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Not All Muni Bankruptcies Are the Same

San Bernardino City Hall
San Bernardino City HallPhotograph by David McNew/Getty Images

San Bernardino just became the third city in California to file for bankruptcy in less than a month. It’s tempting to think there may be some common post-bubble plague haunting the state, but each of the three towns fell for different reasons.

Stockton was the first to file. An agricultural center that aspired to be part of the vibrant Bay Area to its west, Stockton experienced growth that followed a traditional boom-bust narrative. Its economy depended largely on new home construction. When times were good, city officials loaded up on debt to finance ambitious plans for a downtown redevelopment, including a riverfront district and new baseball stadium. The housing crash dried up employment and tax revenue, leaving the city with heavy pension costs, high foreclosures, and unaffordable loan payments.