Falling Dominos – California Cities Tumbling into Bankruptcy

Russ Steele

The LA Times has the story:

San Bernardino seeks bankruptcy protection

San Bernardino, facing the possibility of missing payroll, becomes California’s third city in weeks to authorize a bankruptcy filing.

Now the question now which city will the next domino to fall, Los Angles, San Diego, San Francisco, or another mid sized city?

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About Russ Steele
Freelance writer and climate change blogger. Russ spent twenty years in the Air Force as a navigator specializing in electronics warfare and digital systems. After his service he was employed for sixteen years as concept developer for TRW, an aerospace and automotive company, and then was CEO of a non-profit Internet provider for 18 months. Russ's articles have appeared in Comstock's Business, Capitol Journal, Trailer Life, Monitoring Times, and Idaho Magazine.

8 Responses to Falling Dominos – California Cities Tumbling into Bankruptcy

  1. Oh My

    The city of 209,000 was about to renege on its payroll, but as the LA Times reports, the city has been lying to its residents about its budgets for years:

    “City Atty. James Penman said city budget officials had falsified documents presented to the mayor and council for 13 of the last 16 years, masking the city’s deficit spending.

    “For the last 16 years the budget prepared for the council showed the city was in the black,” Penman said, not naming those allegedly responsible. “The mayor and the council were not given accurate documents.”

    [Mayor Patrick] Morris was taken aback by the comments, saying this was the first time he has heard of the allegations.”

    • Sean says:

      The part I find most troubling is that for years the state has not been sending all the money owed to the local governments rather they get a portion along with an IOU for the rest and are told to borrow to make up the difference. I read the LA Times article and was surprised this has gone on for so long but it’s difficult to draw any conclusions until you see a break-out of the accounting. They mentioned that the elimination of the redevelopment agencies may have had a lot to do with flushing this out. A second question I’d have is what would motivate the accounting people to conduct a charade like ths for so long? If the redevelopment agencies turned out to be slush fund for balancing the local government’s books, you can expect a whole lot more bankrupcies throughout the state.

      • Sean says:

        One more thing, another article on the home page of the LA Times was on how the police chiefs of several municipalities bank their sick leave, cashing it out in their final year (costing several hunred thousand dollars alone), and this spikes their income for their final year served so they get $200K per year in retirement starting in their mid 50’s. Their retirement income then is more than the regular salaries they received in their final year. So they are likely to earn much more in retirement than the ever earned while they were working. I don’t suppose this has anything to do with local governments running out cash.

      • Sean, the spiking of the last year(s) of income in order to goose pension benefits is common for public employees in California. The recently retired Superintendent of the Grass Valley School District, the very guy whose flawed theories of learning led to wholesale whole language and whole math in Grass Valley was found by the county civil grand jury to have illegally spiked his pension. Fully half of my son’s cohort (virtually all middle class, English speaking and Euro) were in the bottom quartile in language and math when tested in the 3rd grade, and they were the first class to get Wholed from the time they walked into the door.

        A needed reform is to base pensions on some average of past *base* compensation, say the previous 10 years, and, except for non-managerial public safety employees like rank and file policemen and firemen, not begin any pension payments until age 65 or older.

    • MikeL says:

      I blame Bush since he failed to institute no accountant left behind…that mathie stuff is so hard to figure out so why should the numbers people have to bother. As Obamas’ pastor sez… “the chickens are coming home to roust”. It shouldn’t be long before the silly public employees union people come to figure out that the union purchased politicians have lied to them about all of the freebies that await them when they retire. Kinda reminds me of good ‘ol’ Bernie Madolf.

  2. One vote for Nevada City has come in over the e-mail transom to be one of the next to face bankruptcy. Anymore votes?

  3. Dixon Cruickshank says:

    I can’t believe what you pay some of these idiots, some of your cities around there aren’t any bigger than my high school. You’d think that they really did something to boot other than cut ribbons at parks

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