The path to bankruptcy just slowed some in San Bernardino, where the city council decided to delay a vote to declare fiscal emergency by 48 hours. The delay was to allow more time to gather information.
A formal declaration of a fiscal emergency is necessary if the city wants to avoid the AB 506 process. Before being approved by the Legislature last year, an “out” was written in that would allow a city to bypass the mandatory 60-day mediation process if it declared an emergency. However, emergency has a specific meaning, in this case the city risks insolvency and harm to its residents.
The decision whether or not to declare the emergency will be made on Wednesday.
From the Los Angeles Times:
The San Bernardino City Council postponed a vote Monday to declare a fiscal emergency, which would allow the city to move forward with filing for Chapter 9 bankruptcy protection without going through months of state-mandated mediation.
The city’s flirtation with bankruptcy began last week when the council confronted a fiscal report showing it faced a $46-million budget shortfall and might not be able to make its August payroll.
Read the full article here.