Brainfade Posted July 12, 2012 Posted July 12, 2012 http://www.latimes.com/news/local/la-me-san-bernardino-bankruptcy-20120712,0,7695521,full.story. When these towns are out of money, they go under bankruptcy protection. When states like Mass. wanted money to run Romneycare, the Feds subsidized them. Who will subsidize the Feds when they have driven themselves to the brink? The madness has to stop. Facing the same financial stressors that pushed San Bernardino toward bankruptcy, cities across California are slashing day-to-day services and taking other drastic actions to skirt a similar fiscal collapse. For some, it may not be enough. San Bernardino seeks bankruptcy protection San Bernardino seeks bankruptcy protection San Bernardino Mayor Patrick J. Morris Photo: San Bernardino Mayor Patrick J. Morris Foreclosures and the proper role of government Foreclosures and the proper role of government Southland cities struggle to avoid joining Stockton in bankruptcy Southland cities struggle to avoid joining Stockton in bankruptcy Grand jury report tells story of Victorville's plunging fortunes Grand jury report tells story of Victorville's plunging fortunes Ads by Google $99/mo NC Bankruptcy$99/mo debt-buster plan helps you get your life back! Free Consult. www.BillsBills.com Want to Meet Mitt Romney?Join Mitt for a Day on the Road Will It Be You? Enter Today www.MittRomney.com San Bernardino on Tuesday became the third California city to seek bankruptcy protection in the last month and, while no one expects the state to be consumed by municipal insolvencies, other cities teeter on the abyss. "There are likely to be more in the future, but it's hard to know, since a lot of struggling cities may manage to work things out,'' said Michael Coleman, a fiscal policy advisor for the California League of Cities. "Some cities may not go into a bankruptcy, but they may dissolve. They may cease to exist.'' .... Meanwhile, San Bernardino is likely to be scrutinized over how it managed to come to the brink of disaster, seemingly so quickly. City Atty. James Penman said budget figures submitted to the council had been fabricated for 16 years. Interim City Manager Andrea Miller was less harsh, saying the city's budget was erroneously said to be balanced for the last two years. "The real horrible question here is: How do you end up with 30 days of liquidity?' Denniston said. "You have city leaders saying fiscal information was not accurate or reliable. This could create multiple layers of litigation that hurts creditors, employees and taxpayers for a very long time to come." Rising public pension costs are one of the catalysts pushing cities into fiscal peril. In San Bernardino, the city's obligation to its employee retirement system rose from $1 million in the 2006-07 fiscal year to nearly double that in the current budget year. In three years, those costs are expected to swallow up 15% of the budget. Pension spending grew an average of 11.4% a year in the state's biggest cities and counties between 1999 and 2010, roughly twice as fast as spending on public safety, social services, recreation, health and sanitation, according to a February report by the Stanford Institute for Economic Policy Research. Joe Nation, a Stanford economics professor and co-author of the February report, thinks that for at least some cities, insolvency is inevitable unless they can wrest much bigger concessions on salaries and pensions from public employees. "I think this is the tip of the iceberg in terms of the problem,'' Nation said. "Stockton was spending $12 [million] or $13 million on pensions 10 years ago. By 2010, it was $30 million and will double again over the next five years, unless something is changed." Meanwhile, as news of the bankruptcy wafted though San Bernardino on Wednesday, residents feared for the city's uncertain future.
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