Another California City Heads Towards Bankruptcy

From: Ronald S.
Sent on: Sunday, November 17, 2013 10:00 PM



Another California City Heads Into Bankruptcy

California, with its high taxes and regulations, is the leading state when it comes to municipal bankruptcies. With out of control government spending and unionism, California has taxed the middle class into oblivion. Middle income Californians are leaving the state in droves, leaving municipalities with decreasing sources of revenue.

But these tax, regulation and spending policies, that destroy opportunity, are not just confined to the state government. Cities all across the state also suffer from these misguided policies which have made California the king of municipal bankruptcies.

In the last six years four cities in California have filed for bankruptcy. Vallejo in 2008 and Stockton, Mammoth Lakes and San Bernardino in 2012. In all these cases out of control municipal government spending on municipal workers' pay and pensions and wasteful municipal projects combined with increased taxes have led to businesses and middle class families leaving these cities, with the ultimate result being bankruptcy protection.

Because of state budget problems, California cut redevelopment funding that many poorly managed cities across the state began to rely upon, further exacerbating their problems.  With less revenue and increased union benefit obligations, bankruptcy has become the only way for many of these cities.




San Bernardino saw its pension fund obligation increase from $5 million in 2000 to $23 million when it filed for bankruptcy in 2012. And even though the city is the largest transportation junction in southern California with
the two major railways that connect the major ports on the west coast with the rest of the country, three major highways and thousands of bridges, the city still could not make ends meet. So much for President Obama's roads and bridges creating economic growth and opportunity fantasy. San Bernardino is a prime example of government destroying opportunity.

Today, the resort town of
Hot Desert Springs near Palm Springs has declared a fiscal emergency because of rising pension and salary costs and the elimination of redevelopment funds from the state. Fiscal emergency is the first step required by the State of California before a municipality can file for bankruptcy. Hot Desert Springs will be the fifth city in California to file for bankruptcy in six years. 

Not far behind Desert Hot Springs are several more California cities. San Jose has seen its pension fund obligations
soar from $73 million in 2001 to $245 million last year and is facing major fiscal problems. Oakland is in deep trouble as its pension obligations and union contracts are causing its budget deficit climb from $19 million this year to $35 million or more in 2015. Fresno is facing similar problems.




Compton and Vernon are two more cities facing bankruptcy, in both cases because of rampant corruption.
Standard & Poor's down graded Compton and then suspended its credit rating entirely when was impossible to complete an audit because of allegations of fraud and abuse of public funds and non-response by city officials to auditors' questions. Vernon, another hot bed of corruption, was audited by the state. The audit found Vernon operated with annual deficits for 20 years, while increasing spending on managers' salaries. The audit found loose contracting practices with fraud in 21 of the 25 city contracts examined.

Other cities in deep financial trouble in California are Azusa, Monrovia and Hercules.

California is a prime example of government gone wild, a one party state of tax and spend progressives. Politicians and bureaucrats in California believe that more government and higher taxes are the answer to state and local problems. These politicians would be better served by listening to one of the state's former governors who said, "Government is not the solution to our problem, government is the problem." What do you think?

Ron
 



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