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 ...
Meh. Dog bites man.
“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???
“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???
“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???
My care-0-meter registers nothing.
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.
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.
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.
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.
These guys get elected then give raises to each other... Higher pension? Sure, I’ll take one of those too...
Thank you. I grew up in Riverside County, CA...the are a few towns in Riverside county that use county services.
“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.
hmmm...no city gov? like the sound of that.
Coming soon to a neighborhood near you.
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.
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.
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!
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.
Jawohl . . . comrade.
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