You Thought Subprime Was Big????
GET READY FOR THE MUNICIPAL DEFAULTS!!!!!!!!
This is something I have been posting about for the past few months. So far, the mainstream press seems to not want to discuss it. My guess is that will change soon. Very Soon!!!!!
The fall out could be incredible. Job losses. Pay Cuts. Bond Defaults. Service Cutbacks.
The Vallejo City Council voted to declare bankruptcy Tuesday night after months of last-ditch wrangling failed to rescue the city from financial catastrophe.
The North Bay city of 117,000 now heads into largely uncharted territory, as no California city of this size has ever opted for this route.
"This has been a long frustrating process for everyone," said City Manager Joseph Tanner. "There are no winners here tonight."
After about four hours of discussion and public comment from the standing-room-only crowd, the council voted 7-0 to approve Tanner's recommendation to declare Chapter 9 bankruptcy protection as a means to reorganize its finances, which have been shattered by spiraling public employee salaries and the plummeting housing market.
The move allows the city to freeze its debts while maintaining city services. Police, fire and other unions and many in the audience were outraged at the move, accusing the council of poor leadership.
The city suffers from mismanagement and has less debt than it claims, said a union spokesman, Ken Shoemaker, a representative of the electrical union.
Vallejo faces a $16 million shortfall and no money in its reserve account for the fiscal year beginning July 1. In March, the city shaved several million dollars from its payroll, museums, public works, senior centers, libraries and other services to avoid bankruptcy, but needed to make further cuts to meet increased expenses in the next fiscal year.
The city and its police and fire unions held a final contract negotiating session Sunday but failed to reach an agreement before Tuesday's City Council meeting.
The city and its public safety unions have been at the bargaining table for about two years. The city is asking for its police and firefighters to take salary, benefit and staff cuts, while the unions say any further cuts would endanger public safety as well as the safety of the police and firefighters.