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San Bernardino files Chapter 9 bankruptcy

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    Fiscal struggles increasing in California?

  • Duration 2:03
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-- -- story again another California city has gone broke this time is San -- out.

Is that third city to file for bankruptcy in just two weeks and cloudy count -- live -- -- San Francisco bureau -- it is just becoming a trend.

As recently as last month Martha no -- California had opted for bankruptcy since 2008.

And no US city with more than 200000 people had ever chosen to go down this road but the past two weeks have changed all of that in a really big way.

As cities -- had to find some way to deal with their overwhelming financial problems.

First it was Stockton then last week mammoth lakes and last night San Bernardino became the latest.

Outside the City Council meeting people were not happy.

Another -- Californians don't know.

Reorganization whatever you say it's bankruptcy.

Credit ratings going down contracts a wide open everything's open ten of choice but to -- the way that didn't.

The reorganization will probably help.

You know they have no we have no other avenue and you know that -- my life and to see dead.

We leave.

We're we're down this -- it -- -- San Bernardino needs to close in nearly 46 million dollar budget gap it's already stopped paying some vendors and may not be able to make payroll over the next three months -- Martha that tough situation but -- that man says may be the reorganization we'll start.

To help.

To weed things out as the main issue here the pension funding and employee costs.

You know it's the same story rising payrolls and pensions rosy projections bad investments and all that coming in the midst of a recession.

The move toward bankruptcy protection allows these cities to invalidate their contracts with city employees.

And potentially renegotiate retirement plans that have caused expenses for these once thriving communities to skyrocket in recent years.

And -- you can bet every struggling city across the country is watching all of this closely.

To see whether bankruptcy as a tool to get out from under might also be an option for them yeah well maybe to -- -- get out from under exactly back right thank you very much.

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