Let’s face it: bankruptcy is the worst option and the last choice for almost everyone. But in San Bernardino, the city council seems eager to jump at the chance to pass off their problems to bankruptcy lawyers.
This sentiment may seem harsh, but consider the whole picture.
By the admission of the city’s top staff and hired consultants, the storm that has brought San Bernardino into bankruptcy didn’t blow-in overnight, it brewed and built slowly over two decades. Then, in a single night’s agenda, with less than an hour of council discussion, they made their decision – bankruptcy.
The staff report? Virtually non-existent. The rationale? A 49-page report published the day before.
This begs the question: Where did the ‘leadership,’ ‘governance,’ or responsibility run to?
Across the state, local government officials and public servants show up each day and work to figure out solutions to their city’s troubles. Cuts, restructuring, outsourcing, revenue enhancements, fees – they all have their critics. Only fools try to please everyone. But the supremely foolish in San Bernardino ignored chance after chance to reform and improve. They put themselves in a position where bankruptcy was the first and only option.
San Bernardino faced years of deficit spending. It’s structural gap, however, was covered-up instead of addressed. The city sold assets, borrowed from city funds, borrowed from banks and bondholders, used one year’s surplus (now discovered to have been imaginary) to cover the following year’s deficit, and raided its reserves. And after years of these so-called solutions, the city was left with just $150,000 in the bank.
The city council members never broached real, long-term, and lasting solutions until they were facing the reality that they couldn’t cover two payrolls.
What happened to planning and governing?
If San Bernardino had seen the bankruptcy writing on the wall, they should have begun this process no earlier than four months ago. They should have looked forward and had the courage to say that they were in trouble – real trouble.
Four months ago, they should have begun a conversation with the public. As little as three months ago, they should have looked to the 60- or 90-day AB 506 process and began working with their creditors. While still unproven, perhaps it could have staved-off bankruptcy. It certainly would have helped them prepare for it.
Stockton’s decision to enter bankruptcy proceedings is no doubt controversial. But they did their due diligence and took a responsible path to that ultimate Chapter 9 filing. They went through the motions and took all the steps – including public discourse and the AB 506 process. They availed themselves of the processes that San Bernardino so wantonly disregarded.
As editor of this local government website, I am often looked to as an advocate of local governments. And when asked about California government by friends, colleagues, or family from other states, I often give the same answer:
While our state government might be epically bad, local government – where so much of our governance actually happens – is monumentally good. And I believe that local government does it right.
But San Bernardino did this wrong. And they did it wrong enough that it will be a stain upon those of us who believe in and work with local governments. This decision by that council will be a plague on all of our houses.