San Bernardino bankruptcy: Why Other California cities could be next

Los Angeles Times ^ | 07/12/2012

[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.

[Uncle Chip]

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.

[Eva]

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.

[Owl558]

“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.

[LouAvul]

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.

[Lurker]

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.

[kingu]

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.

[Eva]

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.