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$45 million deficit forces San Bernardino, Calif. into bankruptcy

By Arturo Garcia
Wednesday, July 11, 2012 15:18 EDT
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Bankruptcy concept via Shutterstock
 
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Facing a $45 million deficit, San Bernardino became the third California city in less than two weeks to file for municipal bankruptcy on Tuesday, after it was revealed that the city received falsified budget information for 13 of the past 16 years, according to the San Bernardino Sun.

The San Bernardino City Council approved a motion to seek Chapter 9 bankruptcy days after learning the city had just $150,000 in its coffers. During the meeting, City Attorney John Penman told the council it had been given documents hiding the fact that the city had been deficit spending. Without filing for bankruptcy, Penman said, the city would not be able to meet its Aug. 15 payroll.

Mayor Pat Morris told local media Wednesday morning that bankruptcy protection will allow the city to renegotiate some retirements to keep services running, according to San Bernardino Sun photo editor Rick Sforza via Twitter.

According to KNBC-TV, the city currently faces a 15.7 percent unemployment rate and about 5,000 homes in foreclosure. The city had slashed its workforce by 20 percent since 2008, and negotiated $10 million in concessions from employees.

Officials said the city had been heading for financial trouble for years, as rising pension costs, labor agreements and the nationwide economic recession combined to drain the city’s resources.

San Bernardino now joins Stockton and Mammoth Lakes in turning to bankruptcy for help. Stockton is also suffering a foreclosure crisis, and has been forced to make drastic cuts in city services to get by.

After the council meeting Tuesday, Morris called the vote the beginning of a “difficult conversation about the city’s budget and the city’s future.”

Watch video from KNBC, aired July 10, below:

View more videos at: http://nbclosangeles.com.

[image via Shutterstock]

Arturo Garcia
Arturo Garcia
Arturo R. García is the managing editor at Racialicious.com. He is based in San Diego, California and has written for both print and broadcast media, including contributions to GlobalComment.com, The Root and Comment Is Free. Follow him on Twitter at @ABoyNamedArt
 
 
 
 
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