Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

San Bernardino bankruptcy: Why Other California cities could be next
Los Angeles Times ^ | 07/12/2012

Posted on 07/12/2012 9:44:15 AM PDT by SeekAndFind

San Bernardino this week became the third California city to seek bankruptcy protection in the last month, and experts say it might not be the last.

"There are likely to be more in the future, but it's hard to know, since a lot of struggling cities may manage to work things out,'' said Michael Coleman, a fiscal policy adviser for the California League of Cities. "Some cities may not go into a bankruptcy, but they may dissolve. They may cease to exist.''

Once rare, turning to bankruptcy has become a painful but enticing option for cities whose labor costs and municipal debt far outpace anemic tax revenue. The Bay Area city of Vallejo began the current trend in May 2008, filing for Chapter 9 bankruptcy protection because, city leaders said, salaries and benefits for its public safety workers were eating up too much of the general fund.

Last month, Stockton became the largest city in the state to seek bankruptcy protection after it was unable to come to agreement with its employee unions and creditors on a plan to close a $26-million gap in its general fund.

On July 2, the tiny resort town of Mammoth Lakes filed bankruptcy papers in part because it was saddled with a $43-million court judgment it couldn't pay.

San Bernardino couldn't close a $45.8-million budget shortfall and would be unable make its payroll this summer, city leaders said. Days before Tuesday's City Council vote, the city of 211,00 people had just $150,000 in the bank. The city barely scraped together enough money to cover its June payroll.

(Excerpt) Read more at latimesblogs.latimes.com ...


TOPICS: Business/Economy; Culture/Society; News/Current Events; US: California
KEYWORDS: bankruptcy; california; sanbernardino

1 posted on 07/12/2012 9:44:22 AM PDT by SeekAndFind
[ Post Reply | Private Reply | View Replies]

To: SeekAndFind

Meh. Dog bites man.


2 posted on 07/12/2012 9:46:11 AM PDT by cuban leaf (Were doomed! Details at eleven.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

“Some cities may not go into a bankruptcy, but they may dissolve. They may cease to exist.’’

So they cease to exist...so what they dissapear???


3 posted on 07/12/2012 9:48:32 AM PDT by FeliciaCat (I like my money where I can see it...hanging in my closet.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

“Some cities may not go into a bankruptcy, but they may dissolve. They may cease to exist.’’

So they cease to exist...so what they dissapear???


4 posted on 07/12/2012 9:48:33 AM PDT by FeliciaCat (I like my money where I can see it...hanging in my closet.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

“Some cities may not go into a bankruptcy, but they may dissolve. They may cease to exist.’’

So they cease to exist...so what they dissapear???


5 posted on 07/12/2012 9:48:40 AM PDT by FeliciaCat (I like my money where I can see it...hanging in my closet.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

My care-0-meter registers nothing.


6 posted on 07/12/2012 9:50:37 AM PDT by ZX12R (FUBO GTFO 2012 !)
[ Post Reply | Private Reply | To 1 | View Replies]

To: FeliciaCat

No, they become unincorporated areas with no self government, just county government, and county services. The cost of the services are spread across the whole the county.


7 posted on 07/12/2012 9:51:19 AM PDT by Eva
[ Post Reply | Private Reply | To 5 | View Replies]

To: FeliciaCat

No. Still there, just un-incorporate and the county takes over. Which in itself is interesting, I think all contracts are renegotiated. Anyway, this is what has happened in the high desert with some small towns of Riverside county in CA, the weirdest thing is then the county started pushing small area to form HOAs, to handle the little stuff. Our property there is actually under two HOAs.
Other areas may do other stuff.


8 posted on 07/12/2012 9:54:07 AM PDT by svcw (If one living cell on another planet is life, why isn't it life in the womb?)
[ Post Reply | Private Reply | To 4 | View Replies]

To: svcw

What the LA Times will never admit is that this is the logical end result of the type of governance they’ve been pushing in California for fifty years.


9 posted on 07/12/2012 9:59:19 AM PDT by Argus
[ Post Reply | Private Reply | To 8 | View Replies]

To: SeekAndFind

The dominos will just keep falling, hitting larger and larger targets, until the biggest one of all, the state of California itself, also has to surrender to reality.

At which time the Chinese may be able to pick up California on pennies on the dollar on a foreclosure sale. And not even any money out of pocket for them, just as a forgiveness of a portion of outstanding debt.


10 posted on 07/12/2012 9:59:19 AM PDT by alloysteel
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

These guys get elected then give raises to each other... Higher pension? Sure, I’ll take one of those too...


11 posted on 07/12/2012 10:15:20 AM PDT by GOPJ (Marion Berry: 'If you take out the killings, Washington actually has a very very low crime rate')
[ Post Reply | Private Reply | To 1 | View Replies]

To: Eva

Thank you. I grew up in Riverside County, CA...the are a few towns in Riverside county that use county services.


12 posted on 07/12/2012 10:30:35 AM PDT by FeliciaCat (I like my money where I can see it...hanging in my closet.)
[ Post Reply | Private Reply | To 7 | View Replies]

To: Argus

“What the LA Times will never admit is that this is the logical end result of the type of governance they’ve been pushing in California for fifty years”

You are exactly right. You can included the other liberal newspapers in the state which is most of them.


13 posted on 07/12/2012 10:35:20 AM PDT by Parley Baer
[ Post Reply | Private Reply | To 9 | View Replies]

To: svcw

hmmm...no city gov? like the sound of that.


14 posted on 07/12/2012 10:54:54 AM PDT by Chuzzlewit
[ Post Reply | Private Reply | To 8 | View Replies]

To: SeekAndFind

Coming soon to a neighborhood near you.


15 posted on 07/12/2012 11:02:19 AM PDT by YHAOS (you betcha!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: YHAOS

When the bankrupt cities get out of their long term debt obligations to the pensioners, perhaps they will see an increase in migration to them away from those choking under the strain.

In these senarios, I wonder what happens when the school taxing districts run out of other peoples money.

Of course when they go BK, I guess the pension back up is the federal pension guarantee program....another fiasco just waiting in the wings to spread the “california” mirical across the entire federal taxpayer base.

Welcome to the gulag, comrade.


16 posted on 07/12/2012 11:10:11 AM PDT by Mouton (Voting is an opiate of the electorate. Nothing changes no matter who wins..)
[ Post Reply | Private Reply | To 15 | View Replies]

To: FeliciaCat
So they cease to exist...so what they dissapear???

No. They move to where you and I live. That's already what's wrong with America. A virus known as "Californiaitis." It ruins everything it touches. Colorado. Oregon. Washington State.

17 posted on 07/12/2012 11:15:42 AM PDT by LouAvul
[ Post Reply | Private Reply | To 3 | View Replies]

To: SeekAndFind

I’m curious: does anyone here know how a State like California could manage debt default in terms of the law? Since (the remnants of) State sovereignty gives States themselves the power to issue corporate status to cities and counties, are States able to resort to their own bankruptcy declarations? How can a State issue a corporate charter to itself?

And since States don’t issue currencies, they’re obvioously unable to use the Fed to inflate a credit bubble in order to stave off the inevitable. So what’s left? Federal seizure of all assets and liabilities until jurists can sort out the mess?

Issues coming soon to courtrooms near you, you betcha!


18 posted on 07/12/2012 11:21:28 AM PDT by earglasses (I was blind, and now I hear...)
[ Post Reply | Private Reply | To 1 | View Replies]

To: FeliciaCat

Yeah, I lived in Mission Viejo before it was incorporated. What you give up is local control. We kind of liked not having as many police officers on the street and it wasn’t so bad not having to pay for the city council members. I think that we still had a city manager, but no mayor.

There can be major draw backs to be unincorporated, though. For instance, if the liberal government cronies decide to build a regional power plant, they might just decide to put in your town or city because there is no local governmental authority to oppose it. That’s what is happening near me, in WA state. The politicians have decided to put a coal terminal just a few miles from my house because there is no government, except the county council to oppose it and other cities have been turning it down all along the West Coast.


19 posted on 07/12/2012 11:21:36 AM PDT by Eva
[ Post Reply | Private Reply | To 12 | View Replies]

To: Mouton
"Welcome to the gulag, comrade."

Jawohl . . . comrade.

20 posted on 07/12/2012 11:25:10 AM PDT by YHAOS (you betcha!)
[ Post Reply | Private Reply | To 16 | View Replies]

To: SeekAndFind
Michael Coleman, a fiscal policy adviser for the California League of Cities. "Some cities may not go into a bankruptcy, but they may dissolve. They may cease to exist.''

IOW there won't be any more city services but the state of California will still collect those property taxes so they can continue to pour money into CALPERS.

21 posted on 07/12/2012 12:51:39 PM PDT by Uncle Chip
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

My suggestion for saving the cities is tied to health care benefits for government workers.

I advocate a return to the public health system which would serve all government workers, SEIU members, the military and the politicians, state and federal, as well as medicaid and medicare patients who do not have supplemental insurance policies.

The public health system could be staffed by doctors who would receive credit toward government student loans in addition to their pay, in addition to lots of nurse practitioners and physician’s assistants. Oh, and the public health system would also handle the uninsured, freeing up the private hospital emergency rooms.

The cities would have to pay into the public health system, but they would not have to pay for the retirees.


22 posted on 07/12/2012 2:58:20 PM PDT by Eva
[ Post Reply | Private Reply | To 1 | View Replies]

To: LouAvul

“A virus known as “Californiaitis.”

You forget or are too young to remember, it was all those Eastern, out of staters coming here in the ‘60s the ruined California. Easterners crapped all over this state and then left for your state. I know, I was here. These are simply ‘your children’ coming home. Remember, Californians used to elect the likes of Ronald Reagan. I’m at an age where I simply tell out of staters to go home and quit ruining my home.


23 posted on 07/12/2012 4:31:43 PM PDT by Owl558 ("Those who remember George Satayana are doomed to repeat him")
[ Post Reply | Private Reply | To 17 | View Replies]

To: Owl558
First, where they came from is immaterial. They were and are miscreants and reprobates, but they found a home in kalifornia. They were good enough for free states which is why they left.

Second, I used to live in Kalifornia. My favorite times on earth were fishing and camping in the Sierras, hiking in Yosemite, touring the Redwoods and Sequoias. I feel the loss as much as any. I had always planned to move back but I think the state is too far gone.

24 posted on 07/12/2012 5:50:32 PM PDT by LouAvul
[ Post Reply | Private Reply | To 23 | View Replies]

To: SeekAndFind

I’m guessing it’s because their debt exceeds their income by several orders of magnitude. That’s the usual cause of a municipal bankruptcy.


25 posted on 07/12/2012 5:58:35 PM PDT by Lurker (Violence is rarely the answer. But when it is, it is the only answer.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Eva

Got a better idea... If those employees want insurance, they can just by it like many other people. And of they want a job with it included, they can look elsewhere than public service.


26 posted on 07/12/2012 6:29:49 PM PDT by kingu (Everything starts with slashing the size and scope of the federal government.)
[ Post Reply | Private Reply | To 22 | View Replies]

To: kingu

The Public health system was originally set up to serve the merchant marine, the sailors and was expanded to cover all military, and eventually anyone in need. It could also cover the government workers who were promised health coverage until they died.

The SEIU and the single federalized first responders union, was intended to spread the cost of the benefits for the inner city police and fire workers (and paramedic teams) across the country to all the rural areas, dissolving the cities will do the same thing. Spread the costs of the cities to everyone. There has to be a better way. I suggest that we return to the public health system.


27 posted on 07/12/2012 10:54:08 PM PDT by Eva
[ Post Reply | Private Reply | To 26 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson