This excellent Reuters report on San Bernardino provides one strong clue: when you are the poorest city of your size in your state, yet your police and firefighters can retire at the age of 50 with a pension that is 90% of their final salary, you are a strong contender for bankruptcy, sooner or later. One small example of the municipal largesse that eventually dragged San Bernardino into a hole it could not climb out of:
In 2009, patrol lieutenant Richard Taack retired at the age of 59, after 37 years of service. He took home $389,727 that year, including $194,820 in unused sick time and $33,721 for unused vacation time, according to city payroll records. Shortly after Taack retired - on an annual lifetime pension of $128,000 - he was hired part-time by [longtime city attorney James] Penman's city attorney's office, at $32 an hour.
That was long after the city had already seen its tax revenues collapse, along with the economy as a whole. Municipal unions seeking opulent contracts are certainly complicit in San Bernardino's downfall. But the real blame rests with elected officials who voted this entire unsustainable system of lavish payments and pensions into place.
If your local elected officials are math-illiterate, in the pocket of special interests to the point of being functionally corrupt, or both, your city may go bankrupt. A lot of cities meet that criteria. This entire story is excellent. Send it to your city council.