Posted on 05/07/2008 7:32:51 AM PDT by SmithL
VALLEJO — With hundreds of concerned residents looking on, the Vallejo City Council voted unanimously late Tuesday to file for bankruptcy, making the city the first of its size to seek protection due to unaffordable labor contracts.
The dramatic vote came despite a last-minute appeal by state Sen. Pat Wiggins, D-Santa Rosa, and an aide for Assemblywoman Noreen Evans for the city to avoid bankruptcy.
Four council members — Michael Wilson, Tom Bartee, Hermie Sunga and Erin Hannigan — joined Mayor Osby Davis in switching in favor of filing for bankruptcy. In the past they had been part of a 5 to 2 majority seeking to avoid taking that historic action.
Davis indicated before the vote that he had spoken to both Wiggins and Evans about the probable vote, and received assurances they would try to get help for the city from Sacramento.
Davis said that he had "turned over every rock he could find to find a solution" but none came and there is no longer an ability for the city to pay its debts.
Councilwoman Joanne Schivley, who had supported bankruptcy two months ago, called for unity, and said the council and residents need to work together. Councilwoman Stephanie Gomes completed the seven-member roll call.
Vallejo has been slammed by increasing costs of its public safety contracts, the housing crisis, lower property values and state raids on local coffers.
The city faces a $16 million deficit in the 2008-09 Advertisement fiscal year which starts July 1. Tuesday night's dramatic vote came after months of fruitless talks between city and labor representatives.
After those talks, which continued through the weekend and failed to produce a long-range fiscal plan, Vallejo's top administrators recommended bankruptcy as the only option remaining.
Chapter 9 bankruptcy will allow the city to gain temporary protection from creditors and enable the city to continue to offer citizens necessary services.
The bankruptcy process would cost $750,000 to $2 million just in legal fees, city officials said.
Those supporting the bankruptcy option say the city has no recourse left but to rework expensive labor contracts and forge a budget Vallejo can afford.
Many others said the city should do all it can to avoid filing for bankruptcy to avoid hurting Vallejo's credit rating, image and ability to attract businesses.
City leaders say the city is quickly running out of money.
Just hours before it was to take the historic vote, the seven-member City Council met behind closed doors to discuss the latest developments on labor negotiations.
Vallejo bankruptcy attorneys have recommended the city approve any bankruptcy filing at least a month before city coffers run dry, which could happen as early as June 30.
The council also met privately Monday night to talk about the mediator-led negotiations, a day after parties met in a last-ditch weekend effort. Those sessions, held over the past two months with independent mediator John Kagel, have not been fruitful.
City employee union attorney Alan Davis has said a union-hired financial expert has produced two documents contradicting the city's assertions of an enormous deficit.
Davis vowed to release the documents if an agreement was not reached. However, the unions have been unwilling to produce the reports for public review.
On April 22, Councilwomen Stephanie Gomes and Joanne Schivley said a last-minute union proposal should have been made public.
Both Gomes and Schivley voted against the March 3 labor pact, saying it did not go far enough to reduce the union contracts' effect on the general fund.
The city has sought concessions from public safety unions and from International Brotherhood of Electrical Workers union members to slash contract costs and come up with a plan to balance the budget through 2012.
...does anybody know if American cities were forced into bankruptcy during the Depression?...my feeling is they were not...if Goldman Sacs is right, and we have $7-8 gas in 2009; then we’ll have a scenario straight out of 1932.
Aha! Just raise taxes! Again, and again and again until the unions are satisfied. =)
What does the gas price have to do with your sense of municipal solvency?
Oh wait, Vallejo is run by libs.
Never mind.
LOL! That ship has sailed, dude.
It looks to me like the closing of the Mare Island Naval Base did them in.
Unions back dims, right?
ALL the ships have sailed! Vallejo has never recovered from shutting down Mare Island Naval Shipyard. Of course, they continued spending like they had before the shutdown, fully expecting more free money to fall from the sky.
Bureaucratic liposuction, if you will.
What does the gas price have to do with your sense of municipal solvency?”
everything
“Miami went bellow up in the 90’s.”
bellow up?....what, they’re running a blacksmith forge down there?
You might want to do a better job of explaining that, because it makes no sense so far...
And it’s not because they spent to much, it is because they couldn’t rip any more money away from the deadbeat taxpayers. Let this be a lesson to all of us who don’t want more taxes!/SARCASM
Your analysis is very in-depth and informative.
Aside: We live in the Dallas Ft, Worth area and my son was living and working in Vallejo and my neighbor who was a friend passed away in Vallejo; yet, they didn't know, or at least my son didn't, they were both staying in Vallejo.
There is something evil about unions.
Nope, they were done in by Proposition 13, and it was the outcome the taxpayers had in mind when they passed it. For decades, public employee unions have been using the dues money they extorted from their members to 'buy' politicians in legislative bodies. Those politicians (primarily Democrats), in turn, have given them everything they asked for. When the money ran out, they just raised taxes. With the possibility of raising taxes foreclosed, the politicians kept operating as usual, and this is the result. Vallejo started running a deficit during the 'good times', back in '04, but the band played on.
I watched the meeting last night, and highly recommend viewing it on the city's website. It's a great cautionary tale of just how ticked-off the public can be at a group of elected officials. Public comment went on for almost three hours, most of it pretty unpleasant.
There's some inaccurate figures floating around that overstate the problem. Cops, for example, are not "making 250 thousand a year", but the general story line of elected officials who let their city get locked into labor contracts that are indexed to things that don't track their revenue is pretty accurate. In part, the declaration was an effort to get the unions to agree to cuts, so in that sense it's part of the bargaining process. Whether they'll come to their senses or let it proceed to the courts is the open question.
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