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Mayor: 'Perfect Storm' Led To San Bernardino Bankruptcy

SAN BERNARDINO (CBS) — The mayor of San Bernardino on Wednesday blamed the city's bankruptcy filing on an economic "perfect storm" as officials warned of widespread budget cuts.

KNX 1070's Jon Baird reports the city is looking for someone to blame after becoming the third California city in less than two weeks to file for bankruptcy.


Facing a $46 million budget deficit and an empty reserve fund, San Bernardino has joined Stockton and Mammoth Lakes in filing for Chapter 9 bankruptcy.

Acting Assistant City Manager Gwendolyn Waters said the City Council voted 4-2 in favor of the move in the hopes of buying some time.

"It allows us to put off some payments so that we can make payroll and apply our cash to more immediate concerns right now," said Waters. "There are going to need to be cuts to police and fire, who are the biggest part of the city budget."

Mayor Patrick Morris attributed the budget shortfall to a steep decline in sales and tax revenue.

"We've hit basically a perfect storm, what with the economic recession, with the meltdown of our nation's economy, the massive loss of both sales and property tax which is essentially the foundation stones for city services," said Morris.

Critics have alleged Morris himself mismanaged the budget and used city resources for pet projects including a brand-new movie theater.

But the mayor told KNX 1070 NEWSRADIO he had no knowledge about allegations by City Attorney James Penman that budget officials falsified documents and that officials were closely monitoring the city's fiscal health.


"We were well aware during my administration about the fragility of our situation financially, particularly post the economic meltdown of our nation's economy," said Morris, adding that "remarkably generous labor contracts" also played a role in the city's fiscal meltdown.

Despite the recent bankruptcies in San Bernardino and other cities nationwide, some have raised the prospect of Los Angeles itself filing for bankruptcy.

The city's budget chief warned a few months ago that Los Angeles could face bankruptcy unless taxes are raised and cuts are made.

But Mayor Antonio Villaraigosa has already said the city would not go broke under his watch, a sentiment echoed on Wednesday by City Councilman Tom LaBonge outside City Hall.

"I know the structure of the city has a lot of eyes on this, and Los Angeles continually has stayed away from the challenges that municipalities somewhat smaller in size have," said LaBonge.

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