From the Voice of OC:
Although Santa Ana city officials and union leaders are saying they can work together to pare down the city’s $30-million budget deficit, the word bankruptcy is being whispered more often these days in the corridors of City Hall.
And it is clear, as the city and unions enter the early stages of negotiations, that if the two sides don’t agree to drastic cost-saving measures, the prospect of bankruptcy will go from a persistent rumor to a distinct possibility.
Yet because there are so few cases of municipal bankruptcy, there is no clear understanding of what bankruptcy would ultimately mean for the city. Labor contracts may or may not be scrapped. The city’s credit rating could be left scarred, or it could easily bounce back. Long-term pension obligations have never been tested in bankruptcy court.



