Are California’s 'Charter Cities' Bankruptcy Prone?

The last three major California cities to file for bankruptcy or announce plans to do so - including Stockton last month and San Bernardino two weeks ago - have something in common: They are all "charter cities." They have their own constitutions, or charters, granting them more freedom than non-charter cities to govern their affairs. 
 
A hundred and twenty one of California's 482 cities are charters. The first were established in the 1870s when tough economic times and criticism that the state was meddling in city affairs spurred a constitutional revision granting municipalities the charter option. Other states, including Colorado, New Jersey, Ohio and Texas, also offer their cities greater autonomy under what is generally known as "home rule," but while the courts in those states have sometimes limited the power of home-rule cities, California's Supreme Court has tended to side with the cities when power disputes with the state have arisen. 
 
Some say the resulting level of independence may be the very cause of charter cities' fiscal problems. They say charter cities, for instance, aren't subject to state laws mandating salary limits for elected officials, a fact that was revealed - infamously - two years ago, when news broke that the tiny, working-class city of Bell outside Los Angeles paid its city manager $800,000 a year. 
 
But not all of California's charter cities are in financial trouble. Two of the largest, Los Angeles and San Francisco, are relatively stable, owing to their large populations, diverse economies and high property-tax rates. And it isn't just California's charter cities that are struggling; plenty of non-charter cities are also facing financial difficulties. 
 
Charters can actually give cities more flexibility to cut costs. For example, California's Supreme Court recently ruled that charter cities don't have to pay prevailing union rates to contractors on municipal projects funded with local tax dollars. 
 
"When you give a city more control, it can go one of two ways," said Jessica Levinson, a professor at Loyola Law School Los Angeles and local-government expert. "One way is the leaders are very successful in running that city; the other way is, you get Bell, you get San Bernardino, you get Stockton." 
 
Lately, however, it seems more charter cities are headed the way of the latter group. Another, Compton, just announced it may have to file for bankruptcy by September (WALL STREET JOURNAL, STATE NET) 

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