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."

[standlee5]

Be careful who you put in local office. They''ll spend like drunken sailors and have very little if any budget or finance expertise.

[standlee5]

This is where every city is heading if local govt. don''t CUT THEIR FAT CAT SPENDING and SHRINK the size of govt. Local govt. is meant to provide the basics not feed, clothe, babysit, and basically nanny all it''s resicents. The are going to go down and bring us all with us because they do not generate revenue they consume revenue and we all can''t afford to pay for it anymore.

[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

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.

[usbrit-2009]

"Democrats'' Housing Plan Faces Bush Veto"

See what I mean notblue???

[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.

[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.

[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.

[randaids]

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



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

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!

[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.

[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

[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 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.

[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]

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]

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.

[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

[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?

[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]