California cities 'may cease to exist'?

Shuttered and padlocked businesses line Main Street in Stockton, California June 27, 2012 (Reuters/Kevin Bartram)
In a phenomenon that seems to be worsening with each and every hour, a widespread fiscal crisis in California is quickly propelling the state into bankruptcy, city by city.

Within a matter of only one month, three cities in California have officially sought bankruptcy protection, with a request out of San Bernardino on Tuesday being just the latest episode in recent surge of unfortunate fiscal news on the West Coast. Coming off of similar measures by way of officials in Stockton and Mammoth Lake, California is experiencing a departure into the deep end across the entire state that no authority seems ready to handle.

"There are likely to be more in the future, but it's hard to know, since a lot of struggling cities may manage to work things out,'' Michael Coleman, a fiscal policy advisor for the California League of Cities, tells the Los Angeles Times. "Some cities may not go into a bankruptcy, but they may dissolve. They may cease to exist.''

Stockton’s seeking of bankrupt protection this week marks the largest city in the state to do as such in the history of California. Going back to a Chapter 9 filing in 2008 out of the Bay Area city of Vallejo, however, it is a trend that hasn’t gone unnoticed.

Even on a smaller scale, officials are being forced to adjust spending everywhere in California, even when it comes to the state’s educational institutions. Earlier this month, evaluators warned administrators at the City College of San Francisco that the school had only eight months to prove that it can propel itself out of the red or else it will be cut funding drastically. In that instance, the president of the Accrediting Commission for Community and Junior Colleges says,"leadership weaknesses at all levels" and a "failure to react to ongoing reduced funding” are jeopardizing the college’s future.

San Francisco’s City College still has a few months to prove itself to the commission, but it’s an issue that is being experienced everywhere across the country. The city of Stockton — which boasts a population of around 209,000 — isn’t expected to be able to pay public workers as early as August 15. Officials close to the city structure warn that, if adjustments aren’t made, the consequences will be catastrophic.

“If the employees are not paid on Aug. 15, on Aug. 16 there will be a mass exodus of city employees,” City Attorney James Penman warned the council this week, Bloomberg News reports. “People are not going to work when they don’t get paid. Most of our employees will not show up to work. That would include police, fire, refuse, everybody. The city will virtually shut down.”

Bloomberg adds in their report that across the state in San Bernardino, the city has accumulated $243 million worth of outstanding debt. This week officials agreed with a 4-to-2 vote to file for bankruptcy protection. At this point, the next measure to keep the city afloat might very well be closing down emergency services.

"I think all possibilities should be on the table," San Bernardino Mayor Patrick Morris tells the media this week. "That includes privatizing services; that includes regionalizing services."