San Bernardino, California finally filed for bankruptcy last week: 1) San Bernardino, California, Files Chapter 9 Bankruptcy (Bloomberg), 2) San Bernardino, Calif., files for bankruptcy with over $1 billion in debts, $195 million unfunded pension liabilities (Reuters). Stockton, California filed for Chapter 9 bankruptcy in late June.
The city was misreporting its general fund balance, had unsustainable costs, and tax revenues crashed after the credit and housing bubbles burst in California. Here are charts and tables from San Bernardino's recent budget stabilization report.
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Here's a street interview I found with San Bernardino's Mayor on July 11 talking about the city's bankruptcy, and why labor contracts need to be renegotiated in bankruptcy court to better align costs with the city's tax base (July 11).
Recent articles on municipalities and States:
- New York State municipalities hover near property tax limits (Reuters)
- DiNapoli: Local Governments Facing New Fiscal Reality (Office of New York Comptroller via MuniLand)
- Miami Mayor May Declare Financial State of Emergency (Fox Business TV)
- Investors Get 17 Cents On Dollar Only In Chicago: Munis (Bloomberg)
- Vacant Detroit becomes dumping ground for the dead (Detroit Free Press)
- Fitch: Michigan Vote Could Challenge Distressed Municipalities (Business Wire)
- Michigan Emergency-Manager Law Goes On Ballot, Court Says (Bloomberg)
- America’s Spain: California (Investor Place)
- California Says Tax Revenue ‘at Risk’ From Facebook Drop ("may cost California “hundreds of millions of dollars” in revenue expected from taxes on capital gains") (BusinessWeek)
- Moody's cuts Compton, Calif. sewer enterprise rev bond rating ("may declare bankruptcy by September" (Reuters)
- Citi: Calif. Bankruptcies Still Outliers, but Fresno Troubled Too (Barron's)
- Believing Default-Averse Fresno Returns 5.41% Love: Muni Credit (BusinessWeek)
- Police Chief’s $204,000 Pension Shows How Cities Crashed (Bloomberg via MuniLand)
- Raimondo Pension Lawsuit Seen Risking Bankruptcies: Muni Credit (Bloomberg)
- The college-cost calamity: Many American universities are in financial trouble (Economist)
- The Underfunded Pension: States Take Action (AllianceBernstein via MuniLand)
Aside from declining tax revenues, unfunded (or underfunded) pension and health care liabilities are the major financial risks at the moment for States and munis: The Widening Gap Update: States are $1.38 Trillion Short in Funding Retirement Systems (Pew).
"The gap between the promises states have made for public employees’ retirement benefits and the money they have set aside to pay these bills was at least $1.38 trillion in fiscal year 2010, according to Pew's latest comprehensive analysis on pension and retiree health care funding."
What inning are we in???