SAN FRANCISCO | Wed Oct 10, 2012 9:04pm EDT
SAN FRANCISCO Oct 10 (Reuters) - Mammoth Lakes, California could slash its police force to help bolster its post-bankruptcy finances, an official with the resort town in the state's Sierra Nevada Mountains said on Wednesday.
One cost-cutting option the city of 8,000 residents is considering as it prepares to ask for its Chapter 9 bankruptcy case to be dismissed is to lay off seven police officers, Assistant Town Manager Marianna Marysheva-Martinez told Reuters by telephone.
Mammoth Lakes spends about a quarter of its $16 million annual budget on its police department, Marysheva-Martinez said.
The cuts would leave Mammoth Lakes' police department with 10 sworn officers and three civilian employees. Savings would help the city as it will pay $2 million annually as part of $29.5 million settlement agreement with a property developer.
The developer had been awarded a $43 million judgment against the city over a property dispute. Saying it could not afford the judgment, Mammoth Lakes became the second city in the most populous U.S. state to file for Chapter protection from its creditors this year.
Marysheva-Martinez said residents of Mammoth Lakes will be surveyed on layoffs and other measures the city could take to shore up its finances, adding that the city later this month will begin the process of asking the judge hearing its bankruptcy case to dismiss it.
Mammoth Lakes followed on the heels of Stockton, a city of nearly 300,000 residents in California's Central Valley, in filing for bankruptcy. San Bernardino, a city of 210,000 residents east of Los Angeles, was the third California city to file for Chapter 9 protection this year and Atwater, a Central Valley city of 28,000, is contemplating a bankruptcy filing.
Atwater's city council last week approved a fiscal emergency measure that it may use to put the city on a fast-track to a Chapter 9 bankruptcy filing. Atwater's leaders are also looking into options for increasing revenue while clamping down on costs, which could include layoffs, while considering whether to pursue a bankruptcy filing.
Analysts in the $3.7 trillion U.S. municipal debt market are keeping a close eye on local government finances in California out of concern that some cites could use fiscal emergency declarations as a way to speed Chapter 9 filings in attempts to shed financial obligations.
A Moody's Investors Service report released on Tuesday said California's three municipal bankruptcy filings "demonstrate that the willingness of some cities to continue to cut costs and associated municipal services to pay debt obligations may be eroding."
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