Third Calif. city files for bankruptcy protection

Jim Penman, city attorney for San Bernardino, Calif., answers questions July 11, 2012, during a news conference to discuss the city's bankruptcy. AP Photo/The Sun

(CBS/AP) SAN BERNARDINO, Calif. - San Bernardino officials filed an emergency petition for Chapter 9 bankruptcy in response to the $45.8 million budget shortfall the city faces this year, making official a move the City Council approved last month.

Interim City Manager Andrea Travis-Miller said Tuesday's filing won't affect essential service to the community, and there are no immediate reductions or changes planned.

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Travis-Miller said city officials are working on a plan for the city's operational budget during bankruptcy, and once the plan is complete reductions may occur.

Travis-Miller hopes to submit a plan for the City Council's consideration within the next three weeks.

The city of 210,000 people declared a fiscal emergency July 18, becoming the third California city to declare insolvency this year. In June, Stockton and Mammoth Lakes also declared bankruptcy.

San Bernardino has nearly 16 percent unemployment, CBS News correspondent Ben Tracy reported last month. The foreclosure rate is three times the national average.

(Watch Tracy's story at left)

"We have a host of our residents who are not working, not paying taxes, don't have disposable income so they are not shopping," Mayor Patrick Morris told Tracy. "That's a problem for us."

Morris, however, was optimistic that online retailer Amazon was about to open a big warehouse in San Bernardino, which was expected to create 1,000 jobs.


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