Posted on 06/29/2012 9:31:17 AM PDT by SeekAndFind
The City of Stockton, the now-infamous port city located in Northern California, is declaring bankruptcy. It is the largest U.S. City to take the drastic step of declaring bankruptcy. Stockton is facing a $26 million budget deficit, it has stopped making bond payments, and employee pay, and health and insurance benefits, have been cut significantly.
Is Los Angeles next? There is no doubt that it is in bad shape financially -- and I mean really bad shape. But for a number of reasons I do not think Los Angeles will go the way of Stockton. Its leaders, hopefully, still have a few more tricks up their sleeves. The key here will be to look at other available options.
The situation in Stockton is unique for a few reasons.
First, Stockton was among those cities leading the country in foreclosures. Indeed it has the second highest rate in the country. Too many people bought houses they can no longer afford. When houses are foreclosed banks lose money and the government loses property tax revenue. That is and was a huge issue in Stockton.
Second, Stockton gave public employees salaries and benefits that the city, in hindsight, simply could not afford.
Here, Los Angeles' chief administrative officer, Miguel Santana, is pushing hard for both higher taxes and lower spending. Los Angeles is and should consider adjusting the retirement age for new city employees. We are also exploring the option of outsourcing or partnering with non-profits to help run the zoo and other city-run properties.
Stockton joins thirteen jurisdictions that declared bankruptcy last year, and seven that filed for bankruptcy this year. That is a marked increase in the number of jurisdictions declaring bankruptcy. Hopefully Los Angeles will buck this truly disheartening trend.
-- Jessica Levinson writes about the intersection of law and government in Los Angeles every week. She is a Visiting Professor at Loyola Law School.
See also here:
EXCERPT:
_______________________
[SNIP]
For the moment, Stockton holds the record as the largest US city to go bust. That dishonor previously belonged to Vallejo, Calif., a former Navy town up the road from Oakland.
Vallejo declared bankruptcy in 2008. The story there was much the same as Stockton’s now: mass layoffs affecting all but a few city employees. Police and fire protection slashed. Closed libraries and parks.
One thing Vallejo didn’t do was touch retirement benefits. Officials said they just couldn’t afford to fight the unions in court.
Vallejo emerged from bankruptcy on somewhat surer fiscal footing last year. But as long as the growth of retirement benefit costs remains unchecked, no city is safe.
Stockton is in immensely worse shape today than Vallejo was four years ago. Yet its problems pale in comparison to the crisis looming in Los Angeles.
LA Mayor Antonio Villaraigosa famously vowed the city wouldn’t go bankrupt “on my watch.” But his term happens to end next year, right about the time the city’s budget deficit is expected to jump from $222 million to $427 million — driven almost entirely by labor costs.
Delaying the inevitable didn’t help the people of Vallejo or Stockton, and it won’t save Los Angeles and other cities from a similar fate.
Stockton is a sensation and a cautionary tale — but the worst is yet to come.
Ex-mayor Richard Riordan was asked about whether L.A. would go into bankruptcy. He replied, paraphrasing here, “It must go into BK. There would be no way it can pay out the pensions promised.”
The can is nearing the end of the road. They can’t kick it much further...Stevie666
East Las Vegas is ready to file.
A major defeat for the brown unions.
“One thing Vallejo didn’t do was touch retirement benefits. Officials said they just couldn’t afford to fight the unions in court.
This is why there are many who believe that Vallejo will soon be back in bankruptcy. They didn’t want to face the reality that the pension benes were the real killers. Vallejo’s Black leadership simply didn’t have the fortitude to do what was necessary. They used bankruptcy to try and kick the can down the road a little further. Here’s hoping that San Diego and San Jose will take their PE unions to court, if necessary, and really put their budgetary problems to rest permanently.
“Its leaders, hopefully, still have a few more tricks up their sleeves. “
Hopefully not. It’s all the various sleeve tricks that have created the financial problems of governments across the country. Including the Feds.
Seems to me the bankruptcy judge should have taken the down the retirement benefits for the city.
The retirees are creditors just like anyone else the city owed money to; no more entitled to the cities assets than anyone else.
So long as Mayor [Insert pornographic reference here] Villraigosa is [Insert pornographic reference here] the unions’ [Insert pornographic reference here], there will be no talk of bankruptcy. The [Insert pornographic reference here] mayor and the [Insert pornographic reference here] city council are the [Insert pornographic reference here] union’s [Insert pornographic reference here] [Insert pornographic reference here] [Insert pornographic reference here] [Insert pornographic reference here] [Insert pornographic reference here] boys. The [Insert pornographic reference here] unions put them into office and the [Insert pornographic reference here] running the city know to keep [Insert pornographic reference here] the unions’ [Insert pornographic reference here] if they want to stay in power.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.