San Bernardino is the third California city to file for bankruptcy in the last few months, following Stockton and Mammoth Lakes. The city’s paper, The San Bernardino Sun noted that the news caused the city to trend on Twitter. But this is not good news, these tweets are sadder than “Old Yeller.” Like this one:
LOL…when I saw that San Bernardino was trending, my 1st thought was “oh no, another murder”…but eh..just bankruptcy :(
— Cheryl Jacobo (@SoCalHobbits) July 11, 2012
Or this one with the hashtag #gottagetoutofhere
— Tiffany (@duafe) July 11, 2012
The city is $46 million in the hole and has laid off twenty percent of its workforce. Also, this:
San Bernardino already has the 2nd highest poverty rate in the US and now it’s bankrupt
— LoweRantula (@soLoweDoloIII) July 11, 2012
The Los Angeles Times is following the bankruptcy, reporting that the City Attorney James Penman said that documents had been falsified to hide the how much the city was spending.
In a live chat this morning, Inland Empire Bureau Chief Phil Willon wrote: “City’s debts will be open for renegotiation — not wiped off the books. Along with the stigma, cities that file for bankruptcy will have a harder time borrowing money — and will pay higher interest rates. all government bodies borrow, the the impact is real.”
This could increase borrowing costs for other cities in California and at the state level. The bond market will see California as a risky bet as the state is perceived as lacking fiscal stability. We’ll have more analysis on tonight’s “Which Way, LA?” Were high salaries part of the problem? Check out this spreadsheet of data from California State Controller John Chiang’s office that shows salaries for police and fire fighters topping six figures.