San Bernardino says it hopes to resume paying Calpers
* Bankrupt city says payments to pension fund could restart after May
* Calpers says restart of payments would be "smart decision"
* No talk of repaying arrears
By Tim Reid
RIVERSIDE, Calif., April 9 (Reuters) - San Bernardino said on Tuesday that it hopes to soon resume paying into Calpers, the California state employees' pension fund, after almost a year of non-payment since the city filed for bankruptcy last August.
The attorney representing the California city in its quest for bankruptcy protection told the judge overseeing the case that the city planned to present a new, detailed budget by April 15, for approval by the city council on May 6.
The attorney, Paul Glassman, added that along with the new, pre-bankruptcy budget, the city hoped "to resume payments to Calpers."
San Bernardino halted its $1.2 million, bimonthly employer contributions to the California Public Employees' Retirement System - the largest U.S. public pension fund with assets of $256 billion - when it declared bankruptcy on Aug. 1, 2012.
The city said at the time that it hoped to resume payments to Calpers, its biggest creditor, in July 2013. Glassman did not specify a resumption date in court on Tuesday or definitively state that the payments would restart. He also did not address the question of the city's arrears to Calpers.
Calpers is opposing San Bernardino's quest for bankruptcy, the only city to have halted payments to the fund. Another judge approved the California city of Stockton for bankruptcy last week. Stockton has kept current on its payments to Calpers and the pension fund has not opposed that city's bid for Chapter 9 protection.
Amy Norris, a spokeswoman for Calpers, said the city "had indicated that it will resume payments. We believe it will be a smart business decision for the City to make the payments part of the budget."
Calpers said it would take several days to calculate the exact arrears figure for San Bernardino.
Both San Bernardino and Stockton are considered test cases in the battle over whether municipal bondholders or pensioners will absorb most of the pain when a state or local government goes broke.
Battle lines have been drawn in both cases between Calpers and Wall Street bondholders over how they will be treated as creditors.
Unlike Stockton, where proceedings have moved relatively swiftly, culminating in last week's ruling of bankruptcy eligibility, the San Bernardino case has made little progress.
The city and its creditors, including Calpers and employee unions, are still negotiating the question of what documents and witnesses the city must provide to make its case for bankruptcy - negotiations that have been taking place since December.
Meredith Jury, the federal bankruptcy judge in Riverside, who is overseeing the case, gave the parties another three weeks to resolve the issue of discovery. The next hearing will take place on May 7, she said on Tuesday.
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