How the City of San Bernardino Went Bankrupt

We commend to our readers a special report published by Reuters, explaining how San Bernardino rendered itself insolvent, and had to file for bankruptcy. Read Tim Reid, Cezary Podkil and Ryan McNeill, How a Vicious Circle of Self-Interest Sank a California City, November 13, 2012 — click here. If you have an interest in municipal financing (and municipal misrule), this report is must reading.

Simply stated, these folks have been shoveling money at municipal unions, and allowing chosen municipal employees, notably police and firefighter retirees to knock off work while in their fifties at large six-figure pensions, plus generous accumulated sick time, etc. We urge you to click on the link above and actually read this report. It’s one of those things that defies credulity, but Reuters is a major, established news service, and there is no reason to believe that it is misreporting this situation.

Incidentally, we wrote on this subject on October 10, 2012. We were replying to an absurd op-ed piece by a former Mayor of Ventura who was peddling the notion that municipal bankruptcies are caused, not by reckless municipal spending, but by — are you ready? — sprawl. The less said about that theory, the better, but you may want to check out our response to it in the form of an op-ed piece of our own, appearing in the Los Angeles Daily Journal of October 25, 2012. It explains how sprawl came about, and you won’t be surprized to learn that the government had a hand in it big time, by providing incentives in the form of low-cost home financing, favorable tax laws, suburban highways, etc. You could say that the government — national and local — de facto bribed the urban population to move out of cities and create suburban sprawl, which is another story that you should read if you haven’t already.

Anyway, do read that Reuters report. It demonstrates that there are no limits to human greed and recklesness. The terrifying question is how a city could possibly descend to such low levels of misgovernance. But it evidently did.

 

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