On August 1, 2012 the City of San Bernardino filed for bankruptcy.
Residents are nervous and have many questions. Here are the answers to some of the questions frequently being asked.
WHY DID THE CITY OF SAN BERNARDINO DECIDE TO DECLARE BANKRUPTCY?
The City claims to have a $45 million budget deficit that will prevent it from paying its employees and the other bills it owes before the end of summer.
WHAT CAUSED SAN BERNARDINO’S $45 MILLION BUDGET DEFICIT?
Mayor Pat Morris and his administration failed to make the tough choices necessary to honestly balance the City’s Budget.
According to an outside independent expert, “San Bernardino faced years of deficit spending. It’s structural gap, however, was covered-up instead of addressed. The city sold assets, borrowed from city funds, borrowed from banks and bondholders, used one year’s surplus to cover the following year’s deficit, and raided its reserves.”
IS THE COST OF THE SALARIES AND PENSIONS OF FIREFIGHTERS AND POLICE OFFICERS THE CAUSE OF THE CITY’S BANKRUPTCY?
No. Pat Morris is falsely making this claim to hide the fact that his failures to stop wasteful spending and balance the City’s budget have driven San Bernardino into bankruptcy.
The truth is the San Bernardino City Charter, as approved by the voters, protects taxpayers by limiting the salaries and benefits of the City’s Firefighters and Police Officers.
Additionally, San Bernardino’s Firefighters and Police Officers have always been willing to do their fair share to help balance the budget. They’ve offered and accepted reductions to their pay and benefits for the last four years that has saved the City millions of dollars.
Unfortunately Mayor Morris and his administration failed to use the money from these savings to cut the deficit. Instead the money was used for wasteful pet projects like the SBX line.
IS IT COMMON FOR A CITY TO DECLARE BANKRUPTCY?
No, it’s very rare. Only 1 or 2 cities declare bankruptcy every year in the entire country. Recently, the cities of Stockton and Mammoth Lakes declared bankruptcy. The City of Vallejo went bankrupt in 2008.
Vallejo has completed the bankruptcy process and the benefits are unclear. Vallejo spent $13 million of taxpayer money on legal bills and still does not have a balanced budget.
WILL BANKRUPTCY BE BAD FOR SAN BERNARDINO?
The greatest risk bankruptcy poses to residents is in the area of job creation.
Our city already has one of the highest unemployment rates in the state and the nation. The decision to declare bankruptcy will likely make it more difficult to attract job-creating businesses to the City because they are afraid of investing in San Bernardino.
An unfortunate effect of bankruptcy is that it will likely result in an increase in San Bernardino’s already high unemployment rate.