Ryan Hagen, Staff Writer
Posted: 08/31/2012 08:22:18 PM PDT
SAN BERNARDINO – The city filed documents Friday in U.S. Bankruptcy Court in Riverside to convince a judge that it could not provide essential services without bankruptcy protection, a point likely to be heavily contested over the next two months.
Creditors have until Oct. 24 to respond to the city’s eligibility papers and argue that San Bernardino has the ability and responsibility to pay those it owes money.
But the city’s $45.8million deficit – on top of an $18.2million cash deficit in the general fund, as little as $150,000 available citywide some days and an inability to borrow money – has already forced it to stop some payments, according to a declaration by Interim City Manager Andrea Travis-Miller.
“I believed that it was necessary for the city to defer and not pay millions of dollars of financial obligations in order to meet the August payroll and continue to operate and provide essential services to the city’s residents,” said Miller, who after receiving City Council authorization did defer those payments.
The apparent speed of the city’s slide into insolvency can partly be attributed to false reports by city staffers, wrote city Finance Director Jason Simpson.
Analysis done since he took over in May showed the fund balance, reported as $2 million, was in fact $1.2 million in June 2011 and would be negative $10.6 million by June 2012, Simpson said.
But the city’s situation didn’t spring up without any warning, Councilman Rikke Van Johnson said in a Friday interview.
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