San Bernadino becomes 3rd CA city to declare bankruptcy in 2 weeks
San Bernadino (pop. 210,000) became the 3rd city in California to file for bankruptcy protection in the last 2 weeks.
Stockton (pop. 300,000) and the small town of Mammoth Lakes previously filed under Chapter 9.
The Southern California city of about 210,000 people will also become the second largest in the nation ever to file for bankruptcy. Stockton, the Northern California city of nearly 300,000, became the biggest when it filed for Chapter 9 on June 28. The much smaller city of Mammoth Lakes voted for bankruptcy July 3.
San Bernardino's City Council directed the city attorney to make the move during a meeting where administrators explained the dire fiscal circumstances and urged them to choose the bankruptcy option.
"We have an immediate cash flow issue," Interim City Manager Andrea Miller told Mayor Patrick Morris and the seven-member City Council, according to the Los Angeles Times.
Miller said the city is facing a budget shortfall of $45.8 million. It has already stopped paying some vendors, and may not be able to make payroll over the next three months.
Four council members voted for the authorization, two opposed it, and one abstained.
"This is probably the hardest decision this councilwoman will ever have to make in this chair," Councilwoman Wendy McCammack said, according to the San Bernardino Sun.
The councilman who abstained from voting, John Valdivia, said he did not trust the information presented at the meeting, and having only served since March believed he should not be held responsible for the money mess.
"The taxpayers of this city have been duped, hoodwinked and misguided for the past several years," Valdivia said, according to the Sun.
"Duped, hoodwinked, and misguided..." describes a lot of local governments who promised tax payers so much and ended up saddling them with massive debt. The culprits in this bankruptcy appear to be the same as Stockton: payroll, pensions, bondholders and vendors.
There are literally hundreds of smaller towns and cities that may have to file under chapter 9 before any kind of recovery takes place. Ultimately, it is the taxpayer who is responsible for a lot of that debt, including pensions and health care for retirees. Holding politicians to account before a crisis hits is the best solution to this problem.