Having set a fiscal emergency and headed for a bankruptcy filing, San Bernardino must make painful cuts to survive the next month.

BY IMRAN GHORI
STAFF WRITER
ighori@pe.com

Published: 19 July 2012 08:32 PM

A day after declaring a fiscal emergency, San Bernardino city officials were clustered in meetings Thursday, July 19, working on plans to keep the city operating until it files a bankruptcy petition.

Interim City Manager Andrea Travis-Miller and Finance Director Jason Simpson will present a short-term budget plan to the City Council on Tuesday, city spokeswoman Gwendolyn Waters said. It’s not clear yet how long a period the plan will cover, only that it will determine spending until a full fiscal year’s budget is adopted.

She said the council will need to make immediate cuts to get through the next 30 days — the amount of time it is expected for City Attorney Jim Penman to put together the Chapter 9 petition. City officials expect demands from creditors to continue to mount until it is filed.

“The meeting on the 10th already started the ball rolling,” Waters said, referring to a meeting last week when the council first took the steps to seek bankruptcy protection.

Council members agreed to the move as a means to hold off creditors due to an immediate cash-flow crisis and a $45.8 million shortfall. The city’s reserves are depleted, its credit line closed and vendors are demanding cash payments.

The city has not stopped providing any services and “is committed to continuing to provide all essential services throughout the bankruptcy process,” according to a statement from the city manager’s office.

But continuing to do so will be difficult, city officials say.

San Bernardino has about $9 million in cash on hand — enough for a month’s payroll — and has a $3.4 million payment on a pension obligation bond due today.

Just for July, the city is expected to run a $5.5 million deficit, followed by a $2.5 million deficit in August. Deep cuts will be needed, Travis-Miller has said.

Mayor Pat Morris said figuring out where to cut will be a “very difficult conversation.” Acknowledging the city’s insolvency was in some way the easy part, he said.

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