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City of San Bernardino Files for Bankruptcy

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Photo by KingoftheHill via the LAist Featured Photos pool
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By Sam Brodey

California's much-publicized city cash problem has finally hit the Los Angeles area. Last night, San Bernardino became the latest cash-strapped California city to declare bankruptcy. The Inland Empire city of over 200,000 joined Stockton and Mammoth Lakes in declaring Chapter 9 bankruptcy.

The city faced major challenges -- a $46 million budget deficit and only $150,000 in cash reserves -- that threatened basic operations, like meeting payroll for city employees. City Attorney James Penman claimed before the bankruptcy vote that the city -- and its fire, police and emergency services -- would shut down if drastic action were not taken, according to the Times. He also alleged that city officials had manipulated budget documents for over a decade to make it look like the city had plenty of cash.

Mayor Patrick Morris said that a "perfect storm" led to the bankruptcy of San Bernardino: "We've basically hit a perfect storm... with the economic recession, the meltdown of our nation's economy, the massive loss of both sales and property tax," he said. He called the 4-2 vote in favor of bankruptcy a "stain" on San Bernardino, but added, "It means the bills will be paid."

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San Bernardino's struggle is, as the Times added, "certain to heighten concerns about the fiscal forecast for other struggling California cities." Is Los Angeles next? Mayor Antonio Villarigosa, in a defensive statement, expressed optimism (at least, not fatalism) about our city's prospects.

For now, this tweet says it all:

Stay strong, San Bernardino.