SAN BERNARDINO, Calif. — They cut spending, sold assets and even asked public employees to take a financial hit.
But budget woes still mounted for San Bernardino city officials. And by the beginning of this week, vendors hadn’t been paid and cash was running out to make payroll, threatening to shut down the city.
That prompted elected officials in the city of 210,000 people to make the sudden move of authorizing the city attorney to seek federal bankruptcy protection, becoming the third California city poised to do so in less than two weeks.
“This city is in a dire financial situation,” Interim City Manager Andrea Travis-Miller said in a statement Thursday. “While many measures have been instituted over the last four years to balance the city’s budget, our financial situation has continued to decline and that has brought us to a critical point.”
The contentious vote Tuesday night took many by surprise and set the city apart from other California municipalities where such an action came only after months of consideration.
Bankruptcy experts say the decision in San Bernardino — some 60 miles east of Los Angeles — could sound an alarm to cities across the state and country that are grappling with weak property and sales tax revenues as their pension obligations continue to rise.
“People are waiting to see whether these are the exceptions to the rule or whether we have a new trend,” said Jim Spiotto, a Chicago attorney who tracks municipal bankruptcies. “I do think it may be something of a wake-up call.”
San Bernardino is facing a budget shortfall of about $45 million and annual deficits over the next five years. That’s even after the city slashed the workforce by 20 percent over the past four years and negotiated $10 million in annual concessions from employees in each of the past three years.
The problems stem from weak property and sales tax revenues combined with escalating pension costs and a loss of state redevelopment funds, city officials said.
On Tuesday night, City Attorney James Penman told the City Council that budget officials had presented falsified documents for 13 of the past 16 years, masking the city’s deficit.
He told reporters a day later that he believed an outside investigation was needed in February but had not realized the scope of the problem until this month.
Evidence of financial mismanagement had been given to “appropriate government agencies,” he said, declining to provide further details while citing the pending bankruptcy proceedings.
“The information was discovered in probably the last 60 days, and the elected officials became aware of it very recently,” Penman said.
San Bernardino County sheriff’s officials said Thursday they are working with police and the district attorney’s office to investigate possible criminal activity within the city’s government.
Sheriff-Coroner Rod Hoops said the investigation began at the request of city officials several months ago. It’s unclear if the investigation relates to the bankruptcy or falsified documents. Hoops declined to release any details.
But budget woes still mounted for San Bernardino city officials. And by the beginning of this week, vendors hadn’t been paid and cash was running out to make payroll, threatening to shut down the city.
That prompted elected officials in the city of 210,000 people to make the sudden move of authorizing the city attorney to seek federal bankruptcy protection, becoming the third California city poised to do so in less than two weeks.
“This city is in a dire financial situation,” Interim City Manager Andrea Travis-Miller said in a statement Thursday. “While many measures have been instituted over the last four years to balance the city’s budget, our financial situation has continued to decline and that has brought us to a critical point.”
The contentious vote Tuesday night took many by surprise and set the city apart from other California municipalities where such an action came only after months of consideration.
Bankruptcy experts say the decision in San Bernardino — some 60 miles east of Los Angeles — could sound an alarm to cities across the state and country that are grappling with weak property and sales tax revenues as their pension obligations continue to rise.
“People are waiting to see whether these are the exceptions to the rule or whether we have a new trend,” said Jim Spiotto, a Chicago attorney who tracks municipal bankruptcies. “I do think it may be something of a wake-up call.”
San Bernardino is facing a budget shortfall of about $45 million and annual deficits over the next five years. That’s even after the city slashed the workforce by 20 percent over the past four years and negotiated $10 million in annual concessions from employees in each of the past three years.
The problems stem from weak property and sales tax revenues combined with escalating pension costs and a loss of state redevelopment funds, city officials said.
On Tuesday night, City Attorney James Penman told the City Council that budget officials had presented falsified documents for 13 of the past 16 years, masking the city’s deficit.
He told reporters a day later that he believed an outside investigation was needed in February but had not realized the scope of the problem until this month.
Evidence of financial mismanagement had been given to “appropriate government agencies,” he said, declining to provide further details while citing the pending bankruptcy proceedings.
“The information was discovered in probably the last 60 days, and the elected officials became aware of it very recently,” Penman said.
San Bernardino County sheriff’s officials said Thursday they are working with police and the district attorney’s office to investigate possible criminal activity within the city’s government.
Sheriff-Coroner Rod Hoops said the investigation began at the request of city officials several months ago. It’s unclear if the investigation relates to the bankruptcy or falsified documents. Hoops declined to release any details.