Bloomberg News reports …
Vallejo, with a population of 117,000, faces ballooning labor costs and declining housing-related tax revenue. The city expects a $16 million deficit for the fiscal year that starts July 1.Police and firefighting salaries, pensions and overtime consume more than 70 percent of the city’s $89 million general fund budget. That’s higher than the 60 percent average throughout the state, according to the League of California Cities.“I guess the battle goes into a courtroom now,” said Kenneth Shoemaker, a city worker and member of the local International Brotherhood of Electrical Workers union. The 20 largest creditors without collateral backing their claims are owed a total of $321.8 million, court papers show. The California Public Employees’ Retirement System, the largest U.S. public pension fund, is owed $135.4 million for retiree health benefits and $83.9 million for unfunded pension plan benefits.
Ah, feels like 1994 all over again, no? To read more, CLICK HERE!
this is just the beginning you think this is the only
city in california that this is gonna happen to?
hell no… the recession is gonna amplify the many
many problems facing our state and nation…
next year at this time the plummeting housing prices
will just be one of many front page horror stories
Man, your title is as BS as Vallejo blaming their financial problems on the RE market. It’s like saying the US has a huge national debt due to the explosion of production in China; it’s vaguely related to part of the issue, maybe, but very misleading to state or imply the majority of causality.
Vallejo went bankrupt because they spent too much money, primarily on public service employee salaries and long-term obligations. The housing market correction, and the inability of the city to collect increasing revenue to mask their out-of-control spending, hastened the day of reckoning, but was a minor factor overall.
They will not be the last California city to go bankrupt; many cities have run-away, irresponsible spending, and will be unwilling or unable to cut back enough to avoid having the courts do it for them. It’s a shame our government cannot be more fiscally responsible during prosperous times, and avoid the compounded downturns that come with spending temporary, phantom, or just non-existent income, but that behavior seems inevitable with America’s politicians. Americans are either too stupid or too short sighted to not vote for the guy who promises them more money, regardless of where it doesn’t come from; see Obama’s popularity for a current sad example.
what is the time frame for the OC getting it’s NOD?
man, I love the new median price
DataQuick’s median: $490,750
say hello to 400K
Lansners a day late and a dollar short on this story
I took a managing position in Finance at a govt agency after having been a Controller in the private sector. I was amazed and not just a bit horrified when I saw the benefits structure that was negotiated.
As taxpayers, for all you who think you know what is going on in govt, you need to look where no one else is looking.
The salaries look reasonable, but you need to look at the benefits.
The agency I went to is small; it has an $8MM operating budget. But the unions have negotiated a combined level of vacation benefits for 20 years of service or greater of 13 holidays plus 42 vacation days. Most work 10 hr days, 4 days a week. This translates into 10 weeks of vacation EACH AND EVERY YEAR. Since no one takes 10 weeks of vacation, they are able to take payouts to reduce the annual expense, increasing their pay dramatically beyond what is published.
You have to understand that those negotiating the contracts usually rise from the ranks; also, their own benefits usually depend on the size and volume of the contracts. So management agrees to higher levels of benefits for their own benefit.
This is different in the private sector because management can give themselves eggregiously huge salaries and benefits without having to give “equal” benefits to the workers.
The latter is just less expensive but equally wrong.
As responsible taxpayers, you all need to start looking at the benefits structures of the local govt agencies. In addition, I think shareholders need to start looking at why anyone is worth $32MM a year in salary.
Vallejo files BK and cities like Corona remain unscathed???? The mushroom cloud that is the IE is imminent….