aClem writes:
I would be very surprised if Vallejo is the last.
aClem | 05.23.08 - 2:32 pm | #

Mel writes:
Can they unincorporate?
Mel | 05.23.08 - 2:36 pm | #

Nemo writes:
Keep an eye on Jefferson County, Alabama.
Nemo | Homepage | 05.23.08 - 2:37 pm | #

mock turtle writes:
not first

does this mean that the cities common stock holders will be left holding the bag...

oh wait that's the taxpayers...
now i get it

but certainly the monolines will back vallejo's minis
mock turtle | 05.23.08 - 2:38 pm | #

The_Scum writes:
the meltdown of California is starting to heat up.
The_Scum | 05.23.08 - 2:39 pm | #

mock turtle writes:
minis should be munis...hahahah

but by now they are mini i guess
mock turtle | 05.23.08 - 2:39 pm | #

Northern Cali writes:
Always remember that you are unique, just like everyone else.
Northern Cali | 05.23.08 - 2:39 pm | #

Nemo writes:
HaloScan sux
Nemo | Homepage | 05.23.08 - 2:44 pm | #

hopeinsd writes:
This will be a VERY closely followed process. If Vallejo can scale back pension promises and then is welcomed back by Wall Street after its over, expect lots of cities to follow their lead.

I suspect police/fire unions around the country will be funding a big battle in the BK courts. One interesting question would be if the BK judge can force Vallejo to raise taxes, even though voters must normally approve all taxes.
hopeinsd | 05.23.08 - 2:45 pm | #

mock turtle writes:
bond holders shouldn't worry

surely the purchasers covered their risk with credit default swap

wikipedia "Credit default swaps resemble an insurance policy, as they can be used by debt owners to hedge, or insure against credit events such as a default on a debt obligation. However, because there is no requirement to actually hold any asset or suffer a loss, credit default swaps can also be used for speculative purposes"

(no requirement to hold any asset nor suffer any loss)

ok now i feel better
mock turtle | 05.23.08 - 2:45 pm | #

Terry writes:
Please don't feed the trolls.
Terry | 05.23.08 - 2:45 pm | #

Rob Dawg writes:
Valleyo is unique in the circumstances that caused it to file for bankruptcy protection. That said have you ever heard a skier with a broken leg NOT describe their injury as a freak accident? No, Valleyo will not be unique in Chapter 9 filing, all the others will have been hit with different freak issues. Oxnard in SoCal is in deep because of long term developer agreements dependent upon the City having spent upfront and expecting to service the debt through sales and proerty tax increments. At 230k population they are too big to fail but they also are the largest by far at-large weak mayor municipality in the nation which makes them incompetent to administer their own options. Other places are the Inland Empire recently incorporated area like Moreno Valley or Perris. Last to grow first to go. I'd be equally concerned about School Districts and other quasi-independent government entities. In California the incredible increase in property values has papered over structural spending deficits.
Rob Dawg | Homepage | 05.23.08 - 2:48 pm | #

mock turtle writes:
or maybe Vallejo's holders of debt instruments have hedged risk using CDS squared

"A collateralized debt obligation squared (CDO-squared) is backed by a pool of collateralized debt obligation (CDO) tranches. " (investopeida)

now that's much mo better
mock turtle | 05.23.08 - 2:49 pm | #

Anonymous writes:
Who's on second.
Anonymous | 05.23.08 - 2:49 pm | #

MarkS writes:
"A collateralized debt obligation squared (CDO-squared) is backed by a pool of collateralized debt obligation (CDO) tranches. " (investopeida)

The high finance version of diversifying your pink sheet portfolio.
MarkS | 05.23.08 - 2:51 pm | #

Nemo writes:
No, really, keep an eye on Jefferson County, Alabama.

The county paid banks $120 million in fees -- six times the prevailing rate -- for $5.8 billion in interest-rate swaps. That was supposed to protect the county from rising rates for their bonds. Lending rates went the wrong way, putting the county $277 million deeper into debt.
...
Bankers who worked for New York-based Bear Stearns Cos. and JPMorgan when Jefferson County bought its swaps have been told they might face criminal charges under an antitrust investigation of the municipal derivatives industry, according to records filed with the Financial Industry Regulatory Authority Inc.
...
Jefferson County -- which weathered the U.S. Civil War in the 1860s and racial strife in the 1960s -- is now scrambling to avert what would be the biggest municipal bankruptcy in the nation's history, measured by outstanding bonds.
Nemo | Homepage | 05.23.08 - 2:51 pm | #

gab writes:
I don't believe Vallejo had any GO debt outstanding. It was water and sewer debt, with the revenues from those operations pledged to repay the debt. Thus, no bondholders to satisfy in bk proceedings.
gab | 05.23.08 - 2:52 pm | #

mock turtle writes:
or better yet

maybe CDS cubed are involved

"CDO-cubeds are backed by CDO-squared tranches. CDO-cubeds allow the banks to resell the credit risk that they have taken once again by repackaging their CDO-squareds.

CDO-squareds and CDO-cubeds can be repackaged countless times to create derivatives that quite different from the original underlying debt security. These are also referred to as CDO^n, to show the unknown depth of some of these securities." investopedia


what was that?

"CDO-cubeds can be repackaged countless times....to show the unknown depth of some of these securities"

we need to fill our prisons with the lawyers and quants and investment bankers that created this s#!T
mock turtle | 05.23.08 - 2:56 pm | #

Anonymous writes:
Are there monoline's who have wrapped Vallejo's bonds?
Anonymous | 05.23.08 - 2:57 pm | #

mock turtle writes:
gab

even revenue bonds could take a hit if their if there are unpaid water bills due to unemployed or bankrupt property owners and-or vacant real estate.
mock turtle | 05.23.08 - 2:59 pm | #

Anonymous writes:
New York City should explore using the power of eminent domain to take Madison Square Garden to speed long-delayed plans to improve Pennsylvania Station by bringing in new tracks and giving it a much grander entrance, New York Assemblyman Richard Brodsky said on Friday.

http://www.reuters.com/article/ b...327964720080523

One more reason not to buy US asserts. It would be interesting to know how much Mr. Richard Brodsky and his buddies will make if this goes threw.
Anonymous | 05.23.08 - 2:59 pm | #

mock turtle writes:
anon wrote "Are there monoline's who have wrapped Vallejo's bonds?"

----i 'm not smart enough to know ...just speculating and wincing

i'll try to find out
mock turtle | 05.23.08 - 3:01 pm | #

hopeinsd writes:
I can't say I know much about the topic (should that ever stop a blog commenter?) but I would be very scared of Mello Roos bonds. (if your not from CA, don't ask) If 10/20% of property taxes in a particular area aren't being paid, then how do these bonds get paid? We are already at 5% countywide late payments in San Diego. I suspect it’s much worse in the bubble parts of the county, where Mello-Roos are much more common.

Now I really have no idea who actually holds mello-roos bonds or how much protection is built in.
hopeinsd | 05.23.08 - 3:02 pm | #

the_economist writes:
The_Scum writes:
the meltdown of California is starting to heat up.

Shouldnt this read the heat up is causing the meltdown?

Just asking?
the_economist | 05.23.08 - 3:02 pm | #

lama writes:
Haven't there also been attempts by adjoining communities to reincorporate as a new combined entity to eliminate pension liabilities for public servants (i.e.: teachers, fire, police)?
lama | 05.23.08 - 3:03 pm | #

MiTurn writes:
Lamma wrote: "Haven't there also been attempts by adjoining communities to reincorporate as a new combined entity to eliminate pension liabilities for public servants (i.e.: teachers, fire, police)?"

I'murious, but hat happens to the retired public servants who had their pensions tied-in (up?) with Vallejo?
MiTurn | 05.23.08 - 3:05 pm | #

Bob Dobbs writes:
Among California cities the weak sister will file bankruptcy -- Vallejo never recovered from the loss of a naval base back in the 90s -- but you won't see massive municipal carnage.

You _will_ see budget cutting to the bone. And you will see, somehow, cities find a way to cut back on police contracts, or at least on their retirement funds. They'll find one because they have to. It's simply not affordable.

I don't want starving retired cops, but 3 percent per annum after 20 years is too much, not even counting the scam of running up overtime during the last three years of service.
Bob Dobbs | Homepage | 05.23.08 - 3:05 pm | #

calhousingbear writes:
I think hopeinsd hit the key two items.

If they can break the pension promises, then many other cities will go the BK route.

And if they can't, can the judge force the city to raise taxes? I doubt it -- after all a BK judge cannot force the shareholders to pony up more $$ than the share price in BK. The bond holders end up eating it.

And it is not yet 5pm on this three day weekend. What other news will leak out....
calhousingbear | 05.23.08 - 3:07 pm | #

ChefVisar writes:
Yes, others will follow. Vallejo was first because they (1) failed to replace the closed Mare Island military facility with another tax revenue source (preferring to remain a bedroom community) and (2)locked in increasingly generous contracts to the police and firefighter unions. About 70% of their tax revenue goes to those two categories. The city council of course is elected by generous donations from the unions, so all the "oversight" functions of the council disappeared.

This problem is widespread in California, so how the BK courts treat the pay and pension contracts for these unions is going to be closely watched. The unions had refused any concessions for the past several months, even though they were heavily pressured by other police and fire groups from other cities. The day after the council voted to go BK, the unions wanted to negiotiate. But it was too little, too late.
ChefVisar | 05.23.08 - 3:08 pm | #

mock turtle writes:
GO bonds for Vallejo?

see items 315 and 355

looks like two issuances but not sure if i'm reading it right

http://sec.gov/news/extra/burncomp.htm

still looking
mock turtle | 05.23.08 - 3:10 pm | #

Rob Dawg writes:
Mello-Roos are special assesment districts. The participants, usually individual lot owners are joint and severally liable. Your neighbors crap out, you are stuck with their bills too. The "upside" is M_R is usually second in line (behind property taxes) for liens on those properties. Thus things have to become very bad before M_R districts experience losses. Cash flow problems certainly but not solvency.
Rob Dawg | Homepage | 05.23.08 - 3:11 pm | #

Billy Hill writes:
Haven't there been cases where courts have ordered tax increases for school districts that were inadequately funded? If so, could this provide a precedent for funding of pensions?
Billy Hill | 05.23.08 - 3:12 pm | #

El Cliffo writes:
The funny thing about Vallejo is that its mayor, Osby Davis, was sworn in six months ago after winning an election recount by 2 votes (out of over 11,000 cast). The previous newly-elected mayor, Gary Cloutier, had to leave office. Cloutier had won in November 2007 by 3 votes.

Moral: Be careful what you wish for, you just might get it.
El Cliffo | 05.23.08 - 3:13 pm | #

Elvis writes:
I wish for George W. Bush to be unanimously elected in the inaugural class of the Doofus Hall of Fame.
Elvis | 05.23.08 - 3:20 pm | #

Tim writes:
This hits close to home literally because I live in Sf. They had to match the benefits of neighboring counties like SF and Alameda but they didn't have the revenue. I don't trust Muni Bonds in CA. All of these cities are strapped and they're payrolls are ballooning. Voters are resistant to new taxes and existing revenues are declining.
We are all Subprime now.
Tim | 05.23.08 - 3:23 pm | #

Tim writes:
Time to play hardball with the Unions. The court battles will be the game to watch in 08' Huge repercussions for all US municipalities.
Tim | 05.23.08 - 3:26 pm | #

mock turtle writes:
http://www.bloomberg.com/apps/ ne...id=atl3yFmV508A

"S&P today lowered the ratings on Vallejo's certificates of participation, a type of bond backed by its share of the state's vehicle license fees, to B from A, given the uncertainty of how the revenue source would be dealt with under bankruptcy, the rating company said in a statement. It also lowered the rating on Vallejo Public Financing Authority's bonds to B from A-."
mock turtle | 05.23.08 - 3:28 pm | #

Tim writes:
It also lowered the rating on Vallejo Public Financing Authority's bonds to B from A-."

Cliff diving in V-Town.
Tim | 05.23.08 - 3:29 pm | #

mock turtle writes:
i cant get this to open

but the google hit reads:

abc7news.com: Vallejo will become the largest city in the state to ...
Vallejo has over $50 million in bond debt secured by its general fund. Bankruptcy attorney Dean Gloster, who represents the city's three employee unions, says there will be other ...
abclocal.go.com/kgo/story?section=news/local& id=61... • Found on Windows Live, Yahoo! Search
mock turtle | 05.23.08 - 3:30 pm | #

mock turtle writes:
my error

not found on google

found on dogpile
mock turtle | 05.23.08 - 3:31 pm | #

checker writes:
"One interesting question would be if the BK judge can force Vallejo to raise taxes, even though voters must normally approve all taxes"

Taxation without representation! An interesting concept. It currently happens indirectly when a judge requires available funds to be spent on ...whatever - sewage treatment, schools, jails. To keep other essential services, taxes must be raised. I expect this issue to become increasingly critical in California as more interest groups go to court to fund their particular critical public service.
checker | 05.23.08 - 3:31 pm | #

rich writes:
>This will be a VERY closely followed process. If Vallejo can scale back pension promises and then is welcomed back by Wall Street after its over, expect lots of cities to follow their lead.

Not so. Public pension benefits are determined mainly by state law and state judicial precedent. The idea that a pension benefit could be discharged or "scaled-back" in bankruptcy is a little simplistic. In any case, Wall Street would be wary of welcoming back municipalities with unpaid pensions and the resulting lawsuits.

>I suspect police/fire unions around the country will be funding a big battle in the BK courts. One interesting question would be if the BK judge can force Vallejo to raise taxes, even though voters must normally approve all taxes.

Bankruptcy judges do not have the power to raise taxes. For that matter, neither does the executive branch.

Taxes can only be raised by the vote of the people or their elected representatives.
rich | 05.23.08 - 3:34 pm | #

Anonymous writes:
The main U.S. accounting rule maker said on Friday bond insurers will have to recognize claim liabilities when the bonds they have insured have experienced deterioration, in a move that will likely force bond insurers to recognize claims sooner.

http://www.reuters.com/article/ b...WEN591420080523

Uh Oh!
Anonymous | 05.23.08 - 3:35 pm | #

skeptictank writes:
Hey it's Friday afternoon before a 3 day weekend. Is the FDIC going to have a busy weekend? IMB maybe? DSL?
skeptictank | 05.23.08 - 3:37 pm | #

Winston writes:
mock turtle,

313 is a Separate entity from the City of Vallejo and is still solvent. I have no idea about 355. Actually, as is typically the case in California there are several independent districts that provide services within Vallejo and surrounding areas (such as the Vallejo Unified School district) that are involved in this bankruptcy. However, it is apparently making it hard for them to buy things as people are afraid that the not-bankrupt districts are part of the bankrupt city.
Winston | 05.23.08 - 3:37 pm | #

Rob Dawg writes:
mock turtle,
Thanks, good find. That's an interesting question raised. Can a BK judge or master interfere with COPs? I would think that a third rail in these circumstances. Vehicle license fees are a State animal. The COPs are marketed as having the only claim on those funds. If the special master so much as hints that BK trumps COP status the entire COP market will panic. Near every municipality or district would experience a cash flow problem of crisis proportions. COPs are useful tools for managing the often arbitrary receipt of funding. Take that away at all our peril.
Rob Dawg | Homepage | 05.23.08 - 3:38 pm | #

Winston writes:
There is NO reason for Vallejo to continue to exist as an independent city. It would make far more sense to dissolve it and let Solano County provide policing and fire protection and the Sanitation district run the water and sewer services.
Winston | 05.23.08 - 3:40 pm | #

rich writes:
I believe you will see states (maybe led by California) create their own versions of the PBGC to help public plan participants such as Vallejo's.

These entities could be funded by special assessmens against corporations that operate inside the affected areas. For example, if UPS wants to deliver a package in Vallejo, it will have to pay 10 cents per package to this entity.

Of course, this would tend to drive business out of these areas over time. But over time, most of California could be included.

I think the bottom line will eventually be a business exodus from California.
rich | 05.23.08 - 3:40 pm | #

mock turtle writes:
hopeinsd

rich

checker

One interesting question would be if the BK judge can force Vallejo to raise taxes, even though voters must normally approve all taxes"

----

if the experience with the Washington Public Power Supply System bonds..."wpss" are any indication the answer is no

courts did not require WA state nor taxpayers to back the largest municipal default in the history of the USA
mock turtle | 05.23.08 - 3:42 pm | #

Adan Lerma writes:
expected, yes, but still a shock when it finally arrives....
Adan Lerma | Homepage | 05.23.08 - 3:42 pm | #

Rob Dawg writes:
I think the bottom line will eventually be a business exodus from California. - rich

I think the bottom line will eventually be an accelerated business exodus from California. - Rob Dawg
Rob Dawg | Homepage | 05.23.08 - 3:44 pm | #

Winston writes:
It was kind of fun watching the social parasites (otherwise known as police and firefighters) offer to take a small pay cut if only the city would reconsider its bankruptcy filing.
Winston | 05.23.08 - 3:45 pm | #

Tim writes:
"I think the bottom line will eventually be a business exodus from California"

Replace CA with USA.

Don't forget CA's overused and crumbling infrastructure.

The expensive labor agreements are the sole reasons for chasing jobs away. Free trade agreements have let big business treat people as commodities. US wages will have to go down or foreign wages will have to go up as they are in India to make the costs prohibitive. The world is flat and it sucks.
Tim | 05.23.08 - 3:45 pm | #

rich writes:
In the case of Jeff County, Alabama, it was the EPA that forced the county to take on onerous new debts to fund sewer renovations and improvements. But technically, it was a consent decree, not an executive branch mandate.

Also, the voters of Jeff County (and their representatives) have stubbornly resisted increasing taxes to cover sewer bond/swap costs, even though this tax protest may make them a default soon.
rich | 05.23.08 - 3:45 pm | #

Tim writes:
Winston,
That was sad When the police called the cities bluff and then they offered to "not get a 6% raise this year". Thanks guys but too late.
Tim | 05.23.08 - 3:47 pm | #

rich writes:
>It was kind of fun watching the social parasites (otherwise known as police and firefighters) offer to take a small pay cut if only the city would reconsider its bankruptcy filing.
Winston


Man, it's getting nasty when posters call police and firefighters social parasites.

I'd hate to be you, Winston, the day you need an EMS crew to pick your ass off the road.
rich | 05.23.08 - 3:48 pm | #

ac writes:

>It was kind of fun watching the social parasites (otherwise known as police and firefighters) offer to take a small pay cut if only the city would reconsider its bankruptcy filing.
Winston


Man, it's getting nasty when posters call police and firefighters social parasites.

I'd hate to be you, Winston, the day you need an EMS crew to pick your ass off the road.

I was with him there for a second when I thought he was going the hedge fund manager route... =/

ac | 05.23.08 - 3:51 pm | #

MH writes:
Pittsburgh has been narrowly averting bankruptcy since 2003. Of course, it doesn't have much to do with the housing crisis.
MH | 05.23.08 - 3:52 pm | #

Winston writes:
rich,

When the average wages are the 150K range and the highest paid are in the 300k range, the term fits.
Winston | 05.23.08 - 3:55 pm | #

Tim writes:
Lets be fair. It is not the Police and Firefighter per say but the heads of the unions. I remember I worked at a hospital when the hospitality workers went on strike those workers went without pay for weeks because of 12 dollar a check education fund that the unions head wanted. Most of the workers just wanted to get back to work.
Tim | 05.23.08 - 3:56 pm | #

Tim writes:
Winston are you from the Bay area?
Tim | 05.23.08 - 3:56 pm | #

the_economist writes:
I think we need to go back to volunteer firemen, pony express and
swearing in deputies and possies when needed.
the_economist | 05.23.08 - 3:56 pm | #

Geoff writes:
Rob, rich, anyone...wasn't this the case of San Diego about two years ago? I remember driving through there and listening on the radio to talk about how the city was effectively bankrupt, and that they would have to go to the courts to figure out how to restructure the pensions of firefighters, cops, etc. But the ONLY way they COULD do any restructure, was if they went bankrupt FIRST. What ever happened with that? I guess they somehow avoided BK, but they must still be in an awful mess since things there have only gotten much worse since I recall hearing that broadcast. Any insights?
Geoff | 05.23.08 - 3:57 pm | #

Winston writes:
Tim, I've spent most of my life living within 2 hours of Vallejo (in a bunch of different directions).
Winston | 05.23.08 - 3:57 pm | #

hopeinsd writes:
Thanks to Rich and others who chimed in on BK court powers. But it begs the question- if the BK court can't scale back payments on the city's biggest debt (city pension fund) and can't force the city to raise revenue, then what's BK going to accomplish? I guess just screw over unsecured G.O. bondholders.
hopeinsd | 05.23.08 - 3:58 pm | #

Tim writes:
I think we need to go back to volunteer firemen, pony express and
swearing in deputies and possies when needed

YEE-HAW!!!
Tim | 05.23.08 - 3:58 pm | #

Outsider writes:
How about we carve Vallejo out and sell it to Mexico?

Just brainstorming here.
Outsider | 05.23.08 - 3:58 pm | #

Yossarian writes:
"">It was kind of fun watching the social parasites (otherwise known as police and firefighters) offer to take a small pay cut if only the city would reconsider its bankruptcy filing.
Winston""

I agree with Winston. I have always depended upon the kindess of Investment Bankers when I need police protection, education, or a fire put out.
Yossarian | 05.23.08 - 3:59 pm | #

Winston writes:
Yossarian, There are plenty of evil and useless investment bankers, but in the case of Vallejo, there are no good actors or innocent victims. Just rich scumbags battling over who can get the biggest share of the tax revenue.
Winston | 05.23.08 - 4:02 pm | #

Rob Dawg writes:
I've an idea. Let's advertise police or firefighter jobs at wages that manage to attract fewer than 100 qualified applicants for every open position. It is an absolute market signal when there are a thousand people applying for every job.

Actually I rather think 15-20 qualified applicants is sufficient but I don't want to commoditize the professions.
Rob Dawg | Homepage | 05.23.08 - 4:02 pm | #

Tim writes:
I don't necessarily agree with Winston but I see where he is coming from. Firefighters and Police make much more compared to the residents that they serve compared with LA, San Diego, Central valley and other parts of CA from what I have read.
Underpaid are paramedics who make less than 40 k starting. Worked in an ER and they are more just as crucial as the Doctors and nurses in saving your lives. No union though.
Tim | 05.23.08 - 4:03 pm | #

mock turtle writes:
Winston writes:
It was kind of fun watching the social parasites (otherwise known as police and firefighters) offer to take a small pay cut if only the city would reconsider its bankruptcy filing.
Winston | 05.23.08 - 3:45 pm | #

-------

have read that the deal Vallejo cut with police and firefighters does not represent the norm on the west coast

at vallejo they get salaries higher than San Fran, and pensions calculated on 3 times highest year of salary times years of service with overtime counted!!!!

throughout much of CA, most of OR and nearly all of WA the formula is much less:

2 times AVERAGE of last 5 years salary, no overtime included, times years of service, REDUCED by several percentage points for every year earlier than age 65 retirement, whether the employee has more than 30 years in or NOT!!!
mock turtle | 05.23.08 - 4:04 pm | #

UnLucky writes:
This is bank default Friday, but does this town qualify?
UnLucky | 05.23.08 - 4:04 pm | #

Ethan writes:
Outsider:
Is it too late to admit our mistake and give ALL of California back to Mexico?
Ethan | 05.23.08 - 4:06 pm | #

Tim writes:
This is bank default Friday, but does this town qualify?

Not yet. No bailout YET. Ben is busy flying around in his helicopter collecting mortgages payments.
Tim | 05.23.08 - 4:06 pm | #

Elvis writes:
You can give me CA. I'll gladly take it.
Elvis | 05.23.08 - 4:08 pm | #

Winston writes:
Tim,

Being less hyperbolic, the best solution that I can see is to dissolve the city and leave Vallejo's overpaid police and firefighters with an underfunded pension. Just about any way you work it out, they'll still end up with better benefits than most people with comparable jobs or than the people they "serve." Then Vallejo can then be served by much lower cost county employees who work just as effectively for half the pay.
Winston | 05.23.08 - 4:08 pm | #

Tim writes:
I agree Winston.
Tim | 05.23.08 - 4:09 pm | #

UnLucky writes:
How would you handle a strike from the underfunded workers, and you know there will be one?
UnLucky | 05.23.08 - 4:10 pm | #

mock turtle writes:
correction i was unclear

in the pension calculation above the 3 yields a percent!!!!

so the pensioner gets 3 times years of service yielding a percent

work 25 years, multiply by 3 and get 75 percent of highest salary as a pension benefit

in other jurisdictions it is 2 times years yielding a percent of average 5 years
mock turtle | 05.23.08 - 4:10 pm | #

Geoff writes:
PBGC only covers corporate unfunded pensions, right? Cant just dump this problem on the feds Id guess. Though it would be a nice easy out since most of corporate america that hasnt done it already will be lining up to do it soon. Yay, ponies for everybody!
Geoff | 05.23.08 - 4:11 pm | #

Winston writes:
Unlucky, I obviously was unclear. They would no longer be employed as their employer would no longer exist. Therefore, a strike isn't that much of a risk.
Winston | 05.23.08 - 4:11 pm | #

tj & the bear writes:
Actually, the governator had one good idea that should have passed -- force all public employees into 401k plans and eliminate fixed pensions. Of course the unions shot it down, claiming it would cut off benefits to widows of cops & firefighters KIA.
tj & the bear | 05.23.08 - 4:12 pm | #

Tim writes:
Geoff,

The PBGC is already short cash by 100 million as I have read and must ask Congress for funding this year. This is going to be GM's receptacle for their huge pensions so watch out. All of your tax dollars will be involved in this.
Tim | 05.23.08 - 4:13 pm | #

tj & the bear writes:
Tim,

Not just GM. I expect Ford, Chrysler, and a few airlines to dump on PBGC before too long.
tj & the bear | 05.23.08 - 4:14 pm | #

Tim writes:
tj & the bear,

That was 05 right. The unions targeted him in a special election that year and his initiatives got killed. Almost cost him the office. I'm not against high pay for civil servants (studies have shown it does cut down on corruption) its their retirement that gets me.
Tim | 05.23.08 - 4:16 pm | #

tj & the bear writes:
BTW, it would be interesting to see one city *try* to tax their way out of this kind of mess just to show everyone else the folly of such a plan.

Would the last person out of Vallejo please turn out the lights?
tj & the bear | 05.23.08 - 4:19 pm | #

Geoff writes:
Oh, I understand how bad it is getting, and probably will get for PBGC, and am already allocating much of my future income for social security replacement, pension tax burdens pushed on to the public, and housing bailout costs. Pretty much in the past few years Ive gone from a solid retirement picture to a giant grey area because of how screwed up our country is and how much of it will eventually come to rest on taxpayers shoulders. And of course, I have no pension, just my self empl SEP, and didnt buy a house because I knew it was a bubble, and always paid my SS tax, even though it will probably have a gigantic negative return attached to it. Ya know, it just doesnt pay to play the game fairly, since you gain nothing, and end up picking up the tab for everyone else's mistakes. At least I sleep well at night.

But I digress, my issue was whether they could find a way to push this on the Feds, since it seems like one way or another, someone has to pay, and the people of Vallejo dont seem willing. So will be all CA taxpayers, or all US taxpayers?
Geoff | 05.23.08 - 4:20 pm | #

Cobradriver writes:
"How would you handle a strike from the underfunded workers, and you know there will be one?"
UnLucky | 05.23.08 - 4:10 pm | #

Air Traffic Controllers...

Chris
Cobradriver | 05.23.08 - 4:22 pm | #

tj & the bear writes:
"underfunded workers"? Obviously you're not talking about the same people.
tj & the bear | 05.23.08 - 4:23 pm | #

deflationary jane writes:
Actually that 3% pension benefit isn't as unusual as you would think. The city of Davis FD has a similar deal. There has been a huge stink about it recently as Davis is rife with "unmet needs".

Salaries DFD are in the upper 100k to lower 200k. I had no idea it was that high.
deflationary jane | Homepage | 05.23.08 - 4:24 pm | #

Cobradriver writes:
"Of course the unions shot it down, claiming it would cut off benefits to widows of cops & firefighters KIA."
tj & the bear | 05.23.08 - 4:12 pm |

tj&b,

I am sure this is a small number of people. They should resubmit with a committment to fully fund a pension for widows,or at the minimum purchase a decent life policy. Heck,I work for a large company and no longer have a defined benifit plan. 401k only.

Chris

Chris
Cobradriver | 05.23.08 - 4:27 pm | #

cd writes:
Jane,

Maybe all the rice fields need protecting!
cd | 05.23.08 - 4:28 pm | #

Alo writes:
I went back to Vallejo
And my city was contained

...
I said, hey, oh, way to go Vallejo
Alo | 05.23.08 - 4:29 pm | #

Tim writes:
Lets see the Airlines, Banks, Homeowners, Auto companies... What's the total bailout bill?
Tim | 05.23.08 - 4:29 pm | #

tj & the bear writes:
I first realized the extent of the public pension crisis after reading Mauldin's "Bull's Eye Investing" back in 2004. Seems like damn near every level of government has promised huge retirement benefits, so much so that the associated costs were guaranteed to overwhelm future budgets regardless of economic prospects.

Throw in a severe economic downturn, and, well...
tj & the bear | 05.23.08 - 4:29 pm | #

The_Scum writes:
the_economist writes:
The_Scum writes:
the meltdown of California is starting to heat up.

Shouldnt this read the heat up is causing the meltdown?

Just asking?
the_economist | 05.23.08 - 3:02 pm | #


No, it is stated correctly. As you melt a solid substance it goes through a phase change to liquid. The temperature holds constant until the entire mass of the substance changes phase (ie melts from solid into liquid). Only after this phase change is complete will additional heat input increase temperature.

The meltdown is heating up. Valejo has had enough heat added to go from solid to (il)liquid. Additional heat input will now begin to increase the temperature of Valejo until it goes through the next phase change....

...conversion to smoke or gas.
The_Scum | 05.23.08 - 4:34 pm | #

Bob Dobbs writes:
Deflationary Jane writes:

"Actually that 3% pension benefit isn't as unusual as you would think. The city of Davis FD has a similar deal. There has been a huge stink about it recently as Davis is rife with "unmet needs"."

It was unusual -- until the state signed off on 3 percent pension deals for state public safety unions at the height of the dotcom boom. Then the cities piled on under pressure from the unions -- why not, we were all going to rich from dotcom investments forever, right?
Bob Dobbs | Homepage | 05.23.08 - 4:35 pm | #

DonKei writes:
Rich,

That little bit about "Jefferson County surviving the Civil War"... Well, sorta, except Jefferson County was barely populated during the Civil War. It had nothing of interest at the time--no good land upon which to put plantations. Birmingham (the largest city in Jefferson County and Alabama) didn't even become a city until 1872. After iron ore, coal and limestone were discovered in abundance, it grew so quickly, it was dubbed the "Magic City". It became the biggest city in Alabama by the early 20th century.

Ironically, Birmingham is one of the places where Chapter 13 (debtor's court) of the Bankruptcy Code was developed to give folks working the mines and steel mills a chance at reorganizing their debts. It appears it might give Chapter Nine a few new pages in the law books if it ever files.

But something is keeping Jefferson County (the county in which Birmingham is located) out of Chapter Nine. It is, and has been insolvent since at least February. My guess is the feds and ibanks have something to do w/ it. The PPT at work?

If/when it does go bust, it will be the biggest ever.
DonKei | Homepage | 05.23.08 - 4:42 pm | #

Paul writes:
Our provincial attitudes about local government are the root cause of this bankruptcy, not the housing crisis.

Why does it make sense for a SF suburb of 120,000 to have it's own local government? Is there a business base to support this government?
Paul | 05.23.08 - 4:44 pm | #

tj & the bear writes:
C'mon, Paul, this crisis has nothing to do with the size of the city or the housing bust. It's all about overly generous pensions, and this drama will be played out across the nation. Vallejo just happened to be especially vulnerable.
tj & the bear | 05.23.08 - 4:47 pm | #

KnotRP writes:
Normally, public sector extractions are reduced via inflation. The public sector negotiates for more, expecting some reduction from inflation....

...when things get deflationary, none of the costs (debts, pensions) go down....just incomes go down....so all the previously diluteable promises have to be defaulted upon instead. This is gonna hurt.
KnotRP | 05.23.08 - 4:50 pm | #

Paul writes:
Sorry TJ I don't see it that way. Why is it such a crime to pay a decent wages and benefits to people? Should they all work for minimum wage? How could they possibly afford to live there with homes selling for half a mil?
Paul | 05.23.08 - 4:51 pm | #

other jim writes:
pension nonsense aside, I hope Vallejo does not have any vacancies in the police or fire departments. Might be kinda hard to find recruits nowadays.

Were I a cop looking for a job, I would not consider Vallejo unless they did offer substantially more than the quieter, less violent parts of Calif., say for instance, El Dorado county.
other jim | 05.23.08 - 4:53 pm | #

Tim writes:
other jim,

Hogwash, police there will still be paid more than any other job with similar education requirements i.e. high school diploma.

Paul,

It is not a crime to pay good wages but when it contributes to bankrupting a city you have to wonder if things didn't get out of hand.
Tim | 05.23.08 - 4:59 pm | #

tj & the bear writes:
Why is it such a crime to pay a decent wages and benefits to people?

If the wages & pensions were simply "decent" then we wouldn't be talking about them because they wouldn't be a problem. They're not, so we are.
tj & the bear | 05.23.08 - 5:10 pm | #

checker writes:
"rich writes:
In the case of Jeff County, Alabama, it was the EPA that forced the county to take on onerous new debts to fund sewer renovations and improvements. But technically, it was a consent decree, not an executive branch mandate."

Coming soon to a sewer near you! San Diego is barely complying with its EPA consent decree to fix its leaking sewers. LA County and Malibu got sued in March by environmental groups due to pollution from storm sewers. Central Valley towns can't afford to upgrade to meet new sewage treatment requirements. At the same time other mandates are not being bet - jails are overcrowded, special education programs underfunded. Adjudicating these conflicting demands outside the legislative system will be interesting. I see judicial wars: one judge mandating better health care for jail inmates while another decreases jail funding as part of an overall reduction in funds to city departments. Taking it in the shorts will be government functions not backed up by legal mandates - road repair, public safety, etc.
checker | 05.23.08 - 5:11 pm | #

Peterbob writes:
Vallejo wasn't bankrupt one year ago. So what changed? I haven't read anything about any massive increase in police or fire pension funds, or even salaries.

What HAS changed is that revenue has dried up such as property and sales taxes and fees. But I would really like to see the numbers on these.

I really wish that reporters would stop talking about the pension funds. Sure, these obligations may give Vallejo fewer options, but the real story seems to be the revenue side, NOT the expenditure side.
Peterbob | 05.23.08 - 5:28 pm | #

zaleriana writes:
Paul: "How could they possibly afford to live there with homes selling for half a mil?"

So, they'll volunteer for a paycut now that houses are only "worth" $300k?
zaleriana | 05.23.08 - 5:29 pm | #

Winston writes:
Peterbob,

The police and firefighters secured a big raise about a year ago (If I recall correctly). Plus more cash was flowing into Vallejo with good economic times and all.
Winston | 05.23.08 - 5:39 pm | #

Viewing with alarm writes:
The Courts will not break the pension contract and they cannot raise taxes. The next move is a sheriffs sale of assets to satisfy claims. Should be interesting to watch. Want a cheap fire truck?
Viewing with alarm | Homepage | 05.23.08 - 5:40 pm | #

4runner writes:
S&P today lowered the ratings on Vallejo's certificates of participation, a type of bond backed by its share of the state's vehicle license fees, to B from A,

You can always count on those ratings agencies to be ahead of the curve...
4runner | 05.23.08 - 5:42 pm | #

Average Joe writes:
As a cop I have spoken before on the Calpers system.

I will get 3% for every year I worked for the rest of my life with a COLA of 2%.

My city puts in 9% of my pay each year to get this return.

I started when I was 25. I will work till I am 55. I will get a tricky 9% spike (too complicated to explain), but will end up with about 97% of my highest year pay FOREVER (overtime doesnt count).

This is rediculous and there is no way the state can afford it long term.

If I live to 85 years old. Then I will collect my pay for 30 years after I retire and my LOWEST earning year in retirement will be equivilant to my HIGHEST ever when I worked.

Given low returns for Calpers, 9% contributions is not enough.

(San Diego has their own retirement plan, their problems are more immediate since they stopped putting in enough during the stock boom, got used to the extra money and now have to make up for lost time when money is tight).

There will come a time when taxpayers revolt. It will be hard since my pension is protected by law. It is more likely that they will simply make the newer officers pay my way, as well as reduce services for the taxpayer.

I am preparing for the worst.
Average Joe | 05.23.08 - 5:44 pm | #

Winston writes:
Viewing with alarm:

The city parks should be worth something. I mean Bay Area real estate... Oh, never mind...
Winston | 05.23.08 - 5:47 pm | #

Schiff's assumptions writes:
Given low returns for Calpers, 9% contributions is not enough

Schiff is right, and hyperinflation starts, then it is entirely feasible that you could get your projected retirement, but it would only pay for dog food.
Schiff's assumptions | 05.23.08 - 5:53 pm | #

manu06 writes:
Let's see. No pensions, higher health care costs,
and real declining wages. i don't see how the
average worker can afford a house costing 3x income much less come up with a downpayment.
manu06 | 05.23.08 - 5:53 pm | #

Schiff's assumptions writes:
should start -- If schiff
Schiff's assumptions | 05.23.08 - 5:53 pm | #

DCRogers writes:
For what it's worth, the goal of the BK is to allow the court to void the current union contract, which contains mandates for automatic employee pay raises and minimum staffing requirements. Without the BK, the city can't even do a layoff.

While the retirement plans are the heaviest part of the long-term burden, they are untouchable. (However, the promise of free health-care for life may be another matter.)

The salaries are far beyond any "decent wage" argument: from Daniel Borenstein: Vallejo simply can't afford to pay a police officer an average $191,000 a year in salary and benefits; a maintenance worker as much as $96,000; nor a firefighter an average $193,000. That's before overtime.

It's not just the rank-and-file workers' salaries and benefits that are soaring out of control. It's also the average police captain ($348,000), police sergeant ($234,000) and fire captain ($234,000).
DCRogers | 05.23.08 - 6:12 pm | #

Paul writes:
Paul: "How could they possibly afford to live there with homes selling for half a mil?"

So, they'll volunteer for a paycut now that houses are only "worth" $300k?

Sure. I find this hostility toward compensation rather curious. We all depend on others for our livelyhood. If everyone made less money for their meager work then who would buy the products and services you and I make and sell?
Paul | 05.23.08 - 6:16 pm | #

Winston writes:
Paul,

It's not hostility to people being paid. It's hostility to people being paid 200k/year for a job that someone will willingly do for 50k/year.
Winston | 05.23.08 - 6:19 pm | #

Paul writes:
I'll do that work here in MI for $50K because I can buy an nice house for $120K or pay $600 a month for rent. No problemo!

Do that work in a SF suburb for $50K?!? Ok - sure.
Paul | 05.23.08 - 6:21 pm | #

Paul writes:
And no one is actually making $200K in salary. The addition of the "benefits" is a red herring. Who uses that as a measure of salary anyway? Folks trot that out when they want you to feel bad about how much you make. Nonsense.
Paul | 05.23.08 - 6:25 pm | #

mossypete writes:
This all started during the dot com boom when the public sector was having a crisis attracting workers to the public sector. 3% at 55 was the mantra for public safety workers. The fiction was that this would benefit recruitment and retention. It mostly created a wave of retirements that may have lowered some costs for municipalities replacing older more highly paid experienced workers with newer recruits. Sweetening pensions is a an easier thing to do for the craven politician- there's no immediate tax hike involved. At one point I believe Contra Costa county ignored the advice of it's investment consultants and based its bid to raise pensions on a higher rate of for the pension portfolio making the increased pension pencil out. It was all in the newspapers...but how many folks read or understand that kind of stuff these days...Now the Gubenator is proposing to take a HELOC (LELOC) out on the Lottery to balance (but not cure) the structural imbalance in the budget, because of course the value of the Lottery always goes up. Sound familiar
mossypete | 05.23.08 - 6:27 pm | #

Paul writes:
Average Joe - we hope you die young?
Paul | 05.23.08 - 6:28 pm | #

Russ writes:
I don't want starving retired cops, but 3 percent per annum after 20 years is too much, not even counting the scam of running up overtime during the last three years of service.

My guess is they'll require retired employees to retain residence in the municipality in order to collect pension $. Then of course taxes will be increased...
Russ | 05.23.08 - 6:28 pm | #

Average Joe writes:
For the record, Paul has a point.

Those numbers cited by DC are misleading only in that the cop making 110-120K is costing the city 190K. The cop isn't making 190k.

Be that as it may, it's still good money. However things are relative and it's very expensive to live in these areas and the work is hard.

For that money you get a more professional, corrupt free (organizationally speaking) work force.

A corrupt, bribable police force is certainly more expensive to the community that paying good wages.

That being said, it's not so much the salary as the pension benefits.

They are simply too lucrative and without incredible inflation, can't be maintained.

If A private sector person were to save up in their 401K enough to replace 90% of the 100k income, they'd have to save more the 2 million bucks. I am not sure ANYONE saving in a 401K at 100K a years is gonna hit that mark.

I say pay them good wages, get quality people, and make them save for their own retirement.

Gov. Schwarzennegar tried that plan and was killed by the unions for the record. He backed down.
Average Joe | 05.23.08 - 6:28 pm | #

Paul writes:
Average joe - maybe you'll get shot in the line of duty? That would be a good deal for us taxpayers.

Seriously though - we owe you something other than being a Wal-Mart greeter in retirement.
Paul | 05.23.08 - 6:29 pm | #

Bob Dobbs writes:
Paul raises a good point. In my county (Santa Cruz) housing prices are quite high but public safety salaries are not -- not by the standards of adjoining Bay Area counties. So it's hard to keep people long-term.

If you could buy a house here for even $250K, though, we'd have to beat the applicants away with sticks. At least the ones that surf!
Bob Dobbs | Homepage | 05.23.08 - 6:29 pm | #

Lawyerliz writes:
Here in South Florida, an entity, schools, police, whatever sez ok, we must cut; here's what we're going to
cut. The cutees scream bloody murder, and the cuts are recinded. But the money just isn't there, and must be cut. Don't know what will happen. Tax cuts only for the least vigilent.
Lawyerliz | 05.23.08 - 6:31 pm | #

Average Joe writes:
Paul, I hope you don't want me to die young :)

Anyway my wife gets a portion of my salary until her death (there are a variety of plans to choose from...but most often the spouse still gets checks till death).

The actuaries they used to determine how long cops live are based upon cops passing away now...i.e. smoking, blue collar types who drank too much and didn't work out. That isn't the type of typical cop these days and life expectancies will surprise to the upside bigtime.
Average Joe | 05.23.08 - 6:33 pm | #

Paul writes:
The problem with all these complaints about generous retirement packages is that the rest of us would love to have your spending. Maybe after you retire you'll come to MI for vacation and spend it in our economy.

HEY! It could happen!

Well fine - maybe you'll go on vacation someplace interesting and spend that money on food and golf there.
Paul | 05.23.08 - 6:36 pm | #

Paul writes:
Average joe - of course I want you to live a long and healthy life at the expense of the taxpayers where you worked!

Well, since I work for big pharma - maybe not too healthy!
Paul | 05.23.08 - 6:37 pm | #

tj & the bear writes:
IMHO it'll be a case of public servants "eating their young".

The money spent meeting pension obligations of retirees will come at the direct expense of jobs, salaries & benefits of those active. That ought to sow more than a little dissension in the ranks.

Reduced public services for everyone!

p.s.: Health benefits are NOT protected by ERISA, so expect them to go bye-bye in short order.
tj & the bear | 05.23.08 - 6:39 pm | #

Average Joe writes:
"Seriously though - we owe you something other than being a Wal-Mart greeter in retirement."

That may be. I am afraid that we'll lose alot of goodwill from the community if we continue to break the bank. Don't get me wrong, I am not complaining. I am just able to see things from the other side, and if I took the risks to run a business, I'd feel lucky to make 100k a year. But I wouldn't have a lucrative pension, I couldn't take paid vacations, I couldn't call in sick whenever etc.

I think my job, if as others mentioned, were market driven, you could still get alot of quality people for the same pay without the incredibly lucrative retirement benefits.

Keep in mind, the state will likely be paying me more each year in retirement than I ever earned while working, for at least as long and likely longer than all the years I worked. I will have no financial incentive to work any more or contribute.

I think it's great for me, but not for the longterm financial health and vitality of the state's economy.
Average Joe | 05.23.08 - 6:41 pm | #

Paul writes:
Let's see - the average CA taxpayer can only buy a 35" plasma every couple of years instead of a 60". In exchange, Average Joe the retired police officer can live a comfortable retirement after cleaning up all of society's messes.

Seem's like a good deal to me.
Paul | 05.23.08 - 6:46 pm | #

tj & the bear writes:
Let's see - the average CA taxpayer can only buy a 35" plasma every couple of years instead of a 60".

Again, if it were that simple it wouldn't be an issue.
tj & the bear | 05.23.08 - 6:48 pm | #

Winston writes:
If California doesn't crack down on its corrupt, overpaid and incompetent public "servants" and bring their compensation into line with what the private sector offers then the state is doomed to continue lurching from crisis to crisis slowing driving away the businesses and productive individuals that create its wealth. Vallejo's spectacularly overpaid cops (Median salary, NOT salary + benefits, over 133k/year with more than 1 in 10 making over $175k/year) are a good place to start.
Winston | 05.23.08 - 6:52 pm | #

Paul writes:
And to augment my argument that this has nothing to do with housing, let me refer you to Bloomberg.com

http://www.bloomberg.com/apps/ ne...id=ajk0l1sVp4Lo

"And that's what you have in the municipal market. It's amateur hour, made up mainly of people who don't understand the risks of what they're doing or approving, and who can't afford the staff to do these things justice. They're fine for the University of Virginia, but not for the local school district.

That's because there's an enormous knowledge gap between the men and women at securities firms who sell this stuff and municipal officials, and it looks like some firms exploited that to a fare-thee-well.

Or at least that's what the Securities and Exchange Commission's and Justice Department's investigations into the field seem to promise: collusion and price-fixing. Because most issuers don't have the expertise to figure out how their financings work, they hired the help. Did the help cheat them? We'll soon find out."

Yes - those country bumpkins have been led to the slaughter by the Wall Street sharks. As it is and ever shall be...
Paul | 05.23.08 - 6:53 pm | #

Winston writes:
Paul, you're loosing focus. There is one thing and one thing only that bankrupted Vallejo - their unwillingness to control employee pay.
Winston | 05.23.08 - 6:58 pm | #

Paul writes:
OK fine :) Here's my parting shot:

It's clear the way we've been doing business has not served us well," said City Councilman Tom Bartee at Tuesday's meeting. "We have to change that."

Meanwhile, the unions would like an independent state audit of Vallejo's books.

"We don't believe they're insolvent," said Vallejo police Detective Mat Mustard, vice president of the police union. "But by declaring bankruptcy, they've taken a financial crisis and turned it into a catastrophe. It's like using an elephant gun to shoot an ant."

Even so, bankruptcy is an extreme measure for a public entity, he said. Thousands of cities across the United States are in the same boat as Vallejo, but nearly all of them find other ways to avoid Chapter 9. They cut and outsource services, share services with neighboring cities, sell property and raise taxes and fees.
Paul | 05.23.08 - 7:11 pm | #

Paul writes:
The question is: Is Vallejo unique, or will a number of other cities file bankruptcy?

Vallejo is unique.
Paul | 05.23.08 - 7:18 pm | #

sdtfs writes:
Hmmm, as cynical as it seems, we *should* "underpay" our firemen, police, and teachers because we want people who are committed to the public good, i.e. take advantage of their altruistic tendencies. I'm not entirely comfortable with the thought, but that's how my economic thoughts go.
sdtfs | 05.23.08 - 8:03 pm | #

Billy Hill writes:
Normally, public sector extractions are reduced via inflation. The public sector negotiates for more, expecting some reduction from inflation....


So maybe we should all be wishing Helicopter Ben good luck on his missions?
Billy Hill | 05.23.08 - 9:01 pm | #

tj & the bear writes:
Only for the moment.
tj & the bear | 05.23.08 - 9:57 pm | #

Chip writes:
Rich wrote: "Also, the voters of Jeff County (and their representatives) have stubbornly resisted increasing taxes to cover sewer bond/swap costs, even though this tax protest may make them a default soon."

Last year I scouted about 75 different neighborhoods in the Birmingham area. I fairly quickly scratched everything in Jefferson County because they already have the highest property tax rate in the area (if not the state). Neighboring Shelby County, which is well-run and has the highest per-capita income in the state, has much more reasonable property tax. So it is no wonder the county balked at higher taxes - people would flee to the neighboring counties.

As for who is protecting them, I go with the PPT/ibank posit. If I remember correctly, Jefferson was in a position to sue one or more Wall St. Big Boys for screwing them over with the auction rate securities and it seemed as if they might have a winnable case.
Chip | 05.23.08 - 10:32 pm | #

JoeB writes:
Vallejo had to crash and crash hard - and many other cities will follow. The sentiment here is overwhelmingly against the ridiculously highly paid (and underworked) public servants. Yeah we value our police and fire departments - but they are now paid way too much. The perks and retirement benefits are outrageous. Most citizens had NO idea how their tax dollars were being spent to support these pay levels until this all came to light recently. Tax payers should be in near revolt soon. The public service unions should be ashamed.
JoeB | 05.23.08 - 11:02 pm | #

DCRogers writes:
This is probably a dead thread, but if Paul is still here, check out: "City of Vallejo $100K-plus earners". I liked that there was a pull-down slot for $400K-$500K.

http://www.sfgate.com/webdb/vallejo/
DCRogers | 05.23.08 - 11:33 pm | #

ed browne writes:
Vallejo today; can Napa be far away ?

Happy New Year; can you believe it's 2050 !
… The Second Great Depression dragged
on for nearly ten years, though the rest of the
world managed to avoid that gruesome fate.

It did not start to abate until America realized
that ignorance was suicide, and most citizens
upgraded their general and special knowledge
base by whatever means necessary over a span
of several years.

This first paid dividends after adults turned
to online learning from home in a big way.
Then a reformed culture and school systems
started to produce workers that could cope.

Even then, it was a long and tough road just to
recover enough to balance a skimpy budget,
regain a BBB rating for treasuries, and to scrape
together the downpayment to repurchase California
from Chindia, and regain the defense umbrella
that we so desperately needed.
ed browne | 05.24.08 - 12:26 am | #

doug r writes:
Well, Six Flags exercised their option to buy back Discovery Kingdom. I did my part and bought season passes....
http://www.themeparkreview.com/f...pic.php? t=42825
doug r | Homepage | 05.24.08 - 12:51 am | #

republicans are traitors writes:
Orange COunty CA will also file bankruptcy...again. We have a stupidvisor and his subordinate who invested/gambled with tax payer funds and purchased a bunch of worthless SIV's. It's coming.
republicans are traitors | 05.24.08 - 12:51 am | #

some investor guy writes:
Many states have taken over localities and straigtened them out their finances. The Compton School District in CA was an example. Brockton Massachusetts was another.
some investor guy | 05.24.08 - 1:16 am | #

Anna Lee writes:
It's going to be interesting. I wonder if the adage that the federal government can't go bankrupt because they can tax, devalue, print, hyperinflate, and whatever will hold true. It would be interesting to see if the Supreme Court decides that a country can declare bankruptcy. Also, do state and local governments pay into the pension protection? If not, then shifting the burden upward won't be an option. If so, the federal government will certainly need to make sure some mechanism reduces $45K/year pension to a value more like $.45K/year. I think the bankruptcy option is a little short sighted. Maybe California should price jobs by the relative cost of living with value added for dangerous jobs. Perhaps, to save money, some of the richer districts would be willing to do their own volunteer police and fire work. Paying middle America blue collar salaries for jobs that require living in or near the job when the local cost of living won't permit it strikes me as extremely ignorant to even suggest. What percent, on average, of the total workforce is represented by government employees? Are California municipalities higher?
Anna Lee | 05.24.08 - 6:27 am | #

Richard writes:
Here is what other California cities are likely to do in the near future: http://www.chicoer.com/ advertise...www.chicoer.com . 7.5% salary cuts across the board for all city employees in Chico. Really, what are the other options? Municipal, county, and state revenues are shrinking daily. Taxes won't be raised significantly when the average citizen is hurting from the recession (depression?). Cities can't continue to borrow their way out of red ink, especially when muni bond rates are high due to no sales at the ARS. Won't employee earnings fall just as house prices are falling? It looks to me like reduced public services, reduced earnings, destruction of wealth, and deflation are inevitable in California and probably elsewhere in the U.S. The financial fantasy buzzard has come home to roost, and his nest is very soiled.
Richard | 05.24.08 - 12:37 pm | #

Don writes:
OK, so on the one hand if these folks bought a house in Vallejo on a 50K income the commenters here would be baying about how ridiculous it is and how morally depraved these folks are and how they deserve all the bad things that happen to them. On the other hand if they demand a wage that would yield a realistic DTI ratio on a decent home in Vallejo then they're greedy bloodsuckers who are moirally deparved and deserve all the bad things that happen to them. I'm sensing a theme....
Don | Homepage | 05.24.08 - 3:36 pm | #