City of Vallejo declares bankruptcy

The City of Vallejo, in northern California, has filed bankruptcy. Here are a few excerpts from the San Francisco Chronicle about this desperate action, which happened primarily because the Vallejo City Council overpaid its cops and firefighters:

The Vallejo City Council voted to declare bankruptcy Tuesday night after months of last-ditch wrangling failed to rescue the city from financial catastrophe.

The North Bay city of 117,000 now heads into largely uncharted territory, as no California city of this size has ever opted for this route.

After about four hours of discussion and public comment from the standing-room-only crowd, the council voted 7-0 to approve Tanner’s recommendation to declare Chapter 9 bankruptcy protection as a means to reorganize its finances, which have been shattered by spiraling public employee salaries and the plummeting housing market.

The move allows the city to freeze its debts while maintaining city services. Police, fire and other unions and many in the audience were outraged at the move, accusing the council of poor leadership.

The city suffers from mismanagement and has less debt than it claims, said a union spokesman, Ken Shoemaker, a representative of the electrical union.

Vallejo faces a $16 million shortfall and no money in its reserve account for the fiscal year beginning July 1. In March, the city shaved several million dollars from its payroll, museums, public works, senior centers, libraries and other services to avoid bankruptcy, but needed to make further cuts to meet increased expenses in the next fiscal year.

The city and its police and fire unions held a final contract negotiating session Sunday but failed to reach an agreement before Tuesday’s City Council meeting.

The city and its public safety unions have been at the bargaining table for about two years. The city is asking for its police and firefighters to take salary, benefit and staff cuts, while the unions say any further cuts would endanger public safety as well as the safety of the police and firefighters.

Vallejo spends 74 percent of its $80 million general fund budget on public safety salaries, significantly higher than the state average. The generous contracts are the result of deals struck in the 1970s, following a police strike that left the city in turmoil.

I wonder if the City of Santa Ana will end up in the same dire straits one day? Mayor Miguel Pulido doles out regular raises to our cops and firemen because their unions give money to his campaigns, and they walk precincts for him too. The Santa Ana City Council also recently gave out huge raises to City Manager Dave Ream and to our City Clerk. Probably to keep them from talking when they retire, potentially as soon as next year.


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