As one of three California cities to file for Chapter 9 bankruptcy since this past summer, San Bernardino has been making waves in efforts to restructure and regroup. Having declared themselves financially insolvent just a few months ago, the City Council recently presented a plan to the bankruptcy judge they hope will gain approval in order to move forward.
Budget Plan Proposal
San Bernardino City Officials have bounced several proposals around in bankruptcy court aiming to resolve debt troubles. After a 5-2 vote of city approval to cut spending by eliminating extraneous spending and reducing costly services, the 30% budget reduction was hoped to save around $22.4 million.
Part of the budget balancing cuts include deferring payments to one of the city’s biggest creditors, CalPERS. Citing the payments to CalPERS are behind the failure to make payroll and maintaining essential city services, San Bernardino officials have requested permission to prolong these payments until the fiscal year 2013-2014. Further, this “pendency plan” would spread out its $143.3 million obligations over a period of 30 years.
CalPERS is obviously not happy about this proposal, but says it will continue to negotiate with the city to recover unpaid pension payments. The plan was presented to the presiding bankruptcy judge last Friday, November 30th and will be decided in the coming weeks.