San Bernardino, California Declares Bankruptcy


Yesterday, in an unexpected vote, the city council of San Bernardino, California declared bankruptcy.  Joining Stockton and Mammoth Lakes, it becomes the third California city in less than a month to seek bankruptcy protection.

As the Los Angeles Times reports

The unexpected vote came at the suggestion of the interim city manager, who said the city faces a $46-million deficit and depleted coffers.

“We have an immediate cash flow issue,” Andrea Miller told the mayor and seven-member City Council.

Mayor Patrick Morris called the decision, passed on a 4-2 vote, a “stain” on the city. But he said the only other option was “draconian cuts” to all city services, including the police and fire departments.

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There are 9 comments.

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  1. Profile Photo Inactive

    What can they do now? Nothing.

    The time to have done something was before they accumulated the debt.

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    No suggestion that overpaid city bureaucrats might get axed?  How’s about the city council do the honorable thing and work without pay until the city is back in the black?  Might give them a wee bit of incentive to clean up the mess.  I can dream, right?

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    ~Paules: No suggestion that overpaid city bureaucrats might get axed? 

    Seems to me that the guy whose job it was to alert the town that “we can’t afford it” didn’t do his job, did he?

    He should be first against the wall. Ooops, I mean first to be laid off. (The only problem is that, if pattern holds, they’ll owe him a generous pension.)

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    Obviously, the perfect time to build a $69-billion high-speed rail system.

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    Don’t you get the creeping feeling of a massive, massive Federal bailout looming? Is this why the politicians in these cities and states are only working at the margins? Thinking they are too big to fail? Is this why Reid and Schumer say and do the things they do?

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    I recommend reading the entire LA Times article that Tim links to. Buried in the text is a paragraph about a statement from the city’s attorney, saying that in 13 of the past 16 years the city council was presented with budget numbers showing the city operating “in the black”–when in fact they were running deficits. This assertion took the mayor by surprise.


    When there are unexpected financial moves due to completely out-of-the-blue cash flow problems, one tends to think “embezzlement.” It is reasonable to assume that there is more to this story, and it’s going to turn out to be more than just the usual California tale of bloated pensions and Madoff fiscal management.

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    Thus begins the muni bond bubble burst. And we thought the economy has been bad til now? We ain’t seen nothin’ yet.

    • #7
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    Orrick et al, got almost $11 million in legal fees from the Vallejo Ch 9, what do you think the Stockton will bring ? They wrote a retainer check way before the decision.

    I have been studying this and the percentage of distressed munis in the US is somewhere around 70%. Underfunding of legacy costs (pensions,healthcare) are the biggest problem. 

    California has carved out a special place in hell with it’s giveaways to unions, the state’s lawyers and admin judges even have their own union.

    It’s going to get ugly. Meredith Whitney has taken alot of hits for predicting this, but in the end her only fault may have been premature prediction.

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    San Berdoo admits it has a problem. That, at least, is a giant step forward from neighboring Riverside, where I live. These guys have a magical “42 million dollar surplus” no matter what year, or what time of the year, for as long as I can remember it’s been this amount.

    Meanwhile, we have 18% unemployment…

    • #9
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