The San Bernardino, Calif., City Council voted Tuesday night to authorize a bankruptcy filing.
The vote gives City Attorney James F. Penman power to begin proceedings for Chapter 9 bankruptcy, which would free the city of much of its debt but maintain the mayor and council as decision-makers.
Without filing for bankruptcy, the city -- which has a deficit of $45 million -- would likely be unable to meet its Aug. 15 payroll, according to Penman.
Four council members voted for the authorization, with Councilmen Chas Kelley and Fred Shorett opposing it and Councilman John Valdivia abstaining.
All seven council members, city administrators and many members of the public said the decision was heart-wrenching.
"This is probably the hardest decision this council woman will ever have to make in this chair,' said Councilwoman Wendy McCammack.
"Philosophically, I'm against bankruptcy, but if this is the only way to save the city from long-term debt from which it might never recover ... it's the best choice."
Penman also said at the meeting that for 13 of the last 16 years, the council had been given falsified budget documents. Those documents said the city was in the black when, in fact, it had been deficit spending, he said.
That period covers the tenure of multiple city managers and sets of elected officials, but it predates Acting City Manager Andrea Travis-Miller and Finance Director Jason Simpson, whom he said discovered the discrepancy.
That revelation was part of the reason Valdivia said he was abstaining -- he didn't trust any of the information he was given.
"The taxpayers of this city have been duped, hoodwinked and misguided for the past several years," said Valdivia, who added that he was served only since March and should not be held responsible.
In a Twitter post sent during the meeting, he said neither massive city-supervised cuts nor bankruptcy were the right option, but did not say what he would do instead.
"I'm not convinced of either path for our city," he tweeted. "Wish to God there were other viable options. I'm not one to drink the Kool Aid."
In an earlier report to the council, Travis-Miller said the city has faced declining revenues and escalating retirement costs, with employee compensation accounting for about 75 percent of the city's general fund spending.
A bankruptcy filing would reopen negotiations on employee contracts but would not invalidate its pension payments, which Mayor Pat Morris and others have said are the main cause of the city's financial problem.
The filing would probably come in about 30 days, setting off a process of a year to 18 months, according to Travis-Miller.
San Bernardino would be the third California city to file for bankruptcy this year, following Stockton and Mammoth Lakes. In 2008, Vallejo filed for bankruptcy.
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