The city council of San Bernardino voted today to seek bankruptcy protection after being told the city faces a $45 million deficit. The city's attorney said it would likely take 30 days before the municipality could officially file under chapter 9. "City officials said they faced the possibility of being unable to make its Aug. 15 payroll for employees and pay some vendors," the Press-Enterprise reported. "Even if the city were to eliminate all departments except for police and fire, it would still face a deficit, interim City Manager Andrea Travis-Miller said."
This news is the lead story tonight on the San Bernardino Sun website, of course. The second story on the page: Two men killed in city's 27th and 28th homicides. All last year there were 30 homicide deaths, the Sun says.
Meanwhile, Reuters says out of San Francisco that bankruptcy may be no fix for the Inland Empire city.
Chapter 9 bankruptcy would give San Bernardino an opportunity to restructure its battered finances, city staff said during a webcast of the city council meeting.
But the council's vote may backfire on San Bernardino in the municipal debt market, and raises concerns about local officials in California potentially looking to bankruptcy protection as an easier solution than making tough decisions about spending cuts and raising revenue, said Dick Larkin, director of credit analysis at muni bond broker-dealer HJ Sims.
"Am I troubled? You bet," said Larkin. "I couldn't believe how quickly this vote happened."
Larkin noted the concerns of San Bernardino's staff about the risk of the city not meeting its payroll in coming months may be eclipsed by concerns it could be frozen out of the muni debt market if it goes through with a bankruptcy filing.
Stockton and Mammoth Lakes have recently taken the bankruptcy filing path hoping to get out from under their financial troubles.
Photo: Ed Fuentes