San Bernardino Could Make Three California Cities to
File Bankruptcy; Unions are Culprit
by Mike Shedlock
When you see headlines like this: San
Bernardino, California, Weighs Chapter 9 Bankruptcy, you know 100%
without a doubt the city is bankrupt, and the only question pertains to the
filing.
From the Bloomberg headline story ....
From the Bloomberg headline story ....
San Bernardino may
become the third California city in two weeks to file for municipal bankruptcy
protection, as it struggles with declining tax revenue, growing employee costs
and ill-timed public-works projects.
The City Council is to consider authorizing the city attorney to file a Chapter 9 petition at a meeting late today, said Gwendolyn Waters, a spokeswoman. A decision was possible tonight, though unlikely, she said.
A San Bernardino bankruptcy would follow Stockton, a community of 292,000 east of San Francisco, which on June 28 became the biggest U.S. city to file for bankruptcy. Mammoth Lakes, a mountain resort of 8,200, filed for protection from creditors on July 3 saying it can’t afford to pay a $43 million judgment, more than twice its general-fund spending for the year.
San Bernardino, a city of 209,000 east of Los Angeles, faces a $45 million deficit this fiscal year, according to a June 26 budget analysis posted on its website. The city has declared fiscal emergencies, negotiated for concessions from employees and reduced its workforce by 20 percent in four years, according to the report.
The city is facing insolvency because of accounting errors, deficit spending, pension and debt costs, and lack of revenue growth, according to the report.
Few Options
“Cities are running out of options,” Michael Sweet, a partner specializing in bankruptcy at the San Francisco office of law firm Fox Rothschild LLP, said today in a telephone interview. “As they see pension contribution obligations and retiree health-care costs going through the roof, revenue is at best stable if not declining.”
“The city’s reserves and discretionary funds have been depleted, and the city faces insolvency,” San Bernardino Interim City Manager Andrea Travis-Miller and Finance Director Jason Simpson wrote in a June 26 memo to the council. “Simply put, the city must now take substantial action to reduce its spending and increase revenues.”
According to its financial statements, the city and its agencies held $243 million of outstanding debt, including $48.6 million of taxable pension-obligation bonds outstanding. The city’s debt per person was $1,506 or $5.37 percent of personal income. San Bernardino had $200 million of outstanding general- obligation bonds, according to the statement.
The City Council is to consider authorizing the city attorney to file a Chapter 9 petition at a meeting late today, said Gwendolyn Waters, a spokeswoman. A decision was possible tonight, though unlikely, she said.
A San Bernardino bankruptcy would follow Stockton, a community of 292,000 east of San Francisco, which on June 28 became the biggest U.S. city to file for bankruptcy. Mammoth Lakes, a mountain resort of 8,200, filed for protection from creditors on July 3 saying it can’t afford to pay a $43 million judgment, more than twice its general-fund spending for the year.
San Bernardino, a city of 209,000 east of Los Angeles, faces a $45 million deficit this fiscal year, according to a June 26 budget analysis posted on its website. The city has declared fiscal emergencies, negotiated for concessions from employees and reduced its workforce by 20 percent in four years, according to the report.
The city is facing insolvency because of accounting errors, deficit spending, pension and debt costs, and lack of revenue growth, according to the report.
Few Options
“Cities are running out of options,” Michael Sweet, a partner specializing in bankruptcy at the San Francisco office of law firm Fox Rothschild LLP, said today in a telephone interview. “As they see pension contribution obligations and retiree health-care costs going through the roof, revenue is at best stable if not declining.”
“The city’s reserves and discretionary funds have been depleted, and the city faces insolvency,” San Bernardino Interim City Manager Andrea Travis-Miller and Finance Director Jason Simpson wrote in a June 26 memo to the council. “Simply put, the city must now take substantial action to reduce its spending and increase revenues.”
According to its financial statements, the city and its agencies held $243 million of outstanding debt, including $48.6 million of taxable pension-obligation bonds outstanding. The city’s debt per person was $1,506 or $5.37 percent of personal income. San Bernardino had $200 million of outstanding general- obligation bonds, according to the statement.
Untenable Union Wages and Pension Benefits to Blame
Once again, deficit spending, union wages, and soaring pension obligations are at the heart of the matter.
Los Angeles, Oakland, San Diego, and numerous other cities face the same fate. Just give it time.
Once again, deficit spending, union wages, and soaring pension obligations are at the heart of the matter.
Los Angeles, Oakland, San Diego, and numerous other cities face the same fate. Just give it time.
Source: Townhall Finance
2 comments:
Hello! Glad to have a chance to drop by and learn additional information about this particular topic from your blog. Keep up the good work! Thank you so much for sharing your knowledge about bankruptcy. You have an interesting and very informative page. I'll be looking forward to visit your page again and for your other posts as well.
In addition to that, I remembered reading another article about bankruptcy that states that Chapter 7: basic liquidation for individuals and businesses; also known as straight bankruptcy; it is the simplest and quickest form of bankruptcy available.
Filing for bankruptcy is a viable option to help protect assets when debt has gotten out of control. The Law Office of Theodore S. Collatos can help residents and businesses in Peabody and Lynn, Massachusetts take steps to prepare and learn what the costs and benefits of bankruptcy might be in their unique situation.
Bankruptcy Lawyer Peabody MA
You will most likely lose your house in a Chapter 7 bankruptcy filing, whereas in Chapter 13 bankruptcy, you can still pay for the mortgage and be allowed to keep you house. This is really a question for yourself. Do I want to keep this house?
San Francisco Bankruptcy Attorney
Post a Comment