San Bernardino, Calif., cuts workers’ pay and benefits

The San Bernardino city council approved cuts of nearly $26 million in pay and benefits for city workers, part of the financially strapped city’s effort to qualify for Chapter 9 bankruptcy protection. The city imposed the cuts in new contracts with city unions, in some cases without agreement from those unions, according to The Sun.

The council’s action effectively ended months of contract negotiations with seven city employee groups, including middle managers, police and fire fighters. The cuts are part of a budget plan submitted to U.S. Bankruptcy Court.

San Bernardino filed for bankruptcy protection in August, saying that it owed more than $1 billion, with a $46 million deficit. Council members said the latest cuts were essential in the city’s bid for bankruptcy protection. The cuts are “critical to the future of the city and sustaining it,” Councilman Fred Shorett said, “not only getting us into bankruptcy (court) but leading us on a path out of bankruptcy.”

Obstacles still remain on that path. The union representing middle managers, one of the unions that did not agree to new contracts, has gone to court to argue that the city doesn’t qualify for bankruptcy protection. The city’s biggest creditor, California’s public employee’s pension fund, is also opposing the bankruptcy bid.

To make matters worse, top officials in the city are bailing out. The interim city manager quit, along with the human resources chief and the head of code enforcement. The city’s finance manager is expected to leave soon, according to Thomson Reuters.

San Bernardino is scheduled to continue its bid for bankruptcy protection in court on Feb. 12. To get bankruptcy protection while it restructures its finances, the city must present a viable plan to satisfy its creditors.