Another California City Opts for BankruptcyJuly 11, 2012 – In The News
The city of San Bernardino, CA recently decided to file for federal bankruptcy protection, making it the third California city to do so in less than two weeks. Michael A. Sweet, a partner and member of the firm’s Financial Restructuring and Bankruptcy department in San Francisco, spoke with the Associated Press about the looming possibility of bankruptcy for US cities.
Sweet told the AP that cities like Harrisburg, PA and Mammoth Lakes, CA have considered bankruptcy as a way to cope with a specific debt. Conversely, cities like Stockton, CA and Central Falls, RI have sought bankruptcy to deal with a bleak financial outlook due to rising costs and stale revenues.
“Those are the ones you want to watch,” Sweet said. “The cities that have higher reliance on property tax revenue to support their general funds are the ones that are going to feel the most pain.”