Desert Hot Springs Teetering on Edge of Bankruptcy – Again
Update by Bankruptcy Attorney Eric Ridley
For the second time in recent years, Desert Hot Springs edged closer to possible bankruptcy recently when their City Council voted to cut pay for its police force by 22%, emphasizing how dire the city’s budget crisis is.
The Southern California city, which has a total population of 27,000, is staring down the barrel of a $4 million budget deficit. The city council, unfortunately seems to be fundamentally opposed to raising taxes or otherwise increasing their revenue. In recent years, the City has been forced to lay off 2/3 of the full-time staff
The 39-member Desert Hot Springs police department has a relatively high pay scale. The average officer’s total pay package was $177,203 in 2011, according to the New York Times, compared to a median household income of $31,356.
In the 1980s, Desert Hot Springs had a reputation as a bad, dangerous place to work, live or visit. The city even went so far as to disband the police department and contract with the sheriff for law enforcement services. The police force was brought back in 1997 by popular demand.
Four years later, the city hired bankruptcy lawyers and declared bankruptcy, but it wasn’t because of municipal salaries and pensions this time. In that instance, Desert Hot Springs lost a lawsuit with a developer had to pay a $10 million judgment. The city is still paying the bill for this stinging loss
City officials calculate they have until June to cover the shortfall and avoid the fate of Stockton and San Bernardino, which declared bankruptcy in 2012.