The judgment is more than twice the size of the town’s annual budget, which already faces a $2.7 million shortfall for fiscal 2011-12 and a projected deficit of $2.8 million for 2012-13. The town has already cut services and employees’ pay. A poor snow season and a slump in visits to Mammoth Mountain are largely to blame for the town’s reduced tax revenues.

MLLA plans to fight the bankruptcy filing, and claims that it offered the town a plan to repay the full judgment over 30 years. Mammoth Lakes plans to ask the bankruptcy court to approve a 10-year payment plan of about $500,000 a year, according to the Los Angeles Times. The city argues that this plan will safeguard the security and welfare of residents and tourists.

Essential city agencies including police and fire services will remain intact regardless, town officials said. Mammoth Hospital and the Mammoth Community Water District are separate from the town and not affected.