San Francisco Suburb To Declare Bankruptcy

Vallejo's City Council Chooses Bankruptcy As Solution To Fiscal Crisis

(AP)  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.

Representatives from police, fire and electrical workers unions all argued against the Chapter 9 bankruptcy protection, saying that doing so would only make hiring already short-staffed public safety agencies even harder.

Other critics warned that if a bankruptcy judge does not rule in the city's favor, the legal costs of the proceedings could sink the city further in debt.

The city's mayor, Osby Davis, resisted filing for bankruptcy, arguing that it would stigmatize Vallejo and hurt future economic development. But after months of personally negotiating with the unions, Davis conceded Tuesday that there were no other options that he could find.

"It's time to do something different. I don't like it. I don't want it," he said before voting for bankruptcy protection.

The seven-member council all said the process of making the decision was difficult and emotional.

"Honestly, if there are any more options out there, I would like someone to tell us what they are," said Councilwoman Joanne Schivley, who then recited her phone number twice for people to call her with ideas.

City leaders said filing for bankruptcy will not immediately allow them to fill the potholes on untended streets or add more detectives to the undermanned police force. But they hope, if a judge rules in their favor, it will allow them to restructure union contracts and other debts in a way that allows the city to turn itself around financially within the next few years.

In addition to being the largest California city to declare bankruptcy, Vallejo will be the first city in the state to do so because its revenues cannot cover expenses, experts say.

Desert Hot Springs, a small town in Riverside County, filed for bankruptcy in 2001 after losing a lawsuit. Orange County declared bankruptcy in 1994 after it lost money in a series of bad investments.

"There is a stigma associated with bankruptcy that's not necessarily warranted," said Sajan George, an Atlanta-based financial turnaround consultant who worked on the Orange County bankruptcy.

"My message to residents of Vallejo is, this is not a death knell and should not be equated with that," George said. "We put together a plan for Orange County, issued municipal bonds that allowed county to emerge from Chapter 9 a couple of years later, and now Orange County is thriving."

[payasyougo]

Actually, the demise of Orange County in 1994 was a joint effort between a Democrat and the Republican controlled county.

County Treasurer Bob Citron, a Democrat, made the stupid financial moves in sole control of the failed investing strategy. It was his job as an elected official. So a Democrat is primarily responsible for the disaster.

In all fairness the rest of the county, controlled by Repoublicans who benefited temporarily from the vapor gains, ignored common sense. If you claim ignorance and allow something wrong to continue you are complicit. Republicanse absolutely share the blame.

[barbaraf4]

It wasn''t mentioned in the article, but I think Vallejo lost an important US Air Force Base (Fairfield AFB) when all the downsizing began. If I remember correctly, that base was a major transportation terminal.

I suspect many towns have been hurt by the closures.

[perceptions5]

Flamming libeals it''s not 1994 it''s 2008 and your hero''s, the subject of this story, the Democrats proved once again they can''t run anything.

[libh8er]

Typical of Republicans... stupid with money.
Posted by Nancy_Naive at 06:30 AM : May 07, 2008

Typical democrat lib......writing revisionist history becase the facts are too painful to face.

[libh8er]

I suspect many towns have been hurt by the closures.
Posted by barbaraf4 at 07:55 AM : May 07, 2008

SF has made it plainly clear that they do not like the military. They are also a ''sanctuary city'' thumbing their nose at upholding federal law.

SF and surrounding areas deserve everything they''re getting. Tourism is down and they are going broke. And I. for one, am happy to see it. Maybe the ''Green Party'' can smoke some pot and come up with solutions. HA!

[johnstossel]

Politicians say it''s no big deal about losing jobs. People will get jobs elsewhere (read: McDonalds or Burger King). One thing these pols need to remember: You can''t pay taxes if you don''t have an income!!!

[notblue]

Typical! The leftwing way, no personal responsibility, it''s always someone elses fault, justify actions by blaming others, everything runs in a gray area, an entire suburb can run from debt without true justification, the leftwing San Fransisco way.

[prinzowhales]

Unlike this community, the Washington Regime has a printing press to create its own money with the connivance of the private bankers who garner billions in Usury through the mechanism of the IRS.

On another economic note...As America imports ******** for the pleasure of paying their medical bill, housing them in our jails and putting up with their quaint diseases such as drug resistant strains of TB...our refineries are selling diesel fuel to Mexico which sells for $2 a gallon...

http://www.oilwatchdog.org/articles/?storyId=19882&topicId=8059

The criminal Oil Companies could be nationalized if you would stop voting for their Demopublican puppets--like Obama...McCain...and Clinton.

[prinzowhales]

In the S&L scandal, the California housing market had been boosted to then record levels by speculators in collusion with the banks...they would by houses and then simply raise the price...and they did this on credit...it was pure finance capitalism at work...a swindle of Biblical proportion...like the finance capital swindle of Enron...the current swindle...and the oil and food swindle.

[inventagod2]

''Flamming libeals''

and

Ignorant Republicans

We go down together...

[libh8er]

The criminal Oil Companies could be nationalized if you would stop voting for their Demopublican puppets--like Obama...McCain...and Clinton.
Posted by Prinzowhales at 10:21 AM : May 07, 2008

If you like living under socialism, move to Chavez land.

[bgwinnett]

The criminal Oil Companies could be nationalized if you would stop voting for their Demopublican puppets--like Obama...McCain...and Clinton.
Posted by Prinzowhales at 10:21 AM : May 07, 2008

If you like living under socialism, move to Chavez land.

Posted by LibH8er at 10:56 AM : May 07, 2008

Prinzowhales is a Ron Paul supporter actually, plus he has no time for the Dems or the GOP.

[missingamerica]

I say again: Thanks, CBS, for providing a place for the nutcases to hang out and vent...I have no doubt it helps to prevent them from committing horrible crimes should they catch a member of one of the numerous groups that they hate in a vulnerable moment...

[ddaryl1]

not a linberal thing, not a republican thing... it is an America is heading downhill fast thng and the dubmasses on both sides are to blame.

Lets face facts most of us draw a line down the center and take just a step to the left or the right, and yet there is no "3rd party" out there that represents this faction.

There are plenty of cities and suburbs in major trouble, this is just the beginning...

[libh8er]

There are plenty of cities and suburbs in major trouble, this is just the beginning...
Posted by ddaryl1 at 11:15 AM : May 07, 2008

All run by democrats

[sistatee-2009]

The city should borrow itself further into debt in order to solve its debt problem. Oops....sorry....that''s the United States.

[Gary Kempf]

So reality has touched California soil??????

[hypnotoad72]

not a linberal thing, not a republican thing... it is an America is heading downhill fast thng and the dubmasses on both sides are to blame.

Lets face facts most of us draw a line down the center and take just a step to the left or the right, and yet there is no "3rd party" out there that represents this faction.

There are plenty of cities and suburbs in major trouble, this is just the beginning...

Posted by ddaryl1
------------------

Sadly true. Unless things turn around, disaster will be inevitable and by the looks of things such a disaster would be worldwide. Is it too late to change? No. Are there things that can be done? You bet. Will they want to be done? Some, yes, some, no. Let''s see what happens, but the worst of it all still won''t take place for a number of years.

We have time, let''s use it. I think we can all agree; Democrats and Republicans alike, NOBODY wants to see things disintegrate.

Or, if nothing else, have faith for the long term.

[navyjimfl]

"overly generous pay and benefits to the city''s police and firefighters"

it''s better than working for a living and getting well paid too.....

[bookwerm314]

This is the canary in the coal mine..

There will be more and more of these bankruptcies, as we find that city, county, state and even FED (which can print money so is "safe") pays and benefits cannot be afforded!

The Public sector gets bennies that FAR exceed that which the private sector can afford, and all on the backs of the taxpayers.. the govts. do hankypanky with budgets, promises for pensions etc. that most regular folks in REAL jobs would KILL to get. Well, not kill, but be pretty desperate for.. and when we are all starving and the retired Secretary from the DMV gets her 80% salary for the rest of her life 20 yrs from now,,... trust me, things will change..

So you Public Service folks.. we are coming.. we are coming to take your bennies, to take your huge pensions.. we won''t care what was "arranged" by your union, won''t matter.. we will drive those city, county, and state govt.s into bankruptcy, and when that happens, the rules change. And all that money you were counting on ripping out of our bleeding wallets will not be coming, YOU will be poor.. And THEN we will have justice.

The NEXT step is to kill all medical and other benefits for elected officials and make THEM buy insurance on the "open" market.. see how THEY like it. Why should a Senator get a pension? They are not an employee of govt. they ARE the govt.

[squidly8]

Wow, who would have thought that if you provide government workers with a very good salary and lavish benefits (that the town really cant afford) and lots of time off (poor productivity), that it wont come back to bite the budget?

A clue to the clueless: The best and brightest do not work in government service! They work where they can make a pile of money and retire. Those who are willing to trade their ambition for a comfortable job work for the government. Once they are in, they complain it isn''t enough!

[Gary Kempf]

I am sure members of city council and mayor were also well compensated. I doubt the police and fire departments pay drove them broke alone.

[mbburch06]

From the article: "There is a stigma associated with bankruptcy that''s not necessarily warranted."

Not warranted? Walking away from your financial obligations via bankruptcy is basically state-sponsored theft. Any stigma associated with it is completely deserved.

This case is just another testament to the incompetence of government.

[mjvw2]

a sanctuary city. maybe they can use some illegals to perform critical services. I fear they''ll be looking to the federal gov to bail them out which means it will come out of all our pockets. Screw them.

[geneonlbk]

The "upper class" is just now beginning to see the problem with robbing the poor to benefit the wealthy. Of course you will have to spend more and more and more to protect yourselves from the very people you have been robbing for decades. Now "protection" is becoming too dear and you are in peril of being overrun by the lower classes, who, after all, no longer have anything left to loose.

[Gary Kempf]

mjvw2;
You can''t really expect a city in California to endure something that the city of Cincinnati, Ohio has endured for the past year and a half. Reality is not something that California accepts well.

[raskal_2]

It is true that politicians in California and the people of California do not deal well with reality. And Mr. George saying in the article that Orange county is thriving is extremely mis-leading. The County just defunded almost all of their Mental health services and their Safety net for emergency Mental health services (P.U.F.F.)are shut down. You can always determine the financial health of a community in how it cares for those who cannot care for themselves...

[imotorist]

They should get into the medical pot business part time. It seems to be very lucrative.

[Gary Kempf]

They should get into the medical pot business part time. It seems to be very lucrative.


--------------------------------------------------------------------------------

Posted by imotorist at 02:04 PM : May 07, 2008

Maybe they did, only they smoked it, instead of selling it........It would explain alot.....

[culturechang]

City council members will probalby still get thier bonuses. This should never happen because any govt entity is supposed to spend only what they get, but intead they operate them like a corporation. Spend like crazy on all sorts of half-baked plans and proposals....and they take risk by investing in real estate and giving tax breaks. Govt should not be in the risk business.

I would not drive through there. They probably have speed traps set up everywhere to get additional revenue.

[superdem]

This shows why you cannot run government like a business, like the Republicans always want to do. Governments cannot make any money except through taxes, they do not exist to make profits. People want services like police protection and trash pick ups and good roads, but they don''t want to pay any taxes. Governments are not "competitive" in the capitalistic sense - they are what they are and cost what they cost. Now if they mounted solar cells on all governmental buildings they could probably generate enough electricity to run the buildings with enough left over to sell it. But the Republicans don''t want that - Reagan, their god, took the solar panels Jimmy Carter set up, off of the White House roof. His first official act was to reject solar energy and bow to the oil companies. What a moron.

[gretagreen]

FYI: Vallejo has been struggling for a long long while, and it''s not really a suburb of SF.

[forthepeopl1]

ALL THEY HAVE TO DO IS MAKE ALL MORTGAGES FROM 2000 TO 2007 ALL GET RE-FI AT A GOOD RATE LIKE 1 OR 2 POINTS OVER PRIME, THATS ALL AND IT WOULD STOP EVERYTHING ONCE AND FOR ALL.

TAKE WHAT THE MORTGAGE IS NOW MINUS 60 % PERCENT OFF AND RE-FI EVERYONE..THIS WOULD STOP IT ALL, AND STOP PUTTING GOOD AMERICANS ON THE STREET.

I JUST HAD MY REALTOR APPRAISE MY HOME I BOUGHT 6 YEARS AGO, PAYED 300,000 FOR IT NOTHING SPECIAL IN A SMALL TOWN IN MASS, NOW HE SAID ITS WORTH MAYBE 150,000 BUT REALLY THINKS IT WORTH 100,000..SO GUESS WHAT WHAT THE BANK WILL OWN IT FOR 300,000 BECAUSE THEY DONT WANT TO HELP IN MAKEING THE VALUE THE 100,000 TO 150,000, AND EVEN AT THAT RATE HE SAID IS BETTER THAN WHAT THEY ARE GETTING AT FORCLOSER SALES, THEY ARE GETTING 20 TO 30 CENTS ON THE DOLLAR. SO IT WOULD MAKE SENCE TO JUST RE-FI EVERYONE AT 40 PERCENT AND START OVER. THIS WOULD STOP EVERYTHING...

[e-mail]

[forthepeopl1]

ALL THEY HAVE TO DO IS MAKE ALL MORTGAGES FROM 2000 TO 2007 ALL GET RE-FI AT A GOOD RATE LIKE 1 OR 2 POINTS OVER PRIME, THATS ALL AND IT WOULD STOP EVERYTHING ONCE AND FOR ALL.

TAKE WHAT THE MORTGAGE IS NOW MINUS 60 % PERCENT OFF AND RE-FI EVERYONE..THIS WOULD STOP IT ALL, AND STOP PUTTING GOOD AMERICANS ON THE STREET.

I JUST HAD MY REALTOR APPRAISE MY HOME I BOUGHT 6 YEARS AGO, PAYED 300,000 FOR IT NOTHING SPECIAL IN A SMALL TOWN IN MASS, NOW HE SAID ITS WORTH MAYBE 150,000 BUT REALLY THINKS IT WORTH 100,000..SO GUESS WHAT WHAT THE BANK WILL OWN IT FOR 300,000 BECAUSE THEY DONT WANT TO HELP IN MAKEING THE VALUE THE 100,000 TO 150,000, AND EVEN AT THAT RATE HE SAID IS BETTER THAN WHAT THEY ARE GETTING AT FORCLOSER SALES, THEY ARE GETTING 20 TO 30 CENTS ON THE DOLLAR. SO IT WOULD MAKE SENCE TO JUST RE-FI EVERYONE AT 40 PERCENT AND START OVER. THIS WOULD STOP EVERYTHING...

[e-mail]

[cpaide]

Posted by forthepeopl1

you''re insane, my friend, really truly insane. if you get 60 percent off, then everyone with a mortgage will want 60 percent off as well. who will pay for that? not me!

now back on topic. what did the california cities and counties do with all that property tax revenue when home prices tripled and tax revenues doubled a few years ago. where is all that money? hundreds of BILLIONS of dollars have just vanished?

[questionnews]

"You don''t know San Francisco, Butters. It was the breeding ground for the hippie movement in the 60s. Those hard-core liberals, lesbian activists, and diehard modern hippies young and old. I swore I would never set foot in San Francisco. God help me."

Eric Cartman

[usbrit-2009]

now back on topic. what did the california cities and counties do with all that property tax revenue when home prices tripled and tax revenues doubled a few years ago. where is all that money? hundreds of BILLIONS of dollars have just vanished?

Posted by cpaide

It''s called Proposition 13. Voted in in the ''70''s I believe it freezes property taxes at the original buying price of the house at the time the occupants bought it. Thus if a family has lived in a house for 20 years, they''re paying 1983 property taxes. The increase in house value only comes into play when the house sells again.

[usbrit-2009]

The reason that Vellejo went bankrupt is PRECISELY because they didn''''t run it like a business.

Posted by ritewingman

Far more businesses go bankrupt than municipalities, so I think your thesis is lacking.

[usbrit-2009]

The Anti-American Democrats with their evil politcal agendas are helping to Bankrupt Cities all over America.

Posted by demslie

I am so fu*king fed up with your hateful sick little diatribes that constantly pollute this venue. You never have anything useful to say just bash, bash, bash the dems. SO BOOORING and futile considering your kind will be as outdated as the dinosaur come January.

[usbrit-2009]

"You don''''t know San Francisco, Butters. It was the breeding ground for the hippie movement in the 60s. Those hard-core liberals, lesbian activists, and diehard modern hippies young and old. I swore I would never set foot in San Francisco. God help me."

Eric Cartman

I''m sure the beautiful city of San Francisco doesn''t miss you at all.

[questionnews]

"You don''''''''t know San Francisco, Butters. It was the breeding ground for the hippie movement in the 60s. Those hard-core liberals, lesbian activists, and diehard modern hippies young and old. I swore I would never set foot in San Francisco. God help me."

Eric Cartman

I''''m sure the beautiful city of San Francisco doesn''''t miss you at all.

Posted by USBrit at 04:12 PM : May 07, 2008

You do know who Eric Cartman is, don''t you?

[usbrit-2009]

You do know who Eric Cartman is, don''''t you?

Posted by Questionnews

Never watched South Park so no I didn''t. I feel much better educated now though. Thanks

[spadeisspade]

This move has been coming for months. Unions in Vallejo literally refused to believe the city council when they were told that they had no money. Unions WILL destroy the US economy, and I just don''t understand why union members can''t see it that way. Unions were created to hold business owners to a higher work standard, now they just strong arm businesses into giving more and more and more. A business would have folded and moved to China. Vallejo unfortunately doesn''t have that luxury.

[randaids]

Far more businesses go bankrupt than municipalities, so I think your thesis is lacking.



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Posted by USBrit at 04:07 PM : May 07, 2008

That is because when governments run out of money, they need only to raise taxes, not revenue. a duuuuh!

[randaids]

This move has been coming for months. Unions in Vallejo literally refused to believe the city council when they were told that they had no money. Unions WILL destroy the US economy, and I just don''''t understand why union members can''''t see it that way. Unions were created to hold business owners to a higher work standard, now they just strong arm businesses into giving more and more and more. A business would have folded and moved to China. Vallejo unfortunately doesn''''t have that luxury.


--------------------------------------------------------------------------------

Posted by spadeisspade at 04:44 PM : May 07, 2008

Sadly the Unions don''t even stand up for the US worker anymore. If they did, they would be after the illegal immigrants, but noooooooooooooo, Labor Unions are hoping to add new members as soon as illegals are amnestied. WE ARE DOOMED.

[notblue]

USbrit, just out of curiousity, what do you think about the Dems bashing and blaming the Repubs dayin and day out? Even more obsurd, blaming one man for terrorist attacks, 935 lies,hurricanes, the price of gas, all the while there is a majority of Democrats in both houses? Just Curious.

[usbrit-2009]

The last part is easy. The dems can''t get squat past the last remnants of the repug congress who are on record guaranteeing Shrub veto override proof nos. of votes simply to stop the democrats doing anything. Then of course they are the ones to cry foul.

935 lies. Maybe not one man, but one man''s administration and he''s the captain so the buck stops there.

Price of gas. The war pure and simple. Speculators wouldn''t have a chance to run up the price of gas this much without the general nervousness of world brought on by the war.

Terrorist attacks especially 911. No I do not blame one man for that. It took a world wide clusterfu*k for the intelligence community to let that happen.

Hurricanes. Blaming them on anything but mother nature is stupid. My personal jury is still out on global warming, but it is definitely too early to be blaming the recent higher %age of 4 and 5 power hurricanes to global warming. The catastrophe after Katrina - definitely the Bush regime to start with in immediate response. Many people have contributed since then including the highly republican lobbied insurance industry.

One last thing you don''t mention is the $2 trillion debt to China to pay for Shrub''s pet war and the resultant devaluing of the dollar by 33%. I lay all that at the feet of the Regime.

I hope that helps - gotta go now, we''ll talk again soon I''m sure.

[usbrit-2009]

"Democrats'' Housing Plan Faces Bush Veto"

See what I mean notblue???

Questionnews, please tell me, because I dont know who Eric Cartman is/was, but I did enjoy my short 6 month stay at Mare Island in 70.

[algoresarse]

Posted by USBrit at 09:31 AM : May 08, 2008
+ report abuse

***************

oh i seen the DNC housing plan..its aka as ghetto expansion