The constitutionality of this ruling is questionable since cities are political subdivisions of state governments. But when have the federal courts ever passed up an opportunity to expand federal power at the expense of the states?
Or at the expense of the people.
The Tenth Amendment should have been the First.
The bankruptcy judge can't make money out of thin air. There is only a certain amount of funds to work with, and if that amount is less than the pension obligations, it's hardly the judge's fault.
The Constitution explicitly gives Congress the power to pass "uniform Laws on the subject of bankruptcies throughout the United States." (Art. I, section 8, clause 4). The City of Stockton voluntarily chose to take advantage of those laws by filing for bankruptcy protection in federal court, and got significant benefits by doing so (including the ability to pay off its creditors at a fraction of what was owed). Once Stockton was in a federal bankruptcy case, the "uniform" federal laws are what governs, not state law.
Bankruptcy laws are federal. Just because a state constitution protects pensions does not mean that they are guaranteed in the event of municipal bankruptcy. Case in point—Detroit. Federal bankruptcy laws trump any state law. The federal judge is correct in this matter.
The problem is that state and local politicians make contracts with unions that the taxpayers are on the hook for, but those taxpayers are never at the bargaining table to negotiate those contracts. Scott Walker took a bold step in changing the collective bargaining of municipal employees.