Wednesday, July 11, 2012

California Keeps Whistling Past The Graveyard

San Bernardino joins the ranks of Stockton and Mammoth Lakes in filing for bankruptcy

San Bernardino on Tuesday became the third California city in less than a month to seek bankruptcy protection, with officials saying the financial situation had become so dire that it could not cover payroll through the summer.

The unexpected vote came at the suggestion of the interim city manager, who said the city faces a $46-million deficit and depleted coffers.

Six paragraphs into the story, you get to the reason why:

The city's fiscal crisis has been years in the making, compounded by the nation's crushing recession and exacerbated by escalating pension costs, lucrative labor agreements, Sacramento's raid on redevelopment funds and a city reserve that is tapped out, officials said.

Miller told the council that the city faced major deficits for the next five years.

The deficits remain even after the city negotiated $10 million in concessions from employees and slashed the workforce 20% over the last four years.
So having unfunded liabilities tied to lifelong pensions, catering to every public union demand and having a state government playing shell games with state finances drained whatever reserve the city had.

San Bernardino's tax revenues have declined by as much as $16 million annually over the last few years, primarily because of drops in sales and property taxes.

The end result of having progressive policies in place means people end up voting with their feet and leaving the state. 

Be sure to read the rest to find out about Stockton and Mammoth Lakes

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