Pensions put squeeze on San Bernardino
LOS ANGELES — San Bernardino, the third California city to seek bankruptcy protection since June, is saddled with huge pension debt and will produce details of those unfunded obligations within 15 days, its mayor said yesterday.
The city filed for bankruptcy protection on Wednesday, citing over $1 billion in estimated liabilities and up to 25,000 creditors, many of whom are the city’s own employees.
The city, 65 miles east of Los Angeles, also listed estimated assets as over $1 billion.
Patrick J. Morris, San Bernardino’s mayor, said in a telephone interview that the bulk of the city’s debt was due to “unfunded liabilities related to pension and benefits” for the city’s employees, and “obligations to employee groups in labour contracts.”
In the past two months, the cities of Stockton and Mammoth Lakes have also filed for Chapter 9 bankruptcy protection, a special bankruptcy provision for municipalities.
Stockton, which like San Bernardino has suffered from the housing crash that was particularly acute in southern California, filed for bankruptcy in June, becoming the largest US city to do so.
Deep fiscal trouble
Other cities in California are also in deep fiscal trouble.
Richard Larkin, senior vice president and director of credit analysis at bond underwriting firm HJ Sims and an expert in municipal bonds, concluded in a recent study that “because of the fiscal environment in California … many of those defaults yet to come this year are likely to be in California.” (Reuters)