Another California City Considers Bankruptcy

Desert Hot Springs stops just short of it, hoping to save money to avoid declaration

The City Council in the resort town of Desert Hot Springs, California, urged by aides to begin steps toward bankruptcy, stopped short yesterday, saying it may avoid running out of cash by finding savings to stay solvent.

The city of 26,000 people and 16 boutique mineral spas near Palm Springs will be out of cash by March 31, according to Amy Aguer, the interim finance director. She said the council should declare a fiscal emergency, a prerequisite under state law before seeking court protection.

"It's too drastic to consider," Mayor-elect Adam Sanchez, a 55-year-old Democrat, said in an interview. "There's room in this city budget to make the cuts that are necessary without going bankrupt."