San Bernardino officially files for bankruptcy protection
San Bernardino officially filed for Chapter 9 bankruptcy protection in federal court Wednesday, just two weeks after the City Council declared insolvency after learning the city would be too broke to make payroll this summer.
The petition was filed in U.S. Bankruptcy Court in Riverside and included the July 26 resolution passed by the council authorizing the action. San Bernardino declared more than $1 billion in liabilities and $1 billion in assets in the first of what will be many court filings over the next year.
The city put out an official statement Wednesday evening saying that the city will continue to provide essential services to the community throughout the municipal bankruptcy process.
“There will be no immediate service reductions or changes in service to the community as a result of the filing," the statement said.
Last week, interim City Manager Andrea Travis-Miller told the council it must cut $45.8 million from the budget to ensure the city remains solvent in the current fiscal year -– a reduction that amounts to 30% of the budget. Crafting the austerity plan will be required as part of the Chapter 9 municipal bankruptcy process.
The cuts, expected to begin this month, will almost assuredly lead to widespread layoffs or cuts in employee compensation, and the city’s police and fire departments will not be immune. Close to 75% of the city’s general fund budget goes to public safety agencies.
San Bernardino became the third California city to seek bankruptcy protection this year, joining the Central Valley city of Stockton and Mammoth Lakes in the Eastern Sierra Nevada.
The action came after Travis-Miller told the council that San Bernardino would probably not have the money to make payroll in August. At one point in recent weeks, the city of 211,000 had only $150,000 in its bank accounts.
-- Phil Willon in Riverside
Photo: San Bernardino City Hall. Credit: Frederic J. Brown/AFP-Getty Images