San Bernardino Is Third California City to Opt for Bankruptcy

San Francisco Chronicle ^ | 07/11/2012 | Michael B. Marois and Alison Vekshin

[SeekAndFind]

San Bernardino’s City Council voted to become the third California city this year to file for bankruptcy, as it struggles with declining tax revenue, growing employee costs and accounting discrepancies in its ledgers.

The council voted 4 to 2, with one abstention, last night to authorize a filing under Chapter 9 of U.S. bankruptcy law. The city of 209,000, about 65 miles (105 kilometers) east of Los Angeles, is so broke it can’t make its Aug. 15 payroll, interim City Manager Andrea Travis-Miller said.

“If the employees are not paid on Aug. 15, on Aug. 16 there will be a mass exodus of city employees,” City Attorney James Penman told the council before the vote. “People are not going to work when they don’t get paid. Most of our employees will not show up to work. That would include police, fire, refuse, everybody. The city will virtually shut down.”

A San Bernardino filing would follow Stockton, a community of 292,000 east of San Francisco, which on June 28 became the biggest U.S. city to go into bankruptcy. Mammoth Lakes, a mountain resort of 8,200, filed for protection from creditors on July 3 saying it can’t afford to pay a $43 million judgment, more than twice its general-fund spending for the year.

The Chapter 9 filing would allow the city to suspend payments to creditors while it seeks court approval for a plan that balances its revenue with its debt. Travis-Miller said a filing could take a month to prepare.

Confronting a $45 million budget shortfall, San Bernardino is facing insolvency because of accounting errors, deficit spending, pension and debt costs, and lack of revenue growth, according to a June 26 budget analysis posted on the city’s website.

[little jeremiah]

And they get free schooling, medical care, probably welfare and all that goes with it, and cost the judicial system - cops, jails, judges etc - big bucks.

Take out the illegals and see how bankrupt SB is. Probably the same with Stockton. Too bad about California.

[stephenjohnbanker]

” Take out the illegals and see how bankrupt SB is. Probably the same with Stockton. “

Or any Calif. city.

[gunsequalfreedom]

Someone, some place, needs to be proactive and think about how a government can be run with minimal employees, minimal costs, and minimal services. It's not going to be a choice, so people should start planning for it now.

San Bernardino just started that planning process.

[gunsequalfreedom]

How many lines of The Slime can your recite without looking up the lyrics? Thanks for the link to Zappa song.

[gunsequalfreedom]

I saw an article that new admin hires discovered the crisis, that the previous city administrators had been cooking the budget for the city council for 15 years.