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Will more California cities go bankrupt?

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    California Lt. Gov. Gavin Newsom unveils economic growth agenda

  • Duration 4:38
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It is unprecedented that three cities in one state would file for bankruptcy protection but that has happened in California.

And some fear more cities we're going to go go under.

Most of them have a hard time convincing a bankruptcy court that they can't cover the -- with tax revenues but mammoth lakes Stockton and now San Bernardino say.

They are absolutely broke.

California's lieutenant governor says.

He has a plan for the state as a whole to rebound.

And Gavin Newsom now joins us live lieutenant governor it's great to be with you.

Do you expect that that more cities may file for chapter nine bankruptcy you know you -- you talk about cities that are having financial difficulty includes.

Fairfield -- El Monte Grover beach Lancaster Monrovia and others -- are there more.

That are now in -- -- player.

-- you also had.

Mayors from cities as large as Los Angeles San Diego San Jose use the B word as well bankruptcy now I don't anticipate that to happen but remember.

Of a -- here in the east bay near San Francisco file for bankruptcy.

In 2008.

And they just came out of it in 2011.

So there is the prospect look at the end of the day comes down to this we had a housing boom and bust and it is dragged down the economy in this state particularly.

In areas around San Bernardino County Riverside Stockton.

Modesto Fresno.

And it has had a dramatic impact on revenue as well as a self evident and obvious point.

We haven't been good fiduciary is in terms of our fiscal budgets.

And our municipal budgets and we're paying a price for that I want to talk about very very -- in just a moment but first of all Forbes magazine.

Took a look at all as what's going on California said -- bankruptcy may not necessarily be such a terrible thing it means all of the worst has happened.

And now there's really nowhere to go but up do you agree.

Yeah I mean that's an interest in argument why you hate to see it because it's an abdication of leadership and from my perspective responsibility I mean we're elected.

To at least keep the lights on in and do the basic math.

And it's required of us but at the end of the day there are macroeconomic consequences that precipitate in no choice in the case of -- whale.

They had no choice and I'll wait and as someone who lives out here in the Bay Area they're doing fairly well right now I'm recovering so it hasn't had that.

Dramatic impact of the devastating impact that summit.

Believed in 2008 self I don't think you know these are headlines but there's a greater trend line -- John and I think we need to focus on.

California was a -- -- the American economy and job creation between 1950 and 1980.

No state -- their economy and jobs more than California but what's happened is since 1980 to 2010 we flat lined.

No longer we that ten Paul we've become average and for those of us who grew up in California we're not a state that price -- we prided ourselves on being on the leading and cutting -- -- hardly average so we've got a jobs and revenue problem.

And the answer is always in California and as the national debate is -- -- we cut our way to solvency or raise taxes to solvency.

Neither are gonna work we've got to -- our way to solvency by creating conditions to create a framework we're startups and small businesses can get.

The revenue growth back -- -- the jobs that we need in this state that you came up with a plan last year a economic summit recently released another plan with 47 points try to get California back to prosperity a lot of which cross -- with you streamline regulation.

Workforce preparation encouraging innovation.

Everybody seems to be on the same page so why isn't that being -- implement.

That is so frustrated I'll watch you -- -- news segments and everyone else isn't Democrats Republicans all saying all right -- -- we don't do the right thing and I think that goes to a of a broader segment in question is.

The old adage you wanna move the -- you got to move the -- -- changing incentives and politics for bad behavior.

And at the end of the day here we are in California.

Ten point 8% seasonally adjusted unemployment you've got ten counties with unemployment north of 15% if you're watching this segment.

And down and Imperial County 26 point 8% unemployment in the state of California a hybrid economy that coast.

Doing fairly well in the inland doing badly the end of the day though.

We've got to focus on what unites us Democrats or Republicans so our -- started with that but here's the framework it's region's rising together it's a bottom up strategy.

Not a top down strategy.

We had an economic conference with George Schultz is a co chair Laura Tyson.

So we brought folks together 700 regional leaders.

Focusing on best practices regional alignment.

Because have been -- there's no national economy or even state economies their local regional economies -- that's the new framework you know I can talking about this all day unfortunately we're at a time -- do wanna mention -- -- -- how after emerge from bankruptcy.

Fewer firefighters fewer police fewer public service so definitely there's a big effect from this lieutenant governor good to talk to you today thanks so much.

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