San Bernardino, after days of pondering its options, formally slipped into bankruptcy with a vote of its a city council, which declared a state of fiscal emergency and ordered the city staff to file the paperwork.
From The Sun's Ryan Hagen: "Many of those who spoke to the council said moving forward with bankruptcy was the only responsible position, but they criticized how the city has gotten to this point."
"This City Council and city councils before, they had their chance," said Roxanne Williams, a chemistry teacher and member of a new group called Save Our San Bernardino, or SOS. "We're taking the power from you. ...My question to you is as you're in conversation with the bankruptcy judge: When can we as the public put in our input? I have so many questions, I have so many suggestions, and I want to be heard..."
"The declaration of fiscal emergency, stating that without bankruptcy protection the city will be unable to meet its obligations within 60 days, allows officials to sidestep negotiations with labor unions and creditors, which would otherwise be required."
Meanwhile, the feds are auditing San Bernardino's books, a move that federal officials say is routine, although rumors are swirling because of earlier suggestions thyat budget numbers may have been falsified.
From The Sun's Andrew Edwards: "The U.S. Department of Housing and Urban Development is performing an audit of the city's use of federal grant dollars, the agency confirmed Wednesday."
"We do have an open audit," said Tanya Schulze, regional inspector general for audit at HUD's office in Los Angeles."
"San Bernardino, like many other cities, participates in HUD's community block grant program. The program is a means for cities to provide funding to myriad city projects or to local nonprofits. In San Bernardino, CDBG funding has been used for such projects as the East Side Skate Park or passed along to nonprofits like the Time for Change Foundation, which shelters homeless women."
Now, public attention is turning to Comption, which is speculating publicly that it may be forced into bankruptcy as well. Compton, like the three other cities that have dedclared bankruptcy in recent weeks, is a charter city. Is that fact significant?
From Tamara Audi, Bobby White and Max Taves in the Wall Street Journal: The last three large California cities to seek bankruptcy protection or announce they plan to had seen their housing values, tax revenue and employment crumble. They also have something else in common: They all are so-called charter cities."
"Now another California city, Compton, says it may have to file for bankruptcy by September. It, too, is a charter city. Some say that's no coincidence."
"Of the state's 482 cities, 121 have their own constitutions, or charters. That gives them more leeway in governing their affairs, including the freedom to set their own rules about elections, salaries and contracts."
Speaking of cities, the nation's largest public pension fund, CalPERS, says the cities should take of their own issues and stop blaming CalPERS for their problems.
From Reuters' Jim Christie: "At the end of the day, it's their decision," said Rob Feckner, the board's president."
"The fund, best known as Calpers, is the largest U.S. public pension system and manages retirement accounts for Stockton, Mammoth Lakes and San Bernardino."
"Stockton and Mammoth Lakes have filed for bankruptcy in recent weeks and San Bernardino's council is considering how their city should undertake a Chapter 9 filing to seek protection from creditors."
"Public pension costs are coming under increasing scrutiny and some local officials in California are blaming for the major financial problems facing municipalities."
Speaking of money, legislative workers received pay raises.
From Patrick McGreevy and Michael Mishak in the LAT: "The state Senate has provided raises of up to 5% to 559 of its legislative employees in the last year, even while the state was grappling with a financial crisis that resulted in pay cuts for most state workers starting this year."
"Assembly staffers also received raises since December, when roughly a quarter of employees received salary hikes. Most of the previous increases were between 3% and 5%, awarded to staffers who hadn’t received merit raises for at least three years. The Assembly did not immediately provide details of raises given since December."
"The Senate's merit raises cost taxpayers $1.5 million and took effect in the fiscal year that just ended July 1, according to Rhys Williams, a spokesman for Senate President Pro Tem Darrell Steinberg (D-Sacramento). Williams declined to immediately release a list of staffers getting raises, saying they would be posted on the Senate website in the next 24 hours..
“The numbers need to be viewed in the context of the last five years when salary costs haven’t risen,’’ Williams said. “In fact they are less.’’
Speaking of more money, UC's Board of Regents endorsed Gov. Brown's November tax initiaitve.
From Matt Krupnick in the Mercury News: "University of California leaders on Wednesday voted to endorse Gov. Jerry Brown's tax measure and promised not to raise tuition unless it fails in November."
"The Board of Regents approved the endorsement amid warnings that a 20-percent tuition hike may be inevitable if the tax fails. Freezing tuition would gain UC a $125 million reward from the state next summer if the taxes pass, but the measure's failure would trigger a $250 million budget cut for the 10-campus system."
"There is no way we will get through, if this tax measure fails, without a massive fee increase," said Regent Russell Gould. The board will discuss its contingency plans at a September meeting."
And from our "Lick the Envelope" file comes word that the United States Postal Service is set to default on billions of dollars in health fund payments. As they say at Fark, "Neither snow nor rain nor heat nor gloom of night" doesn't include "internet", "18th century technology" or "politics" does it?
"The $5.5 billion payment, which was deferred from the 2011 fiscal year, is due Aug. 1. The Postal Service is also scheduled to make a $5.6 billion payment for 2012 in September. A spokesman for the agency said that barring intervention from Congress, it would default on both payments."
“We are simply not capable of making either of these payments to the U.S. Treasury, in part or in full, while continuing to meet our other legal obligations, including our obligation to provide universal service to the American people,” said the spokesman, Dave Partenheimer."
"Missing the health care payment will not cause immediate disaster, nor will it affect current retiree benefits. The Postal Service will still be able to pay its employees and buy fuel for its trucks to deliver mail on time, postal officials said."