City of San Bernardino Files for Bankruptcy

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."

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.