New Jersey and California judges do it quite frequently.
from 11 usc 109 on municipalities being a debtor:
(c) An entity may be a debtor under chapter 9 of this title if
and only if such entity -
(1) is a municipality;
(2) is specifically authorized, in its capacity as a
municipality or by name, to be a debtor under such chapter by
State law, or by a governmental officer or organization empowered
by State law to authorize such entity to be a debtor under such
chapter;
(3) is insolvent;
(4) desires to effect a plan to adjust such debts; and
(5)(A) has obtained the agreement of creditors holding at least
a majority in amount of the claims of each class that such entity
intends to impair under a plan in a case under such chapter;
(B) has negotiated in good faith with creditors and has failed
to obtain the agreement of creditors holding at least a majority
in amount of the claims of each class that such entity intends to
impair under a plan in a case under such chapter;
(C) is unable to negotiate with creditors because such
negotiation is impracticable; or
(D) reasonably believes that a creditor may attempt to obtain a
transfer that is avoidable under section 547 of this title.