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For tattered San Bernardino, a bitter blow

The mass shooting in San Bernardino is the cruelest blow yet for a city already brought low by economic calamity.

In 2012, the city filed for bankruptcy, plunging a once prosperous community into a financial quagmire that led to deep cuts to essential services and employee benefits. At the time, it was the largest U.S. city to file for bankruptcy, surpassed only a year later by Detroit's landmark bankruptcy.

New details of San Bernardino shooting emerge 01:38

While many Americans are familiar with Detroit's boom-and-bust history, San Bernardino may be more of an unknown, a city of 215,000 residents about an hour's drive east from Los Angeles. Located in a region called the "Inland Empire," its top employers include the California State University system and the city itself. After the recession, the city fell on hard times, although many of its problems were due to what critics say was mismanagement by city officials.

While it's unlikely the terrorist attack will have a lasting impact on the city's economy, the massacre is another major psychological hurdle its citizens must overcome.

"Our reality was here even before the tragedy last week," said Miriam Nieto, 28, treasurer for the non-profit San Bernardino Generation Now, which aims to get younger residents involved in revitalizing the city.

After the Paris terrorist attacks, she said, "People were able to get out in to the streets and say, 'We're not afraid and we'll show it by going out to the cafes and bars, there will be concerts and all these things.' Here in San Bernardino, this happens, and we want to show we're not afraid, but how are we going to show we're not afraid and boost our economy if there's nothing for us to do? There are no cafes, no bars, no lively scenes. It's just going back to our own reality that San Bernardino is in bankruptcy."

San Bernardino's economic woes started decades earlier, as big employers such as Kaiser Steel and Norton Air Force Base closed, putting the city on a path that would see it devolve from a middle-class haven into one of the poorest cities in the country.

Even though it's close enough to Los Angeles to be considered a suburb, San Bernardino is a world away. While many of California's biggest cities have benefited from the ongoing economic recovery, San Bernardino hasn't experienced the same windfalls of rising property values and wages.

About one-third of its residents live below the poverty line, compared with some 16 percent of all Californians, according to data from the U.S. Census. Median household income hovers below $39,000, or 37 percent below the median earnings for households across the state.

Yet the victims of the terrorist attack are emblematic of the types of people working to improve the region's outlook: county employees and private sector workers, some who grew up in the region and others who moved there for professional opportunities.

While the city struggles to right itself, the county of San Bernardino remains in sound financial shape, according to Moody's, which in a 2013 note called it a "notable accomplishment given the challenges faced by California local governments."

So what happened to the city of San Bernardino? One of the poster children for its fiscal mess was a police officer who retired at the age of 59 in 2009, when his income topped $389,000 because of almost $200,000 in unused sick pay and about $44,000 for unused vacation time, according to Reuters. That was more than the city's entire budget for street sweeping, the newswire noted. While the payout was legal, some pointed to such generous compensation rules as one way the city had headed for financial disaster.

San Bernardino shooting reignites gun control debate 02:04

Yet there were other signs of fiscal danger, as well, including unfunded pension debt and San Bernardino relying on the now-defunct Lehman Bros. to borrow money to satisfy its retiree obligations. The city was spending more than it was taking in through taxes, a problem that only worsened when the recession hit.

Since 2012, the city has worked hard to patch its fiscal holes, taking steps that included cutting its police force and, earlier this year, proposing to cut health care for retirees. At the same time, there are signs of a renewal, such as the work being done by San Bernardino Generation Now to create "a new cultural identity" for the city.

Although she thinks about moving to a more vibrant city, Nieto believes San Bernardino has a bright future.

"We can't get any worse than where we are right now. We have to see some redevelopment. We have to see the politics changing and keeping the leaders accountable. That's what keeps me from not leaving San Bernardino," she said. "Eventually we will get there."

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