Vallejo a Step Closer Bankruptcy

Talks with the city's labor representatives broke down early this week, and Vallejo is set to consider Chapter 9 bankruptcy tonight.  If the city moves forward with the filing, it would be the first city in California to go bankrupt, and the largest locality to do so after Orange County. 

Vallejo faces a $6 million shortfall and won't have money left to pay salaries as soon as March 31, according to this report in Bloomberg.  What happens next if the city does file?  According to the San Jose Merc, "a federal bankruptcy judge would sort through the city's finances, labor and other contracts, and then work out a fiscal plan to move forward."  In the meantime, city employees could be asked to stay home while the coffers are empty, though the city would likely have to find some way to provide essential services.

This would include public safety -- whose salaries and benefits currently comprise up to 80% of the budget.