Ryan Hagen, Staff Writer
Posted: 06/24/2013 07:31:24 PM PDT
GRAND TERRACE — Tuesday’s vote on whether to declare a fiscal emergency might be a final chance to avoid a “death spiral,” as Mayor Walt Stanckiewitz said Monday, but it’s not unprecedented.
The question is which precedent it will follow.
Eight miles north of the 13,000-person bedroom community is San Bernardino, which declared a fiscal emergency in July 2012. In that case, the declaration allowed an insolvent city with a $45.8 million deficit to file for bankruptcy without meeting with all of its creditors as state law otherwise would have required.
San Bernardino officials say they’re now turning the corner, but Grand Terrace officials say that path — bankruptcy or something similar to it — is one they don’t expect to follow.
“We’re not in the hole,” Stanckiewitz said. “We’re trying to avoid a hole that’s right in front of us. Once we’re in that … it becomes a death spiral. We (wouldn’t) have money for the services a city is required to provide, and we don’t know if at some point the county comes in and says, ‘You’re done, we’re taking over.’ It’s never been done.”
But a declaration of fiscal emergency would allow Grand Terrace to put a utility users tax on November’s ballot. If voters then approve it, city administrators calculate the $1.5 million tax would put the city back on firm — if lower than traditional — financial footing.
To Rialto City Administrator Mike Story, Grand Terrace’s situation sounds like one his city faced — and escaped — just months ago.
The City Council declared a fiscal emergency last year after cutting everything but essential services, Story said Monday.
“It generates about $11.5 million for our general fund, 22 to 24 percent of operating budget of the city,” he said. “Without it, that would be pretty catastrophic.”
Rialto voters agreed, with 63 percent voting in March to extend the 8 percent tax. The city still faces a $2 million deficit as it prepares for next fiscal year, but unlike the $14 million deficit that would otherwise exist, that’s manageable, Story said.
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