San Bernardino city votes to stop paying some debts

San Bernardino City Hall.
San Bernardino City Hall.
Frederic J. Brown/AFP/Getty Images

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The San Bernardino City Council gave its staff permission Tuesday to put off paying some important city bills while it reorganizes city finances and files for bankruptcy.

The council voted 7-0 to defer as much as $12 million in payments.

The city will hold off on paying some leases. It won't pay about $3.5 million in debt service to holders of its pension bonds. The city will continue cutting 10 percent from many city workers' salaries. It will also postpone paying $1.6 million into retiree health plans.

The San Bernardino city council declared a fiscal emergency last week. That step was a prelude to filing for bankruptcy. Interim City Manager Andrea Travis-Miller said that without the emergency spending plan and ability to put off paying big bills, the city would not have cash on hand to meet the mid-August payroll.

The plan also enables the city to cover the large payouts that retiring city employees collect in accrued vacation time and other benefits. The number of employees requesting retirement in the face of bankruptcy has risen from about 30 last week to about 63 on Tuesday, Travis-Miller told the council.

Overall, the city needs $166 million to get through the budget year that ends next June, but expects to take in only $120 million.

With the city's large bills now deferred for a few months, the next step for San Bernardino is to write a more detailed budget plan to present to the bankruptcy court. To get to a balanced budget for the year, the city needs about a 30 percent cut in expenses.