Chapter 9

24 May

The City of Vallejo, California files for Chapter 9 Bankruptcy protection. The deets:

The Vallejo City Council unanimously agreed May 6 to begin bankruptcy filings after months of negotiations with city public employee union negotiators. Several meetings between city and union negotiators after the May 6 vote didn’t break the stalemate. City finance officials attribute Vallejo’s looming $16 million deficit for the coming year to a plummeting housing market and the cost of ballooning public safety employee contracts. Officials expect the city’s general fund to run out of money June 30 and hope Chapter 9 bankruptcy will protect the city from its creditors while it works out a long-term plan to pull out of debt and continue to pay its employees. City officials rejected a union proposal its representatives say offered a two-year plan to avoid bankruptcy and even build city reserves through assumed new revenue sources and union concessions.

Sometimes, it’s heartening just to get confirmation that we’re not the only place with problems.

3 Responses to “Chapter 9”

  1. Richard Strongbridge May 24, 2008 at 8:54 am #

    Mayor Osby Davis said “Irrespective of where we are, this crisis gives us an opportunity to restructure our government.”

    Almost makes you wonder what would have happened to Buffalo/Erie County if they declared bankruptcy instead of getting a control board. Has anything really been restructed? Has the legislature really cut anything?

  2. wcp May 25, 2008 at 9:51 am #

    Two causes- a slumping real estate market and the cost of police and fire protection which make up 75 percent of the city budget. Rumore is just a rookie in comparison. The City is hoping to toss the contracts as part of the bankruptcy reorganization. From SFGate:

    The foreclosure crisis and economic downturn have caused a sharp decline in revenue from sales tax, property tax and development fees.

    Many officials and residents blame Vallejo’s chronic financial problems on labor contracts that they say provide overly generous pay and benefits to the city’s police officers and firefighters. Those city workers comprise about three-quarters of Vallejo’s general fund.

    http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/05/23/financial/f105501D64.DTL&hw=vallejo&sn=001&sc=1000

  3. hank May 26, 2008 at 6:12 am #

    GUARANTEE FAIL—
    SUPPORT YOUR LOCAL CIVIL SERVICE EMPLOYEES UNION—DO IT TODAY!!!

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