There's nothing complicated about why San Bernardino hasn't paid the $5.3 million it owes, said Jim Morris, chief of staff for the mayor's office. “We're not paying them because we don't have the money,” he said. "We don't want to pick a fight with the 400-pound gorilla in the room."
With funds short, the mayor and City Council debated where money is best spent in the city and settled on paying employees and essential services first. Other obligations will be handled in bankruptcy court. The proposed cuts, which include removing $2.9 million from the fire department's budget, reduce the city's overall budget by about one-third.
"We don't have precedent here. But if we get precedent that CalPERS can be impaired in Chapter 9 that's going to make municipal bankruptcy a very attractive business tool for any city that needs to restructure its debt," San Francisco Lawyer Karol Denniston said.