I'm sure this isn't even up for discussion, let alone going to happen. But can someone explain to me what happens when a municipality is simply permanently insolvent?

Let's say for example, that City X is unable to make payroll. An emergency manager [[and, please, let's save the arguments about EMF's for another thread) is unable to correct the solvency of the municipality. At some point, if you increase the tax burden while simultaneously cutting services to the bone, you risk population loss....which only lowers the tax revenue even more.

Does the municipality have the option of unincorporating and merging with the county? In exchange for a resignation of the elected officers, perhaps the county absorbs and assumes all of its debts, and the county then gets access to all the tax revenues of the city, much like a failing company might merge with a more financially stable entity.

And if the municipality does have the option, is the county required to take them in? How does it all work?

I mean, at some point, the crushing weight of the debts become so enormous, that it's almost irreversible. At least if a county takes them in, they can spread the losses over a greater number of people, and perhaps refinance that debt at much lower rate...maybe even one so low that the tax revenues from the city that was disbanded might even exceed its expenses, and the debt can be slowly paid off?

Curious and uninformed...