A toxic stew of undefunded pension liabilities, too much debt taken on during the real estate boom, and civic mismanagement has led to three California municipal bankruptcies so far, with more certainly coming. It’s going to get ugly.
The city of San Bernardino, CA has, as expected, filed for bankruptcy following Mammoth Lakes and Stockton into municipal bankruptcy. Victorville and Compton may well be following soon. This is just the leading edge. Many more financially imperiled cities will be doing the same. The more cities that file for bankruptcy and thus get debt relief as well as the ability to break existing contracts including public pension agreements, the more other financially imperiled cities will consider doing the same.