Vallejo, California, to File for Bankruptcy as Union Discussions Collapse

[marmar]

from Bloomberg:





Vallejo, California, Officials Vote for Bankruptcy (Update1)

By Michael B. Marois

May 7 (Bloomberg) -- Vallejo, California's city council voted to go into bankruptcy, saying the city doesn't have enough money to pay its bills after talks with labor unions failed to win salary concessions from fire fighters and police.

The city council's unanimous decision makes the San Francisco suburb the largest city in California to file for bankruptcy and the first local government in the state to seek protection from creditors because it ran out of money amid the worst housing slump in the U.S. in 26 years.

The city of 117,000 is facing ballooning labor costs and declining housing-related tax revenue that have left it near insolvency. The city expects a $16 million deficit for the coming fiscal year that starts July 1. Under bankruptcy protection, city services would keep running. It would freeze all creditor claims while officials devise a plan for emerging from bankruptcy.

``Nobody wants bankruptcy but there doesn't appear to be a whole lot of options left,'' said city councilwoman Joanne Schivley. ``We are going to be out of money by June 30. It's all a numbers game now.''

City and labor union officials have been meeting since January to revise the existing contracts. The unions have balked at pay cuts. By filing for bankruptcy, Vallejo is asking a judge to step in and force salary concessions from the labor unions.

Once the city files its petition, a federal bankruptcy judge must decide whether the city is actually insolvent. If so, the case can proceed. If the judge rules Vallejo isn't legally broke, the case would be dismissed, said the city's bankruptcy attorney Marc Levinson of Orrick, Herrington & Sutcliffe. ......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=aCWpB6JlHN9Y&refer=home

[DBoon]

1. Police? Fire?

What the hell is left of city government when you cut these?

You mean all that anti-tax rhetoric about generous welfare payments bankrupting taxpayers isn't true? That we are reduced to going into bankruptcy to keep law enforcement and fire protection in place?

[DadOf2LittleAngels]

2. Well there is more than that here are some of the services

I leave it to all to decided what is and is not critical

http://www.ci.vallejo.ca.us/govsite/default.asp?serviceID1=48&serviceID2=688&Frame=L1