Bankrupt San Bernardino, Calif., sued the state's tax and finance departments seeking to block them from withholding sales and property tax revenue owed to the city, Bloomberg News reported today. The city was told on March 4 that unless $15 million is turned over to the state by a redevelopment successor agency, sales and use taxes owed to San Bernardino may be withheld and property taxes due to the redevelopment agency and the city may be held back, according to the city’s complaint filed in bankruptcy court yesterday. The city will be forced to shut operations as early as mid-May and no later than June 1 if the taxes are blocked, according to the complaint. The successor agency has no cash and is insolvent to the tune of $15 million, City Attorney James Penman said in the filing. The city seeks a court order stopping the state from withholding the funds.
