Posted on 05/23/2008 1:07:20 PM PDT by SmithL
VALLEJO, Calif.—The city of Vallejo has filed for bankruptcy protection to deal with a ballooning budget deficit caused soaring employee costs and declining tax revenue.
The San Francisco Bay area suburb of about 120,000 residents is the largest California city to declare bankruptcy.
Mayor Osby Davis says the city's attorneys filed papers seeking Chapter 9 bankruptcy protection in federal court in Sacramento on Friday.
The City Council voted to authorize the city manager to file for bankruptcy on May 6 after months of failed negotiations with its public safety unions.
Some officials blame the financial crisis on labor contracts they say provide overly generous pay and benefits to the city's police officers and firefighters.
It’s amazing....truly....that a government can be so ineptly run as to end up in bankruptcy, and no one gets tarred and feathered.
The never-ending quest for higher sales and property taxes is driven by city and county governments that have never had to downsize/reorganize in order to become more efficient.
Overly generous pensions also factor in heavily.
But since you can only tax “so much,” they can only delay the pain for “so long.”
Eventually, cities and county governments have to recognize that not every file clerk is needed, and certainly isn’t worth a 7 figure retirement pension.
Bankruptcies will help speed up that day of reckoning.
Consider that those who run the city have no skin in the game. It’s not their money they are spending. If it doesn’t work out they just don’t run again.
It’s amazing....truly....that a government can be so ineptly run as to end up in bankruptcy, and no one gets tarred and feathered.
they are democrats...what else needs to be said!!!!
Re: Pensions. You got that right. I’ve heard that the 50% of Californians that are gainfully employed are paying the pensions of the 50% who are retired and that 90% of those who’ve retired from government jobs retired before the age of fifty. An exaggeration no doubt, but not much of one.
This slide (and its not just Vallejo) has been going on for thirty years. They have a city police chief who makes more than US congressmen and most state governors....$306k for the chief. A police Lt makes around $240k. And the chief of the Vallejo fire department makes around $207k, with the average fire fighter making $170k...not counting overtime. Across the entire state...they’ve all allowed the same behavior to occur. This doesn’t even cover the retirement scheme...which is just as silly.
There is a state university security chief for one of the colleges in the state...who they paid off to retire. Then they readvertised the position, and the retired chief applied and was accepted back to the position (with the pension already paid out)...so she was going to start with a huge salary and start rebuilding a second pension deal. No one in the university board was a bit ashamed of the deal or would resign.
This is the thing about Vallejo...its the first town...with another dozen probably going to declare bankruptcy by December of this year. The entire state has a problem and this will eventually trigger a massive exodus of the state, and probably federal help required to prevent a state from dissolving away into is bills.
This is the only place in America where some fireman dreams of being a millionaire by age 55...and probably will do it.
How can the creditors not go after the cosigner.
How can the creditors not go after the cosigner.
Every City and County in California that I have ever been very familiar with is in exactly the same position.
It's simply a matter of when.
Elected officials have the attitude that they simply will not be around when the **** hits the fan. Do the easy thing today and deal with it later.
Pity.
“provide overly generous pay and benefits to the city’s police officers and firefighters.”
There will be more cities to follow Vallejo’s lead. Interesting note is that the Zodiac killer’s first victims started in Vallejo.
Everybody keeps saying “more cities to follow.” What cities?
Just guessing this community has been dominated by democrat politicians over the past 30 years...
Most California cities are in dire straights, due to a loss of revenues caused by the housing crunch. We won’t know which cities until they actually show up in the headlines.
However, keep your eye on the West Contra Costa Unified School District. In a very few years, it will need 100% of its entire budget to pay retirement costs. That will leave exactly $0.00 to run the school system.
Big surprise... the same kind of mentality that is destroying Detroit's big 3...
It’s not just cities in CA. You can expect Glen Cove, NY, to file for bankruptcy in the near future. It’s a small city of 26,000 on Long Island, with a budget deficit of $14 million. Their debt has been described as $2,000 per resident, so that makes it over $50 million. How one little city can get into so much trouble is beyond me.
I don’t think its union contracts that caused it. It was borrowing and more borrowing, with one administration leaving the mess for the next administration and no one bothering to clean it up.
Let’s all wait until Ovomit comments on this.
Check this out.
Very good news in a certain way. The Feds are far and away the worst but all over America on all levels of government (state county city) sweetheart union contracts need to be adjusted downward. Most especially pensions
You know why lawyers love to become judges? Much less pressure and outlandish pensions after ten years and less. In many places that’s how the judge racket works
Thanks for the ping and this bankruptcy needs to be repeated all over the USA to get Gubbermint expenses on salaries benefits pensions under control and in line with the private sector
Myy wife and I were married in this town, 36 years ago.
No prob. I hear what you are saying. This will be interesting to say the least. I don’t really know how this stuff works. I mean a municipality filing for chapter 9 has to be a lot different in court as opposed to corporate or personal entities. What the heck do they do? Liquidate? The bondholders need $$$ and the unions won’t shut up. With Chapter 9 do all labor contracts go out the window?
I am going to have to read up on the fed bankruptcy code.
This seems like the start of something big across the state.
They sent out over 300 pink slips to teachers in the spring
Now it seems they have found $20 Million in a “rainy day” fund so have rescinded the lay off notices.
I wonder how many other dark little corners hold millions (billions?) of dollars in secret so as to substantiate more and more taxes and fees
Speaking of which, Arnold was pushing some fee and on TV yesterday he was making fun of an adversary who didn't want the new “tax.”
The guy should have gone up to the mic and explained how Arnold was ripping us off, but instead he just stayed in the background and giggled.
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