The city of San Bernardino, which is unable to make its Aug. 15 payroll, is the third California city to seek bankruptcy protection.
The city council, facing a $45 million deficit, authorized the city attorney to begin Chapter 9 bankruptcy proceedings immediately, the San Bernardino Sun reports.
City Attorney James Penman says that for 13 of the last 16 years, the council had been given falsified budget documents saying the city was in the black when, in fact, it was running a deficit.
The city, with a population of 210,000, joins two others in California - Stockton and Mammoth Lakes - that have turned to bankruptcy in recent weeks.
The vote Tuesday night was 4-2, with one abstention.
Councilman John Valdivia said he abstained because he didn't think he could trust any information he was given.
"The taxpayers of this city have been duped, hoodwinked and misguided for the past several years," he said, according to the Sun.
The Los Angeles Times, quoting city officials, says the fiscal crisis was a long time coming, compounded by the recession and exacerbated by escalating pension costs, lucrative labor agreements, Sacramento's raid on redevelopment funds and a city reserve that haddried up.
The Times reports that San Bernardino's tax revenues have dropped by as much as $16 million annually in recent years, largely due to the drop in sales and property taxes.