City declares bankruptcy
The city of Vallejo is going to declare bankruptcy, the Associated Press reports. The city's horrible financial woes are due to generous pensions and salaries given to the firefighters and police officers. Those funds make up between 75 and 80 percent of the city's general fund.
It's a little scary knowing that cities could actually declare bankruptcy. The story states that immediate impacts that residents will see are that potholes won't be filled or that more detectives won't be added to the force. Yeah, like that's the worst it. I wonder what the long term effects will be on the city and its residents.
Here's part of the story:
Vallejo is set to become the largest California city to declare bankruptcy after leaders voted in favor of the solution to its spiraling budget crisis.The city council voted unanimously Tuesday night following hours of public comment and months of failed negotiations with police, fire and other unions.
City Manager Joseph Tanner and the city's finance director had advised filing for bankruptcy before its fiscal year ends on June 30 because Vallejo faces a projected budget deficit of $16 million and has no money in its reserves.
The San Francisco suburb of 117,000 people also is expected to generate $5 million less in revenue than projected because retail sales and property values are down amid an economic slowdown and slumping real estate market, according to a report issued by Tanner.
Many officials and residents attribute Vallejo's fiscal troubles to overly generous pay and benefits to the city's police and firefighters. The salaries for police and firefighters currently take up 75 to 80 percent of the city's general fund.
Comments
I find it interesting that in this blog, the posters have no problems normally making inductive leaps in the stories that are posted when it comes to politicians and their connections, union negotiations, etc., yet, here we have a GIANT red flag for many cities in the SGV in the example set by vallejo, yet, nothing is said about how "generous pensions" in the valley could result in similar results if HR costs are not reigned in. How many cities in the valley spend close to the 75/80 % of the general fund on their personnel costs? How many are year by year slowly reaching this threshold? Isn't that a HUGE story for the various cities in the san gabriel valley? Shouldn't this be talked about when police and fire unions in the valley try to put city officials over a barrel during negotiations? I've seen at least three cities go through extremely contentious negotiations over the last couple of years. Are any of these cities trying to avoid the fate of vallejo? Connect the dots on more stories than how much a water board member gets paid, for the love of God.
Posted by: Anonymous | May 7, 2008 4:46 PM