San Bernardino May Fire 100, Still Be Short $16 Million

San Bernardino, the third California city to seek bankruptcy protection this year, may fire more than 100 workers and still have a $16.4 million budget deficit under plans before the City Council.

The so-called pre-pendency plan, part of the city’s Chapter 9 reorganization, would dismiss more than 100 of 1,140 employees, reduce hours at three fire stations and close two centers intended to reduce gang violence. The city of 209,000 is about 60 miles (100 kilometers) east of Los Angeles.

San Bernardino, Stockton and Mammoth Lakes all sought court protection since the end of June. Cities across the most- populous state suffered steep declines in tax revenue after the recession depressed property values and reduced retail sales. At the same time, local governments are burdened with higher employee costs including pensions.

“We recognize that even with these proposed cuts and reductions, there’s still a budget deficit that needs to be addressed,” interim City Manager Andrea Travis-Miller told the council yesterday.

The reductions, which include buying fewer bullets for police and eliminating school crossing guards, would save about $22.4 million. That would leave a $16.4 million deficit in a $166.2 million budget, according to city documents.

Councilwoman Virginia Marquez called the proposals “a bitter pill” and “catastrophic” for a city with an unemployment rate of 19.9 percent in June, more than twice the national average.

Special Funds

The council voted 6-1 to drain special funds for workers’ compensation and liability and unemployment insurance to continue paying employees and providing basic services. San Bernardino has about $7.8 million in all of its accounts and owes creditors about $22 million, Travis-Miller said.

When the City Council initially voted to explore bankruptcy in July, Travis-Miller said the city’s budget problems were exacerbated by using the special funds to subsidize daily operations, leaving the accounts underfunded.

City Councilwoman Wendy McCammack said yesterday’s action to further tap the funds is only a stopgap measure.

“This is a portion of what forced us into bankruptcy, but the reality is that if we had known what was going on, we would have stopped the overspending with three ’no’ votes a long time ago,” she said.

To contact the reporter on this story: James Nash in San Bernardino, California at jnash24@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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