San Bernardino Seeks Federal Bankruptcy Protection

The city council made the decision at a meeting Tuesday night

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    NEWSLETTERS

    San Bernardino Mayor Pat Morris says the city's decision to seek federal bankruptcy protection is the beginning of a "difficult conversation about the city's budget and the city's future." Lolita Lopez reports for NBC4 News at 11 p.m. on July 10, 2012. (Published Tuesday, Jul 10, 2012)

    San Bernardino became the third California city in less than two weeks to file municipal bankruptcy protection Tuesday night when the city council voted to make the move in the face of a $45-million budget shortfall.

    Shortly before the council's vote, Interim Mayor Andrea Miller recommended the city of 209,000 seek bankruptcy protection due, in part, to its inability to make payroll over the next three months, the Los Angeles Times reported.

    If the payroll is not met, the city attorney says there could be a mass exodus of employees. While the mayor says that’s scenario is unlikely, bankruptcy protection gives the city time to avoid payroll delinquency.

    The move followed city negotiations that conceded $10 million from employees and slashed the workforce by 20 percent over the last four years, the newspaper reported.

    Special budget meetings were set for Tuesday and Wednesday.

    Tuesday's special budget meeting began with a prayer invoking the "wisdom of God to be liberally poured down" on city officials.

    San Bernardino has a 15.7 percent unemployment rate and about 5,000 homes in foreclosure.

    San Bernardino Mayor Pat Morris said the decision was the beginning of a "difficult conversation about the city's budget and the city's future."

    "I have no doubt there will be cuts across the board," Morris told NBC4. "A host of savings are required. This is going to be a severe financial haircut for the city."

    The vote makes San Bernardino the latest California city to teeter on the edge of bankruptcy.

    Officials in Stockton said their June decision to seek federal bankruptcy protection was the "only choice" for the city that was unable to reach finance agreements with creditors to address a $26 million budget shortfall.

    On July 4, Mammoth Lakes sought bankruptcy protection from a $43 million court judgment, according to Bloomberg News.

    In the six decades since Congress created bankruptcy protection for cities, fewer than 500 municipal bankruptcy petitions have been filed, according to the United States Courts website.

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