Less than a week after garnering the attention of government officials and public employees up and down the Golden State, San Bernardino Mayor John Valdivia and the council majority he controls receded from what was widely anticipated to be the first major step in effectuating public employee salary reform.
Indications last week were that Valdivia and his council allies were on the verge of initiating an across-the-board effort to reduce by close to half the inflated salaries of the entire workforce at San Bernardino City Hall in an effort to stave off a second looming bankruptcy in less than a decade.
In 2012, the City of San Bernardino was forced to take refuge in Chapter Nine bankruptcy protection after years of overly generous salaries and benefits provided to city workers had created a $49 million annual operating deficit. The city emerged from bankruptcy in 2017, but now, two years later, expenditures in the soon-to-conclude 2018-19 fiscal year are on a trajectory to eclipse revenues in the same period by more than $11 million. If current trends continue, that deficit will zoom to over $16 million by the end of upcoming 2019-20.
Since 2012, San Bernardino has seen two mayoral turnovers. Patrick Morris, a former Superior Court judge, was at the city’s helm when the bankruptcy filing was made. In 2014, the city turned to Carey Davis, a certified public accountant, who had been endorsed by Morris in his mayoral bid. It was widely hoped that Davis might infuse the city with the fiscal discipline needed to stanch the city’s inveterate hemorrhaging of red ink. While some cutbacks were made and a small reduction in the level of overspending was realized by the city under Davis, the city in the five years that the bankruptcy hung over the city balanced its books in largest measure by simply skipping out on the mounting debt it had accumulated and continued to accrue. In the four years and ten months between the time it entered into bankruptcy in August 2012 and its emergence in June 2017, the city stiffed a combination of 109 creditors, vendors and partners for just over $350 million. Left largely unscathed by that devastation were the city’s employees, who continued to draw paychecks throughout the ordeal. They have seen no reductions in pay and their benefits remain intact, including the pensions they were promised by past mayors and city councils, though going forward the employees are now being called upon to make a slightly increased contribution toward their retirement benefits. The employees’ pension plan remains intact, which is administered by the California Public Employees Retirement System, contributions to which constitute the city’s third largest current expense, behind salaries paid out to the city’s police officers and salaries to the city’s general employees. In order to convince Federal Bankruptcy Court Judge Meredith Jury that the city should be allowed to walk away from the debt it owed, the city utilized the services of the law firm of Straddling Yocca Carlson and Rauth, it particular its bankruptcy law attorney Paul Glassman, which has been paid $25 million in legal fees over the last six years and eleven months.
In November 2018, Davis was turned out of office by the city’s voters, who replaced him with John Valdivia, who since 2012 had been serving in the capacity of Third Ward Councilman a, and who in the last three years of Davis’ term in office, which was extended by close to another year when the city adopted a new charter that changed the city’s election cycle from odd-numbered to even-numbered years, had emerged as Davis’ main rival on the council.
Since coming into office, Valdivia has had to deal with the legacy of the city’s spendthrift past which includes the unsustainable commitments it has made in terms of the pay level of city employees and the looming prospect that the city will once again fall so far into deficit spending that the only solution will be another bankruptcy or ending its run as going concern and disincorporating.
Two weeks ago Valdivia and five of the council’s seven members who are generally considered to be allied with him fired Straddling Yocca Carlson and Rauth, which as continued since the city’s 2017 emergence from bankrupty