California Bankruptcies May Increase Without Structural Changes

As the City of San Bernardino joins the ranks of Stockton and Mammoth Lakes as yet another California city seeking bankruptcy this year, are we witnessing a budding trend? Unable to meet its $45 million budget shortfall and nearly out of cash, leaders of the City of San Bernardino in July chose to seek bankruptcy. A complicated host of reasons lie behind what drove San Bernardino to that point, from the mortgage crisis to rising pension costs, and it's evident that these recently bankrupt cities are not unique.

The Planning Report interviewed Chris McKenzie, Executive Director of the California League of Cities, to discuss the long run fiscal challenges tied to mandatory spending that so many cities are grappling with across the country. McKenzie implies that without drastic changes, cities are so strapped that conditions may only continue to get worse for those teetering on the edge. As the state government in Sacramento seeks to contain its own deficits by tapping into revenue streams once held by local government, the California League of Cities argues that the state is handicapping important tools for sparking economic growth and stability.