Wednesday, July 11, 2012 – 11:30 p.m.
Could more Inland cities be on the road to municipal bankruptcy?
The answer is yes.
Like San Bernardino, other fully developed Inland cities are likely headed for rough financial waters.
And they know who they are!
With the inability to attract new businesses or redevelopment of the magnitude necessary to generate new revenues. Cities are hopelessly trying to figure out ways to cajole their electorate into granting higher revenue by way more taxes and fees.
A difficult and nearly impossible task in California. A state that recklessly and routinely blows money at the drop of a hat.
Several Inland cities, such as Grand Terrace, Rialto, Colton and Barstow, are woefully unprepared to deal with what’s next to come.
Obstacles such as the next foreclosure wave and higher pension costs will ultimately strangle the smaller less affluent locales.
As California’s state government bleeds away more and more revenue from cities and counties, the pressure will mount.
At this point the city of San Bernardino, which has announced an intent to file for bankruptcy protection, could shutter every department, except police and fire, and still have no money.
The big question is will local governments find bankruptcy a convenient way out, and ignore the long-term financial repercussions of lost credibility, higher borrowing costs and tight credit.
Municipal bond holders will definitely demand a higher risk return for California debt. That’s if they buy it at all.
The clock is ticking on the next time bomb.