Politics Likely Hinders San Bernardino's Economy

The city of San Bernardino, Calif., is expected to declare a fiscal emergency, and officially file for bankruptcy on Wednesday. The declaration would be the third by a California city in recent weeks. Some analysts believe San Bernardino's problems may be more about its dysfunctional local politics.

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RENEE MONTAGNE, HOST:

Here in southern California tonight, the city of San Bernardino is expected to declare a fiscal emergency and officially go bankrupt. That would make it the third California city to file for protection under Chapter 11. [POST-BROADCAST CORRECTION: Chapter 11 is not applicable to cities; the process they use is Chapter 9.]

This run of bankruptcies in California cities has some worried that more will become insolvent. But as NPR's Carrie Kahn reports, San Bernardino's problems may be more about its dysfunctional local politics.

CARRIE KAHN, BYLINE: At San Bernardino's outdoor amphitheater, musicians warm up while actors get ready to rehearse the local theater group's upcoming production of "The Wizard of Oz." Resident Jill Smith says the group puts on a great play. Her daughter landed the role of the Munchkin mayor's wife, Kira(ph).

JILL SMITH: It's pretty great, if you haven't seen it before.

KAHN: Her enthusiasm though fades quickly when she talks about living in San Bernardino these days.

SMITH: Parks are no longer green and streets are not being paved, and to watch a city slowly deteriorate is sad.

KAHN: And like the characters in Oz, many here say their local leaders lack the heart, the courage or brains necessary to tackle the city's problems. Residents' anger was on full display at this week's packed city council meeting.

CORIE LOPEZ: I think what this city has come to is shameful and ridiculous.

KAHN: Corie Lopez and dozens of others from San Bernardino scolded council members for hours.

LOPEZ: This city needs leadership that's courageous, that's transparent and that's fair.

KAHN: Another resident, Kim Carter, told the seven council members to put their petty differences and agendas aside.

KIM CARTER: We the people would love for you guys, our elected officials, to lead, be transparent, do the right thing, do the next right thing.

KAHN: The city council didn't do any thing at this week's regular meeting. Instead it postponed a vote on the bankruptcy until tonight. It's unclear what a difference two days will make. The interim manager told officials that city credit cards have been cancelled and it's cash-only now with vendors.

Like many cities in California, San Bernardino is reeling from both the recession and the housing bust. Unemployment is over 15 percent, more than two thirds of homeowners owe more than their houses are worth, and businesses are shuttering at alarming rates. Sales tax revenue dropped $16 million last year. But unlike many cities in the state dealing with the same issues, John Husing, a longtime economics consultant for the region, says exacerbating San Bernardino's problems is its current system of government.

JOHN HUSING: What it is is a government that spends its time screaming at each other.

KAHN: Husing says San Bernardino has a weak mayor system with multiple council districts that have carved up the town into small fiefdoms. The interests of the city as a whole are lost in the battles. And he says San Bernardino continues to have its own fire and police departments, while more modern cities contract out those services, pay less for public safety and aren't as beholden to unions.

HUSING: The net result of that is a government that has been total chaos.

KAHN: Husing says given the current economic climate, other California cities with similar governments face equally tough financial times. Like other economists, he says these first three cities going bankrupt are just the beginning of a trend.

But the director of the League of California Cities, Chris McKenzie, says that prediction is overblown. He says staving off bankruptcy has less to do with a city's government structure than the political will to fix the problems.

CHRIS MCKENZIE: You first have to start by being honest about your fiscal condition.

KAHN: And that's something San Bernardino hasn't been good at. Bookkeeping errors are infamous. And according to the local sheriff, there's at least one investigation into the city's turbulent finances.

Carrie Kahn, NPR News.

(SOUNDBITE OF MUSIC)

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Correction July 18, 2012

The introduction to this story incorrectly says three cities have filed for Chapter 11 bankruptcy protection. Chapter 11 is not applicable to cities; the process they use is Chapter 9.

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