Wednesday, July 11, 2012

Turn On The Lights, Watch The Roaches Scatter Part 89

Last month I told you how Stockton, California, one of the cities hit hardest hit by the foreclosure crisis, declared bankruptcy.  I said it wouldn't be the last California city to do so.  That prophetic statement took all of two weeks or so to be proven correct.

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.

"We have an immediate cash flow issue," Andrea Miller told the mayor and seven-member City Council.

Mayor Patrick Morris called the decision, passed on a 4-2 vote, a "stain" on the city. But he said the only other option was "draconian cuts" to all city services, including the police and fire departments.

"It means the bills will be paid," said a dejected Morris, who is not a voting member of the council.

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.

And in California, raising taxes at any level is an absolute impossibility.  The only solution is either massive cuts or bankruptcy.  California is failing by design, and more cities in the Golden State will quickly follow.

And it will only get worse.  Count on it.

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