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Subscribe to RSSA fiscal emergency is considered the first step towards Chapter 9, said CNBC's Jane Wells, reporting on whether Atwater, California will become the fourth town to declare bankruptcy in the state.
Municipal bankruptcies are spreading like a “disease” in California, one public finance expert warned Wednesday as the city of Atwater declared a fiscal emergency with a budget gap of more than $3 million.
The city’s council approved the move on Wednesday night, putting it on the path to becoming the fourth city in the state to declare bankruptcy this year.
With a population of 28,000, Atwater fell on hard times after its housing market imploded and sent property tax revenue plummeting. Furloughs and a hiring freeze had not been able to stem Atwater's losses.
San Bernardino becomes 3rd Calif. city in 2 weeks to file for bankruptcy protection
Municipal debt market analysts are keeping a close eye on the finances of local governments in California out of concern that some could use fiscal emergency declarations as a way to speed Chapter 9 filings to attempt to shed financial obligations.
"In California, we have a disease, and the disease is spreading," David Kotok, chief investment officer at Florida-based Cumberland Advisors, told the State & Municipal Finance Conference conference in New York on Wednesday, according to the San Francisco Chronicle.
"I suspect we're going to see wholesale warnings and downgrades" among bond rating issuers in the state, he said.
If it went bankrupt, Atwater would follow Stockton, San Bernardino and Mammoth Lakes by making a Chapter 9 filing.
San Bernardino, California's city council in July authorized a bankruptcy filing after declaring a fiscal emergency. The city of 210,000 residents 65 miles east of Los Angeles, filed for bankruptcy on August 1.
By contrast, Stockton, a city of 300,000 located about 62 miles to the northwest of Atwater, became California's first city to file for Chapter 9 bankruptcy protection this year after 90 days of inconclusive mediation with its creditors.
Kim Rueben of the Tax Policy Center explains why some American cities are running out of money, filing for bankruptcy, and making drastic cuts in the process.
Mammoth Lakes, a resort town of about 8,000 residents in California's Sierra Nevada mountains, followed Stockton into bankruptcy court, saying it could not afford a $43 million legal judgment against it. Mammoth Lakes has since reached a settlement with the property developer in the legal dispute and later this month will seek to have its bankruptcy case dismissed.
City officials in Atwater are looking into options for increasing revenue such as raising 20-year-old rates for water services and 10-year-old rates for garbage collection services while clamping down on costs, all while considering whether to pursue a bankruptcy filing.
Union representative Nancy Vinson said 38 of Atwater's non-safety employees have received layoff notices and that 12 are sure to lose their jobs as part of the city's efforts to pare spending.
Vinson told Reuters by telephone that she believes Atwater's financial troubles are so severe that the city will not be able to avoid a bankruptcy filing.
"I believe they're heading straight to bankruptcy," she said.
Mayor Joan Faul could not be reached by Reuters for comment.
Reuters contributed to this report.
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Wake up people.
California has always been a bellwether of things coming to rest of the country.
No goverment, city, state or federal can continue to spend more than it takes in year after year.
A large portion of the manufacturing tax base of the country has been shipped overseas (China) in the name of
free trade and for cheap labor and less regulation.
Sadly the US now finds itself in a position similar to the British after WWII.
Broke, hugely in debt and with weak leaders.
They shortly had the rug pulled out from under them, when their also weak
currency, the pound, was abandoned as the worlds currency for the stronger dollar.
The fall was swift and painful.
One Big Problem California has is that a few years back, we had a republican Gov. whose buddies convinced him that it would be cheaper to re-do the SFBridge in China from companies they were involved with. Because this turned out to cost about 3x what it would have if made in America, the debt got bigger. But thats the whole State.
Counties made big mistakes trusting "Traditional Banks" instead of a Credit U or State Bank. Thats the most glaring problem still not solved.
Send some of that GOOD STUFF to the COMMUNISTWEALTH of Virginia baby...... and to the Cities of NORFOLK and SUFFOLK....... It is ALRIGHT for these CROOKED Cities to File for Bankruptcy. But thanks to the CROOKS in Congress and the CROOKED Banks. The Little Guy in this SORRY Country CAN"T File for Bankruptcy. I think KARMA is a POWERFUL THING baby... I hope this COUNTRY FILES for Bankruptcy NEXT............. DAMN the USA....
ayh, but look at the bright side California you banned homosexual therapy now you in a better position to F**K yourself...
California is our bankrupt, looney bin state. And the politicians are STILL coming up with ways to spend MORE OF OTHER PEOPLES' MONEY to buy votes! They have destroyed the economy of their state but are addicted to spending money and just can't quit! THEY NEED TO BE ORDERED TO RE-HAB WITH LINDSEY LOHAN!
blame it on the Politicians.
The rampant ingnorance, hatred, lies and,untruths about california's problems is amazing.Have you'll given it any thought that conservative,neo-fascist,right wing thugs and states are a big part of californias problems.Are any of you even aware that california only got back around 73-76 percent of every dollar they paid in taxes over the last 20-30 years;and that over 1 trillion dollars has been redistributed to red conservative.poor, neo-fascist, christian states in the last 20-30 years. I imagine if california had that approximately 1 trillion dollars back they would not be in such a bind and many of the red fascist like red states would have been in a heep of trouble.
Oh yes it must be the "neocons"! It can't possibly be the millions of illegals who work tax free off the books and send millions of American dollars out of the country that is NOT spent on American goods and services. Because, you know, they are SUCH patriots and love America, right? Do us all a favor...STAY THERE. You can come pick up your trash that's spilled over into the beautiful state of Oregon. Real Americans don't want it/them here.
See what I mean?? CA is the most liberally governed state with democrats everywhere in their history...and sure enough, you've got geniuses like this RRR2112 poster literally trying to blame republicans and other states for their problems!
It's redistrubution of wealth baby! Are you disagreeing with our president you racist?
Wow RRR, "neo-fascist thugs", and we're the "haters"? That 1 trillion you assume, would have burned a hole in your pockets already. You mopes would have given that away by now as well. But we get it, it's all Bush's fault. You guys bear no responsibility at all.....
Have fun folks gotta run the game is on. Chow
ciao
So, how's that touchy feely, 'we love everyone who comes here regardless whether they belong here or not' working out for you now, California? What a toilet that state is. I've lived there twice. Southern (Corona) and Northern (Santa Cruz) and I wouldn't house my dog in that cesspool of illegals, gangs, etc.
Corona was beatiful 30 years ago.
Was Arnold the governor when this happened? Maybe it's time to call in Clint to talk to an empty chair and fix it.
The dems have had a veto proof majority in both houses for years so a republican govenor in cali is useless.
Hi folks, the Great State of Tejas here. Willie Nelson solved your problem 50 years ago. "Turn out the Lights, The Party's Over."
I hope the WHOLE DAMN COUNTRY goes BROKE by November... It will serve this SORRY Country just right. The CROOKED Politicians in Washington and Obama only give a DAMN about their OWN FAT POCKETS.. The Little Guy in this CROOKED Country does have a chance in HELL ... DAMN the Politicians,DAMN the CROOKED BANKS, and DAMN the USA baby..... I would NOT DEFEND this Country FOR NOTHING....Let them all go to HELL....
Back away from the computer Rev. Wright.
here I am trying to keep my head above water and these cities who have ready access to financial planners cant make it? What's wrong here? I wish I had a personal planners to fall back on yet these cities have been living high on the hog apparently and didnt see the roof caving in.
I'll drop the name dropping but in truth calis problems are very complex the state has lost near 1 trillion dollars to the poorer states over time they had a bottoming out of there housing market they have been taken for a ride by the banking fiasco, they have union problems in unfunded retirement,they have border issues.and they are very socialistic in some of there laws," no smoking but mary jane's okay in public, one of the largest penal colonies in the us many there for victimless crimes, look at the ronnie regan 3 strikes law, a couple of hot checkes, shoplifting , minor drug possessions = a life sentence for non violent crimes,things are more complex than they seem, immigration,etc. There is no one shoe fit all. In my perspective of reality the country was set up so that the masses would always be under control, two parties both owned by the rich. In europe there are multiple parties involved in governanace ie. socialist fascist conservative and liberal green party libertarian etc all have a voice as a % of popular vote won not in the freedom loving usa.
Remember in the old days only white male landowners could vote and decide the fate of our nation.No women, no blacks,no mesicans,no asians,no indians,no poor people,etc but when they needed people to fight the british, indians french, it wasn't just the rich american aristocricy who fought and died, was it.sounds like cheney, and romney and obama,and our future furhers the koch brothers etc.
my apoligies about the koch bros they are more plutocratic libertarian using whatever means are necessary to accomplish there goals ie asimov Psychohistory.Food for thought hugh.
why is atwater going belly up ? personally , i blame bill clinton. About 8 miles from atwater is the town of merced and merced had a large military base called castle air force base. Bill clinton shut it down when he wanted to save money for his pet projects ( paying off those who voted for him ). With the closure of castle air force base , merceds economy was hit hard and atwater who depended on military families living there along with having the business from all the military shoppers in both merced and atwater suffered and suffered .
closing military bases has an affect on more people than the democrats ever think of... jackasses....
Actually Castle AFB was in Atwater, and yes when it closed that killed alot of the economy in both Merced and Atwater.