California cities going bankrupt

 

 

San Bernardino is the Third city to go bankrupt in California after reporting a $46 million shortfall in the city’s budget, following in the wake of Stockton and Mammoth Lakes. But other cities in the state are also in deep fiscal trouble. In July, the mayor of Compton, a small city outside of Los Angeles, asked state auditors to investigate unspecified “waste, fraud and abuse of public monies.” Financial officials predict it could file for bankruptcy within the next month. Auditors are also worried that Victorville could go down the same route.

California cities from the north to the border of Mexico are dealing with rising pension cost along with growing unemployment, declining property and sales  tax revenue. The cost comes from decision made when stock markets were soaring and retirment funds were running surpluses.

San Bernardino, a city where 75 percent of its budget goes to public safety agencies, the bankruptcy will lead to widespread layoffs or cuts in employee compensation, affecting the police and fire departments.While unemployment is on the rise, San Bernardino is struggling to rebuild itself as it joins a trend of California cities declaring bankruptcy

“Just by looking around you can see that the city is going down,” small business owner Marcus Nelson told the Associated Press. “On this block there’s only three business – [mine] and two other pawn shops.”

“We lost in the course of a single year 16 million dollars in sales taxes. 60 percent of our property values were lost. When you understand that a city is largely financed by sales and property taxes – when you lose your economic base in that kind of a free fall – you’re in trouble,” the city’s mayor, Patrick Morris, told AP.

 

 

 

 

 

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