Third California city in two weeks declares bankruptcy

posted at 10:41 am on July 11, 2012 by Ed Morrissey

In yet another in our series of posts on what the hell is wrong with my native state, San Bernardino voted yesterday to declare bankruptcy — the third city in California in the past two weeks to do so.   The city of 209,000 was about to renege on its payroll, but as the LA Times reports, the city has been lying to its residents about its budgets for years:

City Atty. James Penman said city budget officials had falsified documents presented to the mayor and council for 13 of the last 16 years, masking the city’s deficit spending.

“For the last 16 years the budget prepared for the council showed the city was in the black,” Penman said, not naming those allegedly responsible. “The mayor and the council were not given accurate documents.”

[Mayor Patrick] Morris was taken aback by the comments, saying this was the first time he has heard of the allegations.

Er, isn’t it the job of the mayor and city council to have those financial statements verified?  The city knew enough to demand concessions and workforce reductions from the public-employee unions the last four years, so they clearly had some inkling that their fiscal position wasn’t exactly solid.  Even if Morris and the rest of the council really knew nothing about the city’s financial woes, that’s still a damning indictment of incompetence.

Now they’re in a $46 million hole with no way to meet payroll.  Their only option now is bankruptcy protection, which will allow them to ignore some creditors while paying their employees, but that’s going to be a very tough solution.  Their municipal bond rating will plummet, making their borrowing costs shoot through the roof.  The bankruptcy might also allow them to impose new concessions on the PEUs, but that won’t come without a lot of agitation from the unions, which will complicate their ability to right the financial ship.

Nevertheless, this is starting to look like a trend for one of the trendiest states in the nation:

Officials in Stockton said their June decision to seek federal bankruptcy protection was the “only choice” for the city that was unable to reach finance agreements with creditors to address a $26 million budget shortfall.

On July 4, Mammoth Lakes sought bankruptcy protection from a $43 million court judgment, according to Bloomberg News.

In the six decades since Congress created bankruptcy protection for cities, fewer than 500 municipal bankruptcy petitions have been filed, according to the United States Courts website.

Decades of financial mismanagement has led the Golden State to the brink of financial collapse — and not just the cities.  The state has run annual budget deficits for years that run in the $15-25 billion range; their latest is an $18 billion gap.  At the same time, the California Senate just approved the construction of a completely unnecessary high-speed rail line between two points in California where no one wants to go, as a first step to building a full line between San Francisco and Los Angeles that will carry passengers at a rate roughly two and a half times slower than air travel.  The cost? $100 billion, at the moment.  Furthermore, it will run on electricity, which California already doesn’t produce in enough quantity to meet its current needs.

Don’t expect bankruptcy to be limited to San Bernardino, Stockton, and Mammoth Lakes.  The whole state will soon sink into fiscal oblivion if they keep making decisions like this, turning what should be a Nirvana into a financial Chernobyl.

On that same note, let’s take a look at a video Bill Whittle produced last month just before the spate of bankruptcies began about what ails California higher education.  I’ll give you a hint — it’s pretty much the same kind of decision-making that ails California in general.

Update: The second sentence should have read “third city,” not “third state.”  I’ve fixed it above; thanks to reader Gillian for the correction.


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

Comment pages: 1 2

If they’d have just built a high speed rail train…..

tommyboy on July 11, 2012 at 10:43 AM

In yet another in our series of posts on what the hell is wrong with my native state, San Bernardino voted yesterday to declare bankruptcy — the third stateCITY in California in the past two weeks to do so

city ed..

upinak on July 11, 2012 at 10:44 AM

I love my state!

:(

pseudonominus on July 11, 2012 at 10:44 AM

Pretty soon, California will reach the level known as Too Big To Fail. And Jugears will make a bailout into a campaign schtick – look at all the jobs I saved.

We need to ask the Brits if they want a second shot at torching the WH. It’s likely the only way to purify it after the ghetto trash is evicted.

platypus on July 11, 2012 at 10:45 AM

I thought moon beam would lead them out of the wilderness.

derecho on July 11, 2012 at 10:45 AM

the third state in California

Pardon?

OldEnglish on July 11, 2012 at 10:46 AM

“Another step in the right direction” – Emperor Husein

NickDeringer on July 11, 2012 at 10:46 AM

I don’t get it … Paul Krugman said spending would bring prosperity.

darwin on July 11, 2012 at 10:46 AM

And of course when the State of California itself is not in a position to bail these communities out I am sure we are going to see another “open borders” policy. And I am not talking about immigration IYKWIMAITYD.

DaveDief on July 11, 2012 at 10:46 AM

upinak on July 11, 2012 at 10:44 AM

Stop being such a fast lady! :)

OldEnglish on July 11, 2012 at 10:47 AM

the third state in California in the past two weeks to do so

While California is, in many ways, a country unto itself, technically this is incorrect.

nukemhill on July 11, 2012 at 10:47 AM

Soon the High Speed rail will have nowhere to go..

Rail to Nowhere.

Electrongod on July 11, 2012 at 10:48 AM

Stop being such a fast lady! :)

OldEnglish on July 11, 2012 at 10:47 AM

in alaska, we has fast internets.

upinak on July 11, 2012 at 10:48 AM

At least they will have high speed rail connecting all those bankrupt cities making it easier for copper thieves to get home after ransacking abandoned houses.

Bishop on July 11, 2012 at 10:49 AM

Can’t wait for the liberal California judges to tell bankrupt cities that they can’t renegotiate union contracts and that they must honor gold-plated union retirement plans.

gwelf on July 11, 2012 at 10:49 AM

But the TRAINS will run on time!!

ToddPA on July 11, 2012 at 10:49 AM

No federal bailouts!!!!
You’ve made your bed, CA. Time for a nap in it.

iurockhead on July 11, 2012 at 10:49 AM

Better get spending on that Health Care Exchange thingy Cal…

Electrongod on July 11, 2012 at 10:50 AM

Morris was taken aback by the comments, saying this was the first time he has heard of the allegations.

Ah….the Sgt. Schultz defense.

BobMbx on July 11, 2012 at 10:50 AM

Governors of other states need to come out and say, in no uncertain terms, that they will not support any national initiative to bail out any state that “goes under”. Each state needs to sleep in the bed they made, and our union cannot become a suicide pact.

Weight of Glory on July 11, 2012 at 10:50 AM

I’m sure this has been discussed before, but what will happen when Californa declares bankruptcy?

nobar on July 11, 2012 at 10:51 AM

City Atty. James Penman said city budget officials had falsified documents presented to the mayor and council for 13 of the last 16 years, masking the city’s deficit spending.

So can we expect some indictments soon? This sounds like some criminal fraud to me.

iurockhead on July 11, 2012 at 10:51 AM

I’m sure this has been discussed before, but what will happen when Californa declares bankruptcy?

nobar on July 11, 2012 at 10:51 AM

We detach it and allow it to float to China…
A gift.

Electrongod on July 11, 2012 at 10:52 AM

Er, isn’t it the job of the mayor and city council to have those financial statements verified?

Not if you enjoy willful blindness, so you can tell voters all sorts of things in order to get reelected.

We’ve been kicking the can down the road, but it looks like we’ve run out of road.

rbj on July 11, 2012 at 10:53 AM

Nevertheless, this is starting to look like a trend for one of the trendiest states in the nation

The next major leg of the financial crisis in the US is going to be a request from California to the Federal Government for a bailout. For a long time I’ve been waiting for QE3 to emerge, but I think California will implode now before that happens.

Should Romney win the election, one of his first challenges will be dealing with the collapse (or oncoming collapse) of California. I think we’ll see them begging the Feds for help by late 2012 or the first half of 2013. California is going to be our Greece; in the past year or so the US dollar has been rising because the attention of the world is on the EU crisis. But once California asks for a bailout, I’m expecting the dollar to start falling again.

And Illinois is close behind California. If California is our “Greece,” then Illinois will be our “Spain.”

Doomberg on July 11, 2012 at 10:53 AM

City Atty. James Penman said city budget officials had falsified documents presented to the mayor and council for 13 of the last 16 years, masking the city’s deficit spending.

In the private sector, when bookkeepers, accountants and others with fiduciary responsibility falsify documents, they get prosecuted. Anyone willing to hold their breath waiting for a public employee to get charged with any crimes in connection to this scandal?

rokemronnie on July 11, 2012 at 10:53 AM

All they need are some federal bailout funds. Should fix them right up. Then, they can still have their choo-choo. It’ll be great!

a capella on July 11, 2012 at 10:53 AM

I am wondering if the city/state will appeal to the federal government to seize the city assets and declare them federal areas (?) or jurisdictions within the state. I’m sure that there is some law preventing that from occurring but, what the hell is the law worth anymore……?

ted c on July 11, 2012 at 10:53 AM

I just waiting until California and another blue state go bankrupt.

Oil Can on July 11, 2012 at 10:53 AM

So can we expect some indictments soon? This sounds like some criminal fraud to me.

iurockhead on July 11, 2012 at 10:51 AM

The rules are different in Kalifornia..

Electrongod on July 11, 2012 at 10:53 AM

California housing crisis to follow? Who would want to move to one of these cities knowing that local taxes will have to necessarily skyrocket.

HoosierStateofMind on July 11, 2012 at 10:53 AM

and our union cannot become a suicide pact.

Weight of Glory on July 11, 2012 at 10:50 AM

There are lot of Dem votes in California.

Another reason to remove Bark – he’ll sign emergency grants to CA in perpetuity if he has to.

CorporatePiggy on July 11, 2012 at 10:53 AM

I’m sure this has been discussed before, but what will happen when Californa declares bankruptcy?

nobar on July 11, 2012 at 10:51 AM

Sell the entire mess to China, and throw in Wisconsin as a parting gift.

Bishop on July 11, 2012 at 10:54 AM

“For the last 16 years the budget prepared for the council showed the city was in the black,” Penman said, not naming those allegedly responsible. “The mayor and the council were not given accurate documents.”

Out here in the real world, this is called misrepresentation and fraud. If the Mayor and council were a board of directors, they would be fired immediately, sued out the wazoo, and would likely face criminal prosecution.
And it doesn’t matter if they were deceived (which is not believable), since the test is not only what you knew, but also what you should have known.

RadClown on July 11, 2012 at 10:54 AM

I’m sure this has been discussed before, but what will happen when Californa declares bankruptcy?

nobar on July 11, 2012 at 10:51 AM

California is too big to be allowed to fail. Regardless of who wins the presidency, they will be bailed out until the Federal Government can no longer afford it… at which point the nation as a whole will be in big trouble.

We’ve been kicking the can down the road, but it looks like we’ve run out of road.

rbj on July 11, 2012 at 10:53 AM

We’re about to kick that can right over the cliff.

Doomberg on July 11, 2012 at 10:55 AM

Hope and Change….
Remember that?
Good times.

Electrongod on July 11, 2012 at 10:56 AM

The private sector is generally more incompetent than the public sector.

crr6 on June 12, 2010 at 12:08 PM

Del Dolemonte on July 11, 2012 at 10:56 AM

Pretty soon, California will reach the level known as Too Big To Fail. And Jugears will make a bailout into a campaign schtick – look at all the jobs I saved.

platypus on July 11, 2012 at 10:45 AM

No federal bailouts!!!!
You’ve made your bed, CA. Time for a nap in it.

iurockhead on July 11, 2012 at 10:49 AM

Of course OweBama will bail out his biggest blue state and campaign contributor. I just want to know what he’ll dub that fiasco?

Too blue to fail?

Laura in Maryland on July 11, 2012 at 10:57 AM

California is too big to be allowed to fail.
Doomberg on July 11, 2012 at 10:55 AM

It MUST be allowed to fail.

Weight of Glory on July 11, 2012 at 10:59 AM

The private sector is generally more incompetent than the public sector.

crr6 on June 12, 2010 at 12:08 PM

Del Dolemonte on July 11, 2012 at 10:56 AM

Miss her stupid comments…

I wonder if she graduated from Leach School?

Electrongod on July 11, 2012 at 10:59 AM

City Atty. James Penman said city budget officials had falsified documents presented to the mayor and council for 13 of the last 16 years, masking the city’s deficit spending

…and whose in jail?…oh wait!…they’ll get to retire on a pension with medical…never mind!

KOOLAID2 on July 11, 2012 at 11:00 AM

It MUST be allowed to fail.

Weight of Glory on July 11, 2012 at 10:59 AM

I agree that it must, but it won’t.

Doomberg on July 11, 2012 at 11:01 AM

I’m sure this has been discussed before, but what will happen when Californa declares bankruptcy?

nobar on July 11, 2012 at 10:51 AM

Well, the state can’t actually do that. But we’ve already had situations where the state paid it’s debts in IOUs.

Eventually the money will run out and they’ll have to stop paying somebody – bond holders, union thug pensions, teachers, whatever.

It won’t be pretty.

peski on July 11, 2012 at 11:01 AM

Wait until California decides to build high speed rail to Hawaii.

Windsweeping on July 11, 2012 at 11:02 AM

No way the feds are bailing out California. It will need to go into BK.

Oil Can on July 11, 2012 at 11:02 AM

The city San Bernardino is 10 miles in that direction. (pointing north of my chair) People in my city do not go there. Unless, of course you want to get mugged and murdered.
That city has been a cesspool for decades.

kh6zv9 on July 11, 2012 at 11:02 AM

It doesn’t help that the feds and the federal courts have put agriculture out of business in the central valley.

Blake on July 11, 2012 at 11:03 AM

the third state in California in the past two weeks to do so

While California is, in many ways, a country unto itself, technically this is incorrect.

nukemhill on July 11, 2012 at 10:47 AM

Another country? Try another REALITY!

pilamaye on July 11, 2012 at 11:04 AM

No way the feds are bailing out California. It will need to go into BK.

Oil Can on July 11, 2012 at 11:02 AM

It SHOULD go into bankruptcy, but it won’t be allowed to. Regardless of who wins the 2012 elections, the Feds will keep giving “emergency loans” of the type that are being given to Greece.

Doomberg on July 11, 2012 at 11:04 AM

I get the feeling the approval of the high speed train was just to get the $3 Billion from the Fed.

They need the cash so bad right now, they’ll say anything. I doubt this train will be built.

This is just an inkling of how the Democrats is going to get the Federal Government(ie, you and me) to bail out CA.

When CA files bankruptcy:

Pension funds cut? Nope, the Fed will take over and ensure every dime.

Massive layoffs? No worries, lots of Federal programs to ease the pain.

Millions on Medicaid? Fed’s got that covered to.

Roads Fund Raided? That’s a gimmie. Fed throws billions in apporiations.

Still not enough cuts? Stimulas/Porkulas round 2! More tens of billions to CA so they really don’t have to make the real tough choices, like eliminated collective bargaining.

The responsible citizens and States will be bailing out the irresponsible.

WisRich on July 11, 2012 at 11:04 AM

Oblivion

LOL picture and caption!

petefrt on July 11, 2012 at 11:05 AM

Just increase cigarette taxes by 100,000%, isn’t that how they usually do it?…

Pest on July 11, 2012 at 11:05 AM

I thought moon beam would lead them out of the wilderness.

derecho on July 11, 2012 at 10:45 AM

He did. Out of the wilderness, into the desert.

Or to put it another way, out of the frying pan, into the inferno.

pilamaye on July 11, 2012 at 11:05 AM

It doesn’t help that the feds and the federal courts have put agriculture out of business in the central valley.

Blake on July 11, 2012 at 11:03 AM

Don’t you mean the environmental groups backed by the courts?

upinak on July 11, 2012 at 11:05 AM

As far as California education goes, unfortunately most of that is the UC and CSU systems reacting to free-market pressures. Private universities started offering juice bars etc. a long time ago, and the public universities need to offer them to stay competitive. Same with facilities – I went to USC (private university in LA) for four years and every. single. year. there was always construction going on. Same with courses – 17 year old high school juniors and seniors are more enamored with short-term gain (i.e. interesting) novelty courses than long-term gain (i.e. employability-boosting) economics and mathematics courses when they decide to look for colleges. And of course, once they get to colleges, those novelty courses are usually pretty easy, boosting the precious GPA’s that supposedly help you for that first thing right out of college.

Same thing as administrator salaries. Why is it appropriate for conservatives to defend high executive pay for private corporations but not for public institutions? Private corporations pay high executive salaries because that’s what it costs to get high performing or at least competent executives (2008 Wall Street aside…). Well, higher education works the same way – competent administrators cost a lot of money.

Rhetoric that administrators ought to be paid less is ominously reminiscent of Marxist calls for equality in compensation…

What’s the real problem with higher education? That the entire system has lost that “comprehensive education” focus. We wouldn’t care about facilities costing millions and juice bars if the degrees actually lead to employment. You get that focus back by stopping to confuse public universities with their private competition.

solatic on July 11, 2012 at 11:06 AM

I get the feeling the approval of the high speed train was just to get the $3 Billion from the Fed.

They need the cash so bad right now, they’ll say anything. I doubt this train will be built.

This is just an inkling of how the Democrats is going to get the Federal Government(ie, you and me) to bail out CA.

When CA files bankruptcy:

Pension funds cut? Nope, the Fed will take over and ensure every dime.

Massive layoffs? No worries, lots of Federal programs to ease the pain.

Millions on Medicaid? Fed’s got that covered to.

Roads Fund Raided? That’s a gimmie. Fed throws billions in apporiations.

Still not enough cuts? Stimulas/Porkulas round 2! More tens of billions to CA so they really don’t have to make the real tough choices, like eliminated collective bargaining.

The responsible citizens and States will be bailing out the irresponsible.

WisRich on July 11, 2012 at 11:04 AM

Excellent post, I agree with virtually everything here. The $3 billion “railway money” is a stealth bailout. That isn’t going to work for long though; the Feds will soon step in with a formal bailout.

Doomberg on July 11, 2012 at 11:06 AM

Does that mean the cancellation of a proposed second High Speed Railroad which connects San Bernadino and Death Valley?

MaiDee on July 11, 2012 at 11:07 AM

if only they had protected that little delta smelt fishy, then none of this would’ve happened…….er.

ted c on July 11, 2012 at 11:07 AM

Electrongod on July 11, 2012 at 10:59 AM

well actually i would agree w/ that statement in regards to this story. these govt officials had to be highly competent to pull off this level of fraud for 16 years!!

chasdal on July 11, 2012 at 11:08 AM

But wait! What about all those Hollyweird celebrity types who have been scolding the rest of US for the last several years how we are all greedy and should be handing over our money to the government! Why aren’t any of them out there right now, gleefully handing over truckloads of their vast fortunes into California’s bottomless coffers so as to save their beloved state from financial clusterf**kdom?!!!

pilamaye on July 11, 2012 at 11:08 AM

No worries. Governor Moonbeam’s high speed rail will keep these California cities from going bankrupt because the whole state will be bankrupt.

ObamatheMessiah on July 11, 2012 at 11:08 AM

The responsible citizens and States will be bailing out the irresponsible.

WisRich on July 11, 2012 at 11:04 AM

Now we’ll know how Germany feels!

Deano1952 on July 11, 2012 at 11:11 AM

Just waiting for some of the East Bay cities like Richmond and Oakland to go under.

I wonder if they’ll keep that bridge open…

I hope not…

JohnGalt23 on July 11, 2012 at 11:15 AM

They are the Cylons Liberals and they have a plan.

banzaibob on July 11, 2012 at 11:15 AM

Doomberg on July 11, 2012 at 11:04 AM

I think there is no desire in a Republican run federal government (after the November elections) to bailout California. It going to need to layoff 100,000 to 200,000 employees. Maybe more. And the retirement age will have to change to 67.

If California gets bailout, then no state will worry about their budgets. California needs to be taken to the woodshed.

Oil Can on July 11, 2012 at 11:16 AM

California is too big to be allowed to fail. Regardless of who wins the presidency, they will be bailed out until the Federal Government can no longer afford it… at which point the nation as a whole will be in big trouble.

There is a lot of wealth in the movie and TV industry there. I think if States can act as a “testing ground” of how public policy would operate on the federal level it would be a wonderful experiment to raise the taxes to whatever level is deemed needed by the state government of California on all those residents making over $250,000. They could continue to tax those people at higher rates as more and more communties file for bankruptcy. I bet the economy in California would take off and they would be awash in prosperity. I am sure the wealthy actors, actresses, directors, producers would see the merits in this proposal and never once think of claiming primary residency in, oh, let’s say Montanna or elsewhere.

DaveDief on July 11, 2012 at 11:16 AM

$100 billion for a train that nobody, not even the liberals, really want.

Unfreakingbelievable…

JohnGalt23 on July 11, 2012 at 11:17 AM

The outside auditors figure to have some issues arise from this, don’t you think?

California does require independent auditing of governmental bodies, doesn’t it?

krome on July 11, 2012 at 11:17 AM

“I know how to fix this problem. A big, Fast Train!!!!!!” Gov. Brown

dirtseller on July 11, 2012 at 11:18 AM

Its not as if there haven’t been warnings.

Before, I thought with enough dire consequences even democrats would be forced to slim down but now the flipp’n liberal loons aren’t just sending the state off the cliff but there’s a launch ramp at the edge and the state is going to catch some air before looking down to see the rocky bottom far below. The view coyote has seen so many times.

Vallejo going broke wasn’t enough, Stockton going broke wasn’t enough, Mammoth Lakes going broke wasn’t enough and San Bernardino won’t be either.

California is proof idiots really can be in charge.

Speakup on July 11, 2012 at 11:18 AM

I guess the stimulus money can only take you so far, then your on your own. Good luck California.

DDay on July 11, 2012 at 11:19 AM

And yet, the margin by which Californians keep voting Democrat keeps getting wider and wider every four years:

http://piqscore.com/california/

As a conservative living in California, I have to ask: cen we just punt, and give California to Texas?

VastRightWingConspirator on July 11, 2012 at 11:19 AM

Electrongod on July 11, 2012 at 10:59 AM

…what would minnesoturd think? …I thought he might be a Horace sock puppet…but Bmore thought otherwise…sure reminds me of him…nuts one minute…ok the next!

KOOLAID2 on July 11, 2012 at 11:19 AM

You guys are not giving the Democrats and socialists that run this state enough credit. Just think how hard it is to take a huge economy, in a place that God has given vast resources and a magnificent climate and run it totally into the ground. That takes a lot of hard work and determination.

dirtseller on July 11, 2012 at 11:20 AM

Can’t wait for the liberal California judges to tell bankrupt cities that they can’t renegotiate union contracts and that they must honor gold-plated union retirement plans.

gwelf on July 11, 2012 at 10:49 AM

That’s about to happen in Scranton, PA, where the city is so bankrupt all employees’ pays (police and fire dept. included) are cut to minimum wage by order of the mayor. Instantly, three unions filed in Federal court against it.

Problem is, the city is broke and it’s impossible to squeeze blood from a stone.

Liam on July 11, 2012 at 11:20 AM

Sad…but predictable

Glad I live in Texas

workingclass artist on July 11, 2012 at 11:21 AM

I was watching one of those business shows on Fox a few years back and Wayne Rogers had a great idea. Let’s change how student loans work! If a student does not pay back their loans, then the University should take the hit for at least a portion of that loan. I would say 50%, 75%, or even 100%, but that is just me. I blame these universities for a lot of the issues. Kids go to college and should return as adults. Instead they go to college and return as babies with no skills to make money and no common sense. The only thing they learn is that they should always vote Democrat.

jeffn21 on July 11, 2012 at 11:22 AM

If California declares bankruptcy and the federal government bails it out, shouldn’t it then be put under receivership to a state that actually knows how to run a government?

dirtseller on July 11, 2012 at 11:22 AM

Couldn’t happen to a nicer bunch.

San Berdoo’s mayor and city council were recently floating the idea of performing eminent domain on a bunch of underwater houses and then unilaterally revaluating the mortgage amount to the “correct” amount of the property.

They should be tarred and feathered for even suggesting that, as that’s Zimbabwe-style banana republic crap right there.

teke184 on July 11, 2012 at 11:22 AM

That’s about to happen in Scranton, PA, where the city is so bankrupt all employees’ pays (police and fire dept. included) are cut to minimum wage by order of the mayor. Instantly, three unions filed in Federal court against it.

Problem is, the city is broke and it’s impossible to squeeze blood from a stone.

Liam on July 11, 2012 at 11:20 AM

I bet they have to raise taxes. That will really hurt our bottom line. We get all of our paper from Sabre in Scranton, they used be named Dunder Mifflin.

jeffn21 on July 11, 2012 at 11:23 AM

If California declares bankruptcy and the federal government bails it out, shouldn’t it then be put under receivership to a state that actually knows how to run a government?

dirtseller on July 11, 2012 at 11:22 AM

I’m curious as to how blatant the press will be about covering the story, if they do at all.

When Ford wavered on bailing out a near-bankrupt New York City in 1976, papers went with the headline of “Ford to New York – Drop Dead!”

Obama, OTOH, has had three cities in Cali and one in Pennsylvania, several of them major ones, declare bankruptcy and the states of Cali and Illinois are both swirling the drain.

teke184 on July 11, 2012 at 11:25 AM

I think there is no desire in a Republican run federal government (after the November elections) to bailout California. It going to need to layoff 100,000 to 200,000 employees. Maybe more. And the retirement age will have to change to 67.

If California gets bailout, then no state will worry about their budgets. California needs to be taken to the woodshed.

Oil Can on July 11, 2012 at 11:16 AM

I think the Republicans are going to look exactly like Germany’s Merkel does with Greece; there will be a lot of dramatic negotiations and tough talk about fiscal responsibility, but at the end of the day they will keep giving money to California and other states in severe fiscal distress, largely for the same reasons.

What will probably happen is California will promise austerity in return for bailouts. Then, like Greece, California will fail to implement the needed austerity and keep demanding bailouts. There will be many excuses for the bailouts; such as “We can pick up votes there if we bail them out” and “We can’t just let people starve in the streets” and “If California fails, it could cause a domino effect and collapse all the states” and “We’re only trying to help the elderly, the poor, and the firefighters/police.”

But I am 100% convinced a major bailout is going to happen. No WAY does Romney or Obama just let them sink. No way.

Doomberg on July 11, 2012 at 11:28 AM

I bet they have to raise taxes. That will really hurt our bottom line. We get all of our paper from Sabre in Scranton, they used be named Dunder Mifflin.

jeffn21 on July 11, 2012 at 11:23 AM

The mayor wanted to raise taxes some time ago but the city council refused, from what I read. Since the article didn’t mention the political party of the mayor, I infer he’s a Democrat.

I can’t imagine those people didn’t see this coming. If they did, and obviously didn’t do anything about it, they’re inept and need to be replaced forthwith.

If they didn’t, they’re obviously inept and need to be replaced forthwith.

The mayor’s order only applies to city employees, so your provider should be safe for now. But, when the taxes skyrocket…

I imagine businesses will leave fast to set up shop in a new, better-managed place.

Liam on July 11, 2012 at 11:29 AM

As a conservative living in California, I have to ask: cen we just punt, and give California to Texas?

VastRightWingConspirator on July 11, 2012 at 11:19 AM

Well…Texans had a chat with California leaders to explain how common sense policies works down here
http://www.youtube.com/watch?v=Aot5si1w-bI

Hope Ya’ll elect more conservatives & regain your beautiful state with creative conservative policy decisions.

We’re rootin’ for ya

workingclass artist on July 11, 2012 at 11:30 AM

jeffn21 on July 11, 2012 at 11:22 AM

gov’t guarantees are the reason we have things like art history, women’s studies, etc. if students had to go to private lenders to get money there is no way in blazes a bank would give them money for worthless degrees like that. and under your suggestion schools wouldnt offer them since they would bear some responsibility for giving degrees that offer no ROI.

chasdal on July 11, 2012 at 11:30 AM

California 2010…
“We don’t need no Stinking Republicans”

jaydee_007 on July 11, 2012 at 11:31 AM

jeffn21 on July 11, 2012 at 11:23 AM

that was a good company once upon a time. but they had that scandal w/ ryan howard and then promoted that tool andy bernard to branch manager. i doubt they last much longer.

chasdal on July 11, 2012 at 11:32 AM

Can’t wait for the liberal California judges to tell bankrupt cities that they can’t renegotiate union contracts and that they must honor gold-plated union retirement plans.

gwelf on July 11, 2012 at 10:49 AM

Good to see you survived the massacree.

We need to think through a process NOW for a state bankruptcy before one suddenly lands in our lap. Draconian terms are a must, if it’s a process loaded with trinkets and baubles from the feral gummint, it will just encourage more.

slickwillie2001 on July 11, 2012 at 11:34 AM

One word you will not find in that LA Times story:

“Democrat.”

Jim Treacher on July 11, 2012 at 11:37 AM

The sad thing about cities going bankrupt, and leaving liberals crying in their $10 lattes, is that it all could have been prevented. Except that Democrats are totally incapable of learning that, when you stick your hand in fire and it burns, you don’t do it again.

Worse, the people voted into office those who ruined their city;’s finances will vote for them again, believing the tried-and-true lie that everything would have been fine if ‘Republicans weren’t in the way’.

Pffft!

Liam on July 11, 2012 at 11:39 AM

Can’t wait for the liberal California judges to tell bankrupt cities that they can’t renegotiate union contracts and that they must honor gold-plated union retirement plans.

gwelf on July 11, 2012 at 10:49 AM

Good to see you survived the massacree.

We need to think through a process NOW for a state bankruptcy before one suddenly lands in our lap. Draconian terms are a must, if it’s a process loaded with trinkets and baubles from the feral gummint, it will just encourage more.

slickwillie2001 on July 11, 2012 at 11:34 AM

Problem being that, per the Cali constitution, those retirement bennies are sacrosanct and the 9th Circus has upheld appeals on the matter.

When Stockton went bust a few weeks ago, someone in the thread noted another Cali city which went bankrupt a few years ago and ended up paying MORE of a percentage in bennies than before because of that state’s constitution saying “You can’t cut those.”

teke184 on July 11, 2012 at 11:39 AM

If Romney is elected President, can California be sold to Bain Capital? We need top-down reorganization out here, but the shareholders (voters) sure aren’t going to do it. And even if voters wake up to what’s going on, the unions, with their bought and paid for judges, won’t allow it to happen anyway.

Left Coast Right Mind on July 11, 2012 at 11:41 AM

If California declares bankruptcy and the federal government bails it out, shouldn’t it then be put under receivership to a state that actually knows how to run a government?

dirtseller on July 11, 2012 at 11:22 AM

Not under another state, but under a federal bankruptcy judge who appoints a management team. The governor remains, largely powerless. The state constitution is put on ice. The legislature and all staffs are wiped clean. New elections after it emerges from bankruptcy.

If the legislature KNOWS that their cushy jobs go poof, they’ll find a solution.

slickwillie2001 on July 11, 2012 at 11:41 AM

The bankruptcy might also allow them to impose new concessions on the PEUs

Hahahahaha!!! Who knew that Ed was a comedian!

Just wait, LA won’t be far behind. And Moonbeam Brown’s “legacy” won’t be The Bullet Train to Nowhere, it will be “the governor of the 1st state to declare bankruptcy”.

GarandFan on July 11, 2012 at 11:41 AM

jeffn21 on July 11, 2012 at 11:22 AM

gov’t guarantees are the reason we have things like art history, women’s studies, etc. if students had to go to private lenders to get money there is no way in blazes a bank would give them money for worthless degrees like that. and under your suggestion schools wouldnt offer them since they would bear some responsibility for giving degrees that offer no ROI.

chasdal on July 11, 2012 at 11:30 AM

Well…Art History is not a worthless degree, although most at the top level are overpaid in the areas of museum administration.

Art Historians consult on Art Restoration/Conservation projects like cleaning and repairing the US Capital Dome or the Sistene Chapel, Restoring DaVinci’s Last Supper etc…

A civilization absent a dynamic and thriving culture & reverence for history resembles…Cuba or NK

No reason to throw the baby out with the bath water imho…just a bit of balance

workingclass artist on July 11, 2012 at 11:41 AM

MKH presently ripping some Demo campaign flack to shreds on Fox News.
Tiny little shreds.

novaculus on July 11, 2012 at 11:42 AM

No worries, gay marriage will fix all of this.

rockmom on July 11, 2012 at 11:42 AM

We need to think through a process NOW for a state bankruptcy before one suddenly lands in our lap. Draconian terms are a must, if it’s a process loaded with trinkets and baubles from the feral gummint, it will just encourage more.

slickwillie2001 on July 11, 2012 at 11:34 AM

Totally in agreement!

First up for me is that CA can have representation in Congress–be allowed floor time for statements and all. But their Reps and Senators are not allowed to vote.

Next, if their fiscal house isn’t in order come the next presidential election, their Electoral votes are not counted.

Liam on July 11, 2012 at 11:43 AM

California does require independent auditing of governmental bodies, doesn’t it?

krome on July 11, 2012 at 11:17 AM

I was upper level management for a local California municipality for close to thirty years and underwent an independent audit each and every one of those thirty years. Given the level of financial participation at the local, state, and federal level (generally speaking; 5%, 25%, & 70% respectively on average) in capital projects, the state and the fed built hardcore preventative measures into the grant funding mechanism that require comprehensive independent audits to protect investment.

“For the last 16 years the budget prepared for the council showed the city was in the black,” Penman said, not naming those allegedly responsible. “The mayor and the council were not given accurate documents.”

Given the audit experience I encountered, I can see no way that this could have happened the way Morris and Penman are characterizing it.

oldfiveanddimer on July 11, 2012 at 11:45 AM

Well…Art History is not a worthless degree, although most at the top level are overpaid in the areas of museum administration.

workingclass artist on July 11, 2012 at 11:41 AM

I don’t think it’s meant as an attack on the major itself.

It’s just an example of a degree where the number of people who have one far outstrips the actual demand for it in the field.

In my circle of college friends, for instance, there were lots of people who got degrees in Radio-Television-Film who never did anything related to the actual field their degree was in. That was the opposite of what happened with ones who got degrees in business, computers, hospitality management, etc.

teke184 on July 11, 2012 at 11:47 AM

Comment pages: 1 2