A resort
town in California warned on Tuesday that it will run out of money by March due
to burdensome salary and pension costs and could join other U.S. cities that
have recently filed for bankruptcy protection.
A
bankruptcy filing by Desert Hot Springs, a city of 26,000 about 110 miles east
of Los Angeles, would make it the third California city along with San
Bernardino and Stockton to seek court protection from creditors. San Bernardino and Detroit - the biggest U.S.
city to seek Chapter 9 protection - are likely to set precedent on whether
retirees or Wall Street bondholders suffer the most when a city goes broke.
The
problems in Desert Hot Springs came to light last week when a new finance
director reviewed the city's records and discovered a $3 million shortfall in
its budget of $13.5 million. Amy Aguer, the interim director of finance, did
not have details on how the shortfall occurred but said it was the result of
higher-than-expected pension and salary costs, especially in the police
department, and overly optimistic estimates of revenue......To Read More.....
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