San Bernardino becomes third California city seeking bankruptcy

By Jim Christie

(Reuters) - The city council of San Bernardino, California, voted on Tuesday to file for bankruptcy, marking the third time in recent weeks a city in the most populous U.S. state has opted to seek protection from its creditors.

The decision by the leaders of San Bernardino, a city of about 210,000 residents approximately 65 miles (104 km) east of Los Angeles, followed a report by city staff that said the city faced an imminent financial crisis.

The report said the city had exhausted its reserves and projected spending would exceed revenue by $45 million in the current fiscal year which started on July 1.

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.

300,000 city going "belly - up"

Among the projects that have helped put Stockton in the red: this downtown multiplex, which opened in 2003 and cost $15 million ... and, there is much more irresponsible spending involved ... the have found the "bottom"  of an endless pocket ... "government money"


Stockton, Calif., is on the verge of becoming the largest city in the nation to declare bankruptcy after its city council voted 6-1 Tuesday night to approve a spending plan that's essentially "a day-to-day survival budget," as the Los Angeles Times puts it.

A bankruptcy filing could happen as soon as today, according to our colleagues at KQED and other local news outlets.

The city of 300,000's painful step follows last year's bankruptcy filing by Alabama's Jefferson County — the largest municipal bankruptcy in U.S. history. That county piled up more than $4 billion in debt involving a failed sewer construction deal.

Stockton, as The Associated Press notes, has a $26 million budget shortfall. James Spiotto, a Chicago bankruptcy attorney who tracks municipal bankruptcies, tells the AP that until now the largest city to have declared bankruptcy was Bridgeport, Conn., (population about 144,000) in 1991.

The Times writes that "how Stockton found itself so mired in debt can be seen everywhere in the city's core. There is a sparkling marina, high-rise hotel and promenade financed by credit in the mid-2000s, mere blocks from where mothers won't let their children play in the yard because of violence."

California facing higher $16 billion shortfall

Maybe Clooney and his cronies could have some fund raisers for the state rather than Obama, could help pay off some of the debt ...........


SACRAMENTO, Calif. (AP) — California's budget deficit has swelled to a projected $16 billion — much larger than had been predicted just months ago — and will force severe cuts to schools and public safety if voters fail to approve tax increases in November, Gov. Jerry Brown said Saturday.

The Democratic governor said the shortfall grew from $9.2 billion in January in part because tax collections have not come in as high as expected and the economy isn't growing as fast as hoped for. The deficit has also risen because lawsuits and federal requirements have blocked billions of dollars in state cuts.

"This means we will have to go much farther and make cuts far greater than I asked for at the beginning of the year," Brown said in an online video. "But we can't fill this hole with cuts alone without doing severe damage to our schools. That's why I'm bypassing the gridlock and asking you, the people of California, to approve a plan that avoids cuts to schools and public safety."

Any EXPERTS Out There?

I think it is inevitable and we are heading that way ....
The Country is going BANKRUPT.
Does anyone out there know how long we have?