San Bernardino files for Chapter 9 bankruptcy

Aug 2, 2012, 6:46 PM

SAN BERNARDINO, Calif. (AP) – Officials in San Bernardino, Calif., which is facing an expected $45.8 million budget deficit this year, have formally filed for Chapter 9 bankruptcy protection, a move that city leaders approved last month.

Interim City Manager Andrea Travis-Miller said Wednesday that there would be “no immediate service reductions or changes in service to the community as a result of the filing.”

City officials are working on a plan for the city’s operational budget during bankruptcy. Once the plan is complete, reductions may occur, said Travis-Miller, who is aiming to submit a plan for the City Council’s consideration within the next three weeks.

The city of 210,000 people, about 60 miles east of Los Angeles, declared a fiscal emergency July 18. It has become the third California city to declare insolvency this year, joining Stockton and Mammoth Lakes.

After last month’s announcement, San Bernardino’s finances experienced increased stress when a dozen employees put in for retirement with hopes of cashing out accrued vacation and sick time. The announcement also has spurred vendors to demand cash instead of credit as payment.

Officials say the housing crisis devastated property and sales tax revenues, and the loss of state redevelopment funds took a toll on the city’s budget.

(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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San Bernardino files for Chapter 9 bankruptcy