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SB Bankruptcy Plan Talks Called “Intractable”

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Councilman Rikke Van Johnson urges outside financial help

Chris Levister

SAN BERNARDINO - As the public battle rages over fixing a $45.8 million budget deficit members of the San Bernardino City Council remained mired in acrimony on Wednesday raising the risk of deepening default, unnecessary layoffs and has some members asking the pivotal question: “Are we up to the task of adopting a plan acceptable to the bankruptcy court?”

“No”. That’s Sixth Ward Councilman Rikke Van Johnson. “We’re essentially in a state of paralysis.”

Johnson says the council’s lack of fundamental financial expertise compounded by the bickering, blaming and sniping between the council, mayor and city attorney has set off unprecedented partisanship and intensified accusations from warring factions on the council.”

He said negotiations on a “pendency” plan have become intractable. The pendency is a day-to-day budget designed to guide the council until the court approves a long-term plan to restructure the city's debt.

Under Chapter 9, bankruptcy rules courts lack authority to interfere with a city's "property or revenues" or its "political or governmental powers."

“The time has come to get some outside help,” said Johnson. “How are we going to come up with an actual pendency plan if we’re still deeply mired in acrimony over the Fire Department budget?”

The council’s lack of knowledge governing the Chapter 9 bankruptcy process reared its head last week when Councilman Robert Jenkins asked when the plan will go to the court.

“It won’t,” said City Attorney Jim Penman.

“You could see jaws drop” said Johnson. The city must give the court a balanced budget first. That means a lot more cuts.

Last month the council voted for bankruptcy to deal with the budget gap, and the city’s inability to make payroll for its employees. The local insolvency is attributed to loss of revenue from foreclosures, lost redevelopment dollars as part of the state mandate last year, and the police and fire departments’ salary and pension impact on the General Fund. Public safety including police, fire and code enforcement accounts for 75 percent of the city’s budget.

The pendency plan the council approved September 5 called for $22.4 million in cuts and another $9.4 million in labor negotiations. The council made several modifications to the plan which included delaying a recommended $3.5 million cut to the Fire Department. 89 employees have left voluntarily since July 10 when the city announced that it intended to file Chapter 9 bankruptcy. The cuts if fully implemented would leave a $7.1 million general fund deficit.

Much of the bickering has focused on union contracts. The biggest clash is over the interim fire chief’s plan for rotating closures of the three least-busy fire stations. Some council members have been adamant that stations in their wards not close. “There are some members of this body who have been brought by the unions. Now they’re cashing in their chips,” he said. This accusation was also made by Mayor Patrick Morris and other members of the council. Johnson points to campaign contributions by the San Bernardino Professional Firefighters and San Bernardino Police Officers Association.

“I think the fire union in particular has told elected officials who depend on union contributions for their election that they are unwilling to take any budget reduction or rank and file layoffs.”

Council members have also butted heads over a waste-disposal deal vetoed by the Mayor in August. The proposal has been discussed and rejected several times.

Johnson was incredulous that reasonable compromise proposals put forth have been patently rejected by “these elected members” despite recommendations from city staff including Finance Director Jason Simpson.

“We can’t expect to agree on a governing plan when we’ve got elected members who can’t distant themselves from the lure of union dollars,” said Johnson.

“I’m not optimist that we as elected leaders are capable of making the tough decisions to show the court we can fix this city. So far we’ve failed miserably.”

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