, ppl still fighting in court because they dont accept the cut of their bonds) in the last 10 years more then a dozen countries went bancrupt but most ppl didnt hear of it as nobody that is involved in it needs to know. and as this is a game, there should be a punishment for bancrupting the town, therefore unlimited loans are no option.

If the player is the mayor and the city goes bankrupt also his company should suffer.
Bonds have to become almost wortless.

Perhaps we can take some notes from this real world event? What do you guys think?

GOVERNOR: PUERTO RICO TO DEFAULT ON $37M IN INTEREST DUE

http://www.apnewsarchive.com/2015/Gover ... 1be9a5d227

"The government has already increased taxes, closed schools, withheld tax returns and taken other numerous measures to cut costs and generate more revenue amid a worsening economic crisis"

I think Detroit would be a better case study. For game purposes and I'LL I guess the trick is to identify when a state is headed towards a point of no return and proactively adjust. So if the city is projected to have 3 years worth of case and the losses are continuing for multiple years reducing that projection to 2 years the game should declare a finnical emergency, kick out the mayor, implement actions that will reverse the situation.

my concern if you wait until you have to close services, raise taxes above other cities you reduce wolf and conditions for companies to maintain operations in that city.

maybe the fail safe is the recovery AI issue a bond for whatever it needs to cover expelse's say for what years but it's a 3 year bond. during this time the recovery AI raise fees, reduce budgets to generate enough cash to pay the bond back in 2 years. During this period of time there can be no mayor until the city bond is paid and it has 3 years worth of reserves.

maybe even have a way for companies to contribute to the recovery fund which has an effect on its b products brand rating in that city, reduced or free corporate taxes equal to the amount donates up front (can cover multiple years). Ability for individual investors/human player to donate for popularly, attitude towards, electability points.

TheRe should be easy recovery options because the more direct the options are the worst off the city is.