Skip to comments.Forward Democrats! Union Sets Record for Biggest City Bankruptcy
Posted on 06/28/2012 3:56:46 AM PDT by Kaslin
Forward! Stockton, California; move on forward, right to bankruptcy.
Can you take the Democrats with you? Oh, that's right: They are already there.
Stockton, California will seek bankruptcy protection after negotiations with unions over benefits and workers pay failed to avert insolvency by the city. But because of laws passed by California liberals aimed at entitling government union workers to inflated pay and benefits under most circumstances, look for more cities in California to seek the same remedy.
If you werent horrified by the case in made in Madison, Wisconsin over union wages and benefits causing massive state and local budget deficits, you should be scared by the example in Stockton.
For more on this story, see Mike Shedlock's Stockton Bankrupt; Unions Pension Death Trap for Cities to Blame
Because California isnt Wisconsin. Its bigger than that. California, as measured by GDP, ranks as the 8th largest economy in the world. At $1.9 trillion it dwarfs Greece and is ranked above Spain. It economy is larger than the economy of Russia.
From the Washington Post:
The city is fiscally insolvent and must seek chapter 9 bankruptcy protection, Stockton said in a statement released yesterday after its council voted 6-1 to adopt a spending plan for operating under bankruptcy protection. In addition to the bankruptcy petition, the city will file a motion with the courts to share information from the confidential mediation.
The Post said that a bankruptcy by Stockton will make it the largest city to file for bankruptcy protection in U.S. history.
Thank God for the unions and Democrats protecting the middle class.
Without them, we might have something outrageous like fiscal solvency breaking out.
Stockton, an agricultural city of about 300,000 residents in Californias Central Valley, voted to pare the years budget by reducing benefits, pay and debt service on bonds.
The new budget will suspend debt payments, reports the New York Times, cut employee pay and reduce retiree benefits, allowing this city of about 292,000 residents to continue providing essential services through the bankruptcy process.
The liberal California Supreme Court ruled in 2011 that union pension, healthcare and other benefits are protected under the law, even when benefits arent promised in contracts. Instead, benefits in some cases are considered implied contracts, leaving cities with few options when it comes to negotiating during tough fiscal times, says Steven Greenhut, vice president of journalism at the Franklin Center for Government and Public Integrity. Increasingly, union benefits are forcing cities, especially in California, to consider bankruptcy as their only option to restore the fiscal health of cities.
Unions, of course, wont take pay or benefit cuts unless forced to.
Yet many state governments such as California struggle with endless budget deficits, wrote Greenhut at UnionWatch.org. Unfunded liabilities to pay for pension promises for state and local public employees hit an estimated $3 trillion nationwide. Then there are the debts for the health-care promises that municipalities have made to their employees. Much of this is not honestly accounted for, so the real numbers are worse than the official ones.
To put those numbers in perspective, the whole country of Greece is underwater on about $420 billion in debt, or only 14 percent of just our unfunded pension promises for state and local workers are.
Hence the need for bankruptcy protection from the courts in order to keep vital services running at the state and local level. In the fight between benefits that you and I will never be entitled to but have to pay for and keeping the garbage picked up and the police cars rolling, get which side the unions pick?
Indeed, some are arguing that states like Illinois and California have no choice but to consider asking Congress for an enabling law that would allow states to file bankruptcy in order to void the union contracts.
Greenhut cites an op-ed from former Florida Gov. Jeb Bush and former Speaker of the House Newt Gingrich who say that union contracts are the problem for states wrestling with budget deficits.
[A]s with municipal bankruptcy, writes Bush and Gingrich in the LA Times, a new bankruptcy law would allow states in default or in danger of default to reorganize their finances free from their union contractual obligations. In such a reorganization, a state could propose to terminate some, all or none of its government employee union contracts and establish new compensation rates, work rules, etc. The new law could also allow states an opportunity to reform their bloated, broken and underfunded pension systems for current and future workers. The lucrative pay and benefits packages that government employee unions have received from obliging politicians over the years are perhaps the most significant hurdles for many states trying to restore fiscal health.
And instead of politicizing the process by allowing the federal government to play favorites with their union buddies and federal bailout money, we ought to let taxpayers and elected officials in the state wrest back control from unelected union hot shots who use your tax money to buy favors from Democrats.
Have you heard the ads on radio (I have) pushing municipal bonds as a “guaranteed safe investment”. I wonder who the after insurers are, and how much of this they can take. I suspect the bond holders will probably get something like 80 cents on the dollar, meaning the insurers will “only” be holding the bag for 20%. Still...
Madison Wisconsin and Sacramento California
Madison is attracting business and Sacramento is driving away business because of Gov. Walker dealing with Unions and Business are not paying for Public Unions cost unlike Sacramento California.
As these Democratic Cities are learning that attracting new people and business who move there to inherit a huge debt that is owed.
I suspect that it will be considerably less than that.
“.......California, as measured by GDP, ranks as the 8th largest economy in the world. At $1.9 trillion it dwarfs Greece and is ranked above Spain. It economy is larger than the economy of Russia.”
Really?? I remember it being the 7th largest economy under Gov. Reagan but after all of the liberal, wacko laws, etc. and companies leaving the state over the past 40 years, it still is 8th in GDP and is larger tn Russia?? Hard to believe.
* In the February 2, 2011 issue of Forbes, the magazine gave Stockton the dubious distinction of being the "most miserable" US city, largely as a result of the steep drop in home values.
* Central Connecticut State University surveys from 2005 and 2006 ranked the city as the least literate of all U.S. cities with a population of more than 250,000.
* According to a Gallup poll, Stockton was tied with Montgomery, Alabama for the most obese metro area in the United States of America with an obesity rate of 34.6 percent.
*Employment breakdown of Stockton:
1 San Joaquin County 5,938
2 Stockton Unified School District 4,000
3 St. Josephs Medical Center 2,230
4 OG Packing 2,001
5 California Div. of Juvenile Justice 1,492
6 Diamond Foods 1,467
7 City of Stockton 1,425
8 Dameron Hospital 1,200
9 North California Youth Center 1,000
10 University of the Pacific 966
Public employees unions is a gift from JFK.
The progressives in motion and the people go broke.
When I lived in Stockton about 10-years ago the nicest building in town was the welfare office.
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