Third California City Declares Bankruptcy
Well done, California:
San Bernardino became the third California city in less than two weeks to file municipal bankruptcy protection Tuesday night when the city council voted to make the move in the face of a $45-million budget shortfall.
Shortly before the council’s vote, Interim Mayor Andrea Miller recommended the city of 209,000 seek bankruptcy protection due, in part, to its inability to make payroll over the next three months, the Los Angeles Times reported.
If the payroll is not met, the city attorney says there could be a mass exodus of employees. While the mayor says that’s scenario is unlikely, bankruptcy protection gives the city time to avoid payroll delinquency.
According to the article, the city’s economy is stagnant. Unemployment is at 15%, and thousands of homes are in foreclosure. A shrinking city needs a shrinking government. The city should have been slashing their budgets well before they reached the point of bankruptcy to keep the size of their budget in line with the size of the city’s population and economy which supports that budget.
But, as yet another display of just how addicted to spending politicians are, they kept spending until they had nothing left to spend. And it gets worse. Not only was the city overspending, but apparently city officials were falsifying records to hide the spending:
City Atty. James Penman said city budget officials had falsified documents presented to the mayor and council for 13 of the last 16 years, masking the city’s deficit spending.
“For the last 16 years the budget prepared for the council showed the city was in the black,” Penman said, not naming those allegedly responsible. “The mayor and the council were not given accurate documents.”
[Mayor Patrick] Morris was taken aback by the comments, saying this was the first time he has heard of the allegations.
The cities of Stockton and Mammoth falls are also declaring bankruptcy.
Meanwhile the state, much just ran an $18 billion budget deficit, is pushing ahead with a $68 billion high speed rail project. And why not?
What’s the worst that could happen?
There is some good news from the Golden State though. It appears as though voters are beginning to embrace meaningful reform for public worker pensions.
Tags: california
