Vallejo, Calif. files for bankruptcy protection

[UpInArms]

Source: Associated Press

SAN FRANCISCO (AP) -- The city of Vallejo filed for bankruptcy protection Friday to deal with a ballooning budget deficit caused by soaring employee costs and declining tax revenue.

The San Francisco Bay area suburb of about 120,000 residents became the largest California city to seek bankruptcy protection.

Mayor Osby Davis said the city's attorneys filed papers seeking Chapter 9 bankruptcy protection in federal court in Sacramento.

"We've exhausted all avenues at this point, and this is all we had left," Davis said. "I had hoped to avoid it all the way up until yesterday. It's something we can't avoid ... We can't pay our bills."

<snip>

"The mismanagement of the city for so long has tarnished our reputation, not bankruptcy," said Councilwoman Stephanie Gomes. "Bankruptcy gives us the opportunity to fix that mismanagement and put a long-term plan in place to ensure true growth and recovery."

Read more: http://hosted.ap.org/dynamic/stories/V/VALLEJO_BUDGET_CRISIS?SITE=MOCOD&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2008-05-23-18-01-38

[Parche]

1. Lets Send $100 Billion More To Iraq

:sarcasm: :sarcasm: :sarcasm:
:hi:

[UpInArms]

2. nation building?

"Let me tell you what else I'm worried about: I'm worried about an opponent who uses nation building and the military in the same sentence. See, our view of the military is for our military to be properly prepared to fight and win war and, therefore, prevent war from happening in the first place."

[AZ Criminal JD]

3. Did you even read the story?

The quote from the councilwoman was "mismanagement of the city".

[UpInArms]

4. the story also attempts to paint the unions as the bad guys

but never really delves into why the city is in such dire straits.

Mismanagement implies???

Did they invest in derivatives as did Orange County?

:shrug:

[AZ Criminal JD]

11. I don't know what they invested in, if anything

But I know whatever money is going to Iraq would not have ended up in their hands so it is besides the point.

[KamaAina]

7. Try $115 Billion

'cause they can never seem to account for the extra $15B. :eyes:

[Auggie]

5. Police and firefighters compensation amounts to 3/4 of the city's general fund

According to this:

Vallejo is the largest city in California to declare bankruptcy, and the only one to do so because of long-term economic problems. The 117,000-resident city has been hit hard by the weak housing market and rising public employee salaries.

By declaring bankruptcy, the city hopes to re-organize its debts and restructure its budget, including, possibly, its police and fire contracts. Union leaders have said the city is not insolvent, but is using bankruptcy as a way to get out of its labor contracts.

Meanwhile, The Chronicle reported Thursday that city officials are also discussing a refinancing plan with financier Calvin Grigsby of San Francisco, whose firm manages billions of dollars in bonds for governments throughout the nation, including several bond deals in California.

Grigsby's partner, Robert Ceresa, said the plan could be an alternative to bankruptcy and would be contingent on further cuts to salaries and benefits paid to city police officers and firefighters, whose compensation amounts to three-quarters of the city's general fund.

Link: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/05/23/BAAF10S5VS.DTL

[redtornado]

6. Taxes in the area are already through the roof

There kinda screwed if they try to raise them anymore. They drove out alot of business already.

[Auggie]

8. It's not exactly a high-income area to begin with.

[xioaping]

10. If they can not afford police and fire and the taxpayers will not

vote in a tax increase to pay the cost of police and fire then the answer is pretty simple: contract for police and fire services with the county.

Why is their always so much politics over basic accounting. If the money is not there and you can not get it then there is only so much you can do.

To use the threat of bankruptcy as a negotiating tool/threat over a labor contract is bad politics no matter what the situation is.

[snapdragon]

9. mismanagement...and no help from the drain of illegal immigration

[annabanana]

12. So this is what a "drowned" government looks like. . . . n/t