The Two-Way
11:02 am
Thu August 2, 2012

San Bernardino Files For Chapter 9 Bankruptcy Protection, Owes $1 Billion

Originally published on Thu August 2, 2012 12:39 pm

The financial morass that San Bernardino, Calif., plunged into last month widened on Wednesday, when city officials filed an emergency request for bankruptcy protection with a federal bankruptcy court. The city's estimated liabilities are greater than a billion dollars.

Last month, elected officials were stupefied to learn the city would go broke August 15. Soaring employee costs, excessive spending on city building projects, and faked financial data combined to fling San Bernardino into the hole.

Now the emergency is at crisis levels. In court filings, San Bernardino officials say the city's insolvency will "endanger the health, safety and welfare of citizens of the City." Officials issued a statement last night, saying essential services will continue as officials work to solve the financial problems.

Last week, the interim city manager told city council officials they must cut more than $45 million dollars from the budget to stay afloat, according to the Los Angeles Times. The cuts are expected to include a lot of layoffs, including fire and police protection; the report adds that nearly three quarters of the city's general fund budget goes to public safety.

Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/.