Desert Hot Springs, California, a resort near Palm Springs, may become the first US city since Detroit to seek bankruptcy protection from creditors after a sharp drop in revenue.
The city of 26,000 people will run out of cash by March 31, according to a memo to the city's council from interim director of finance and administration Amy Aguer. She urged the council to declare a fiscal emergency.
If this action is approved, Desert Hot Springs would join two other Californian cities in the bankruptcy court: San Bernardino, with a population of 210,000, and Stockton, with 292,000 residents.
"I'm just blindsided," mayor Yvonne Parks said when asked about the fiscal crisis. "There isn't anything that could explain this. That's what blows my mind."
Revenue for this financial year is projected to be $US13.9 million ($14.8 million), or $US2.7 million less than budgeted, Ms Aguer said in the memo.
San Bernardino, whose council voted for bankruptcy in August 2012, and Stockton, which filed in June 2012, both cited decreased property-tax revenues from the housing-market collapse, as well as rising labour and pension costs.