A tale of three cities - Macleans.ca

A tale of three cities

A third California city goes broke. Are they flukes, or the first dominoes to fall?


A tale of three citiesLast week, San Bernardino, Calif., battered by the recession and facing a $45-million budget shortfall, became the third city in that state in two weeks to seek bankruptcy protection. By July 10, the city of 210,000 had just $150,000 left in the bank. It joins Stockton, which, in June, became the largest city in the U.S. ever to file for Chapter 9 protection. After years of lavish spending on luxury municipal projects, and a total debt that could reach US$1 billion, Stockton was unable to reach an agreement with creditors and unions on a plan to close a $26-million budget shortfall. Tiny Mammoth Lakes has also gone belly up, largely because it could not pay the $43 million it owed after losing a legal battle with a property developer. If there is a silver lining in all this, it is Vallejo’s recent emergence from bankruptcy, three years after filing. For the time being, though, Californians will remain on bankruptcy watch.


‘We’ve hit a wall’

–Stockton Mayor Ann Johnston

The city spent millions on a riverside promenade, sports arena and hotel. Both the arena and hotel are now vacant.

Two police officers who patrol the crime-ridden downtown only kept their jobs because of a private donation

San Bernardino

The city is in ‘for a world of hurt’

–San Bernardino Mayor Patrick Morris, says he did not learn of the city’s dire financial state until last month

City officials may have falsified documents for 13 of the last 16 years, reporting budget surpluses and masking a ballooning deficit

The mayor and his wife spent last Saturday weeding a park. City parks are in disarray after the department budget was cut in half.

Mammoth Lakes

‘I wish this hadn’t happened. But it’s not the way the cards fell for us.’

–Mammoth Lakes Mayor Matthew Lehman

A poor snow season chased off tourists, hurting the small ski town’s finances, but a $43-million judgment pushed it over the edge

Kids are selling lemonade, hoping to save June Mountain, a nearby ski hill and major employer, which closed indefinitely in June

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