Only $150K In the Bank: Third California City in Two Weeks Opts for Bankruptcy
- Posted on July 11, 2012 at 6:02pm by
Erica Ritz
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(Photo: Getty Images)
(The Blaze/AP) — As recently as last month, no city in California had opted for bankruptcy since 2008, and no U.S. city of more than 200,000 people had ever chosen that route.
The past two weeks have changed that, as the fiscal struggles faced by many American cities became too much for some to bear. San Bernardino became the third California city in that small span to choose Chapter 9 bankruptcy protection with a City Council vote on Tuesday night.
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 in which administrators explained the dire fiscal circumstances and urged them to choose the bankruptcy option.
According to the Wall Street Journal, the city had only $150,000 in its bank accounts days before the decision was made to file for bankruptcy.
“We have an immediate cash flow issue,” Interim City Manager Andrea Miller told Mayor Patrick Morris and the seven-member City Council.
City Atty. James Penman warned the city would “shut down,” including public safety agencies, if it didn’t have enough money to pay its employees.
“People are not going to work if they do not get paid,” Penman noted.
Miller said the city is currently 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.
At the meeting, the city attorney said budget officials had presented falsified budget documents to the City Council for 13 of the last 16 years, the newspaper reported.
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.
It was not immediately clear when the city planned to file.
Sixty miles east of Los Angeles, San Bernardino is in a region that soared economically during the housing boom, and suffered accordingly after the crash. It joins a number of other cities and counties across the nation that have plunged into financial crisis as the recession made it tough to cover rising costs involving payroll, pensions, bondholders and vendors.
Since Congress added Chapter 9 to the bankruptcy code in 1937 to allow municipalities to seek protection, about 640 government entities have filed.
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Comments (63)
1kingforall
Posted on July 11, 2012 at 7:54pmGraduated form Western High (pioneer’s) When I went back there in 2004 it was a pit and that‘s in Anahiem YEAH that’s in Orange Co. the whole school was completly fenced in just like prison so it is a place just perfect for the special so called guest California let destroy the state enjoy it PITO’S !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Report Post »Detroit paperboy
Posted on July 11, 2012 at 8:06pmThey just approved a ten billion $ high speed rail……so people can leave faster !!!!!!
Report Post »Republic_of_Texas
Posted on July 11, 2012 at 10:48pmI was thinking the high speed rail was more for a quick trip to the poor house but…
Report Post »dmerwin
Posted on July 11, 2012 at 11:30pmSooo frickin’ sorry. I guess they elected the wrong leaders. Go bankrupt and restructure your labor contracts and stop doing things you don’t need to do. BTW stop all property tax exemptions.
Report Post »Boone2
Posted on July 11, 2012 at 11:46pmCalifornia by far has the rate of Illegal Immigration from our southern border and we are paying dearly for it innumerous ways. If we do not stop this invasion this whole country will eventually collapse as we know it.
Go To : NumbersUsa.com and get active now in doing your part to stop the invasion, its free.
Report Post »lukerw
Posted on July 12, 2012 at 12:13amFence it in as a Debtor’s Prison… and sell off the people as Indentured Servants!
Report Post »marcus_arealius
Posted on July 11, 2012 at 7:50pmOh what the hell, why don’t they file bankruptcy on a county wide basis, fewer filings, quicker, more vendors screwed. Then why not jack up the income tax rate say to 25% and the sales tax say to 18%. Then get rid of Prop 13 and jack up the prop tax to New York levels, then start seizing property from fixed income retirees who can’t pay.. With all the illegals pouring in thanx to Bubba Holder, there will be a lot of empty houses to put them in. How about a lottery as to what city is next?
Report Post »woodyee
Posted on July 11, 2012 at 7:22pmBankruptcy. Good.
Report Post »The ties that bind the PUBLIC unions to ridiculous city contracts are done. Now they can start digging for REAL cold, hard cash, and stop the dang handouts to illegal aliens in San Bernardino county! Punish the employers of illegal aliens and boot them off of ALL public-dole roles; and for cripes sake, audit, audit, AUDIT ALL city and county departments!!!!!
ChiefGeorge
Posted on July 11, 2012 at 7:18pmI am very familiar with this ill run city! They try and spend money as if they were the same as their Cash Flush sister city of Riverside. Problem is, Sanberdo has no cash flush citizens in which to run all the city programs they do for illegals. Their school district main building is a fairly new 3 story building staffed to the gills for a student body of 30k. They have a massive child support building off the I-10 that rivals their rich sister city. Most of the cities that are in the Sanberdo county are extremely run down and have seen little development compared to Riverside Co. Its a dung heap of a city to boot, so I have no pity for them.
Report Post »chazmo
Posted on July 11, 2012 at 7:10pmDang it.. I grew up in that city… Was a wonderful inland town.. Then it turned bad about 10 years after I graduated and moved on. :( Very sad day..
Pacific Pirates!!!
Report Post »woodyee
Posted on July 11, 2012 at 7:24pmChaz, L.A. been pushing their Section 8 and welfare rollers out that way for years. If you thought Salton Sea was bad 20yrs ago, it is The Armpit now…
Report Post »Paul -Indiana
Posted on July 11, 2012 at 7:03pmI wonder how much income for the city would be generated by selling illegals as slaves? Just a thought ….
Report Post »GeorgieJo
Posted on July 11, 2012 at 7:15pmHOPE they build that high speed railway SOON
THAT way more people can leave Californicia FASTER
OMG 2012
Report Post »RJJinGadsden
Posted on July 11, 2012 at 8:02pmGEORGIEJO, LOL. That would be nice, but that short section of rail will all be within the state’s borders. The two major cities that it will connect, will do so with a more expensive ticket than flying from point A to point B. I still figure that with union labor the cost over runs will be devastating too.
Report Post »pissantno.10
Posted on July 11, 2012 at 7:02pmman encionos every where today demanding every body elses money. ya just wished you had some to. but if you did you would not pay taxes cause you need your money
Report Post »M13
Posted on July 11, 2012 at 8:05pmI just wish you would learn to type and make sense at the same time.
Report Post »lstoddard004
Posted on July 11, 2012 at 6:59pmI’d like to see how each of these California cities that have filed Chapter 9 restructure the government (e.g., public pensions, Union costs) in order to sustain themselves. The hills are falling.
Report Post »db321
Posted on July 11, 2012 at 7:04pmCA don’t come looking for a handout from Texas. We operate on a balanced budget and we just don’t have any spare cash laying around. Maybe you can apply for Obama Cash from his stash or Polosi can step in a lend you some. Texas just can’t – hope you understand.
Report Post »AmericanPatriot
Posted on July 11, 2012 at 6:52pmCalifornia is this nation’s Greece. The state can’t help them because it is hopelessly drowning in its own debt, so the feds will want to bail them out. But how and why would any sane mind be willing to bail out a state that just signed up to add billions to its budgetary shortfall with its newly approved rail system? I mean, how could they??
I pity the people, but they are culpible because of their entitlement culture and votes for any and everything over the past few decades. I saw the writing on the wall and left the state of my birth and the state I will always love and feel an allegience to a few years ago. Glad I got out when I did. The Progressives continue to destroy her. So sad.
This is a clue to what is happening all over this country, folks. I know I’m preaching to the choir here, but this is but a hint of things to come all over this country if we don’t stop and start to reverse it NOW.
Report Post »MeteoricLimbo
Posted on July 11, 2012 at 6:47pmWell it will make for a great opportunity in the private trash pick up and rent a cop businesses. Oh wait, the regulations imposed almost make that as hard as opening up a coal mine
Report Post »FANGS
Posted on July 11, 2012 at 6:47pmGood. Let the procecutions begin. Now an extesive audit can be done and their taxpayers can see all the waste, pay-offs and bribes to judges.
Report Post »1kingforall
Posted on July 11, 2012 at 6:43pmI must say as an X californiacation this is one of the most trilling thing‘s I have seen in year’s this state and its so called we are so much better than the rest of the NOT so united states of ONLY I MATTER .
Report Post »This has been a long time coming and I hope this happen‘s throughout your so called ONLY I MATTER STATE hope you all feel deep pain for your LIE’S and for your special mexinotamerico‘s so enjoy every single bit of your new loser live’s !!!!!
P.S. If this is to harsh for you tough I had to get screwed for 30 yr‘s out there and I was just wishing you all the worst because that’s what happen‘s when your state is like the great whore and NO body would listen so best of your state’s lie’s to you ! :) :)
FANGS
Posted on July 11, 2012 at 6:43pmAt this point, there’s no way Ameri will avoid a Revolution. The Democrats and the Unions must be terminated.
Report Post »encinom
Posted on July 11, 2012 at 6:50pmIts not the fault of those that look out for the middle and working class, blame Romney and the others 1%ers that hid their income and do everything ot avoid to pay their fair share of taxes.
Report Post »Commander and Thief
Posted on July 11, 2012 at 6:57pmAre you insane? Is it fair that almost 50% of the US don’t pay any taxes?
How is paying ZERO taxes considered paying thier FAIR SHARE?
Everybody needs to pay taxes…not just the wealthy.
Report Post »chazmo
Posted on July 11, 2012 at 7:14pmHe won’t answer
Report Post »encinom
Posted on July 11, 2012 at 7:29pmFirst provide something to support that 50% number. Second, if true, 50% of the nation is at or near proverty, is the tea ****** plan to create debtor prisons for the poor so the rich can continue to pay lower and lower percentages? Why do the useful idiots of the tea ****** party, continue to provide protection from those avoiding paying their fair share. Do not complain about the debt if you have drunk Norquist’s poisoned tea.
Report Post »marcus_arealius
Posted on July 11, 2012 at 7:53pmWe can always count on Encinom-****** to crap out his mouth via keyboard. Thanks keyboard!
Report Post »NeoFan
Posted on July 12, 2012 at 1:27amHey Encinoman! California is owned and ran by liberal progressive democrats. It’s their policies on display and shows where they lead. Just like the Euronators. Arrogance and stupidity. Why don’t you post the smoking gun that shows the tea party is at fault? Your a moron just like the people running California.
Report Post »nappy
Posted on July 11, 2012 at 6:36pmactually it’s $127k. San Bernardino is a dump. Crime ridden and just plain bad news. If you don’t clean up you get no money. period.
Report Post »Magyar
Posted on July 11, 2012 at 6:36pmThis is not unexpected, is it folks? We’ve been listening to the warnings for 3 1/2 years!
For those of you who have done nothing to prepare for the coming financial tsunami, you have very little time. So get to it!
While Ag & Au are good—Pb is what you’ll need when the infrastructure fails!
Report Post »ChiefGeorge
Posted on July 11, 2012 at 7:19pmExactly! Chris Christy spoke about this coming in a 60 min piece last year.
Report Post »leloli78
Posted on July 11, 2012 at 6:36pmAnybody been to San Bernardino? Illegals EVERYWHERE!! Nothing but poor people except in one little area…This place is sooo bad they wanted to make all of downtown a lake.. Some of the schools people dont even speak english..It is garbage..
Report Post »chazmo
Posted on July 11, 2012 at 7:20pmYup it’s the new East LA/Compton… :(
Report Post »ChiefGeorge
Posted on July 11, 2012 at 7:21pmRedlands U is there and thats nice, Redlands, CA is nice and is only a stones throw from this pit. Still in its county though.
Report Post »laserblast92
Posted on July 11, 2012 at 6:31pmSan Bernardino city officials are hoping this will make their corruption scandals disappear.
The SB Sun and the city are covering up the murder rate in San Bernardino claiming there are only 22 homicides when there are 30….
Report Post »hempstead1944
Posted on July 11, 2012 at 6:30pmWay to go California ! Chalk another one up for you guys…….what are you smoking out there in LaLa Land?
Report Post »RJJinGadsden
Posted on July 11, 2012 at 6:21pmHave you seen one of those displays where somebody sets up thousands of dominoes? Well, we are about to see the same thing with one California city after another. The really trick ending will be a jump to the next state.
Report Post »RLTW
Posted on July 11, 2012 at 6:33pmGlad I’ve got at least one state separation.
Report Post »oswell
Posted on July 11, 2012 at 6:18pmAnd, like clockwork, the ******** on the LA Slimes blog are blaming Bush and Republicans for this bankruptcy. Delusional tards.
Report Post »MAMMY_NUNN
Posted on July 11, 2012 at 6:15pmTrace it all back to greedy unions where they always eat their own and welcome to Obamaville.
Report Post »RANGER1965
Posted on July 11, 2012 at 6:14pmWhy is it that only Conservatives understand and believe in cause and effect?
Are we really the only adults in the room?
Report Post »AmericanPatriot
Posted on July 11, 2012 at 6:55pmAs a matter of fact, yes, we seem to be the only adults (or realists) in the room
Report Post »MAMMY_NUNN
Posted on July 11, 2012 at 7:57pmThe Dems were raised as either spoiled children or the only child it’s all about me me me and mine mine mine never having to problem solve with common sense.
Report Post »christhefanatic
Posted on July 12, 2012 at 12:18amas a matter of fact, we seem to be the only humans in the room.
Report Post »Prosecute_Constitutional_Treason_In_Washington
Posted on July 11, 2012 at 6:11pmMost of the local, state, and fed gov’s. were bankrupt years ago. The lights are just starting to be turned out. GAME OVER.
Report Post »Prosecute_Constitutional_Treason_In_Washington
Posted on July 11, 2012 at 6:10pmThe US will print currency either with paper and ink or electronically until the dollar is worthless or has to be replaced by a devalued world currency. THE GAME IS OVER. Right now the players are just finishing up the last ending while you and I watch our future on earth wiped out and replaced with total slavery.
Report Post »Mutiny
Posted on July 11, 2012 at 6:10pmIts coming nationwide.
Report Post »