San Bernardino, Calif., will become the second largest city in the nation to file for bankruptcy, according to The Associated Press (AP). The City Council for the southern California city of about 210,000 people voted July 10 to seek Chapter 9 bankruptcy protection. Stockton, Calif., the nation’s largest bankrupt city, filed June 28.
San Bernardino’s City Council directed the city attorney to immediately begin bankruptcy proceedings. It will be the third California city to go bankrupt in the last month. Mammoth Lake, a much smaller city, voted to seek bankruptcy protection July 3.
San Bernardino faces a $45.8 million budget deficit. The city has already stopped paying some vendors, and Interim City Manager Andrea Miller told the council that the city may not be able to make payroll over the next three months. “We have an immediate cash flow issue,” Miller said.
The city attorney said budget officials had presented falsified budget documents to the City Council for 13 of the last 16 years. Law enforcement officials said they have an open investigation into allegations of misconduct in city government, according to the Los Angeles Times.
Stockton, a northern California city of almost 300,000 people, surpassed Bridgeport, Conn., which filed for bankruptcy in 1991, as the largest bankrupt U.S. city. Jefferson County, Ala., which filed in November 2011, is the largest local government bankruptcy.