Dan Walters

By Dan Walters
Published: Wednesday, Aug. 8, 2012 – 12:00 am | Page 3A

The back-to-back bankruptcy filings of Stockton and San Bernardino, following Vallejo’s insolvency a few years earlier, have sparked finger-pointing about causes and speculation about whether more cities may go under.

Those on the political right say the bankruptcies resulted from local politicians’ caving in to pressure from unions for higher pay and more generous pension and health benefits.

Those on the left – unions particularly – contend that the collapse of the real estate market, caused by rapacious Wall Street bankers, is to blame.

The reality is more nuanced.

All three cities on the suburban peripheries were facing urban decay. When the housing boom brought revenue surges, their leaders assumed, irresponsibly, that the windfalls would never end.

They overspent, not only on better pay and benefits for their employees, but in Stockton’s case, on massive loans for image-improving civic projects.

When the housing bubble burst, they covered up the shortfalls with creative bookkeeping. Eventually, reality caught up with them.

San Bernardino’s leaders were especially creative, perhaps illegally so.

And they’ve also blamed the state’s elimination of local redevelopment agencies and seizure of their assets.

It’s apparent, however, that San Bernardino and many other cities had been using redevelopment funds improperly, if not illegally, to fill holes in their budgets, rather than for eliminating urban blight.

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