In August 2010, almost two years before the San Bernardino city council abruptly voted to seek bankruptcy protection, city manager Charles McNeely gave a presentation to the council that became known as "Groundhog Day."
McNeely, who has since resigned, warned that the city of 210,000 was facing financial ruin. The sharp fall in housing prices had slashed tax collections even as employee pay and benefit costs spiraled upwards. Years of budgetary gimmicks would come home to roost in the form of a $40 million deficit in the current fiscal year, he predicted.
"He used that analogy because the city had every year been doing the same stupid things," Tobin Brinker, a former city council member, said, noting the comparison with the comic movie in which the lead character keeps reliving the same day.
McNeely's wake-up alarm, which itself came three years after a management consulting firm had warned of big problems ahead, went unheeded. Instead, local leaders continued to engage in bitter political and legal warfare over the city's biggest expense -- pay and benefits for police officers and firefighters -- and failed to warn local residents and financial markets of the depth of the problems.
While San Bernardino was in economic decline even before the Great Recession and took a big hit from the housing bust, the slide toward bankruptcy has as much to do with the city's poisonous politics and the outsized influence of public safety employees as with the broader economy.
Read more: http://www.reuters.com/article/2012/07/15/us-usa-san-bernardino-bankruptcy-causes-idUSBRE86E0JA20120715
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