Local governments should structure themselves in a way that best meets the needs of their budget, taxpayers and public employees. And the state should give them the power to do so.

A federal judge approved Detroit’s historic Chapter 9 bankruptcy, allowing the city to shave off $7 billion in liabilities from a total debt of $18 billion.

It’s ironic that Detroit government workers and pensioners, on the one-year anniversary of the Motor City’s bankruptcy, have voted to cut their own pensions. Their vote is part of a “grand bargain” bankruptcy restructuring that seeks private, philanthropic and state funds to help avoid massive cuts in government pensions. The bargain reduces Detroit’s debt by...

The California city of Stockton’s bankruptcy case took an interesting turn yesterday. The big question surrounding the city’s bankruptcy has always been what might happen to city employee pensions. Most government advocates assumed that these pensions would remain untouched no matter what happened to Stockton’s finances. Now the federal judge in charge of the bankruptcy...