City Manager Offers A Recommendation To Vallejo - Bankruptcy!

The ongoing saga of the city of Vallejo's financial situation took another turn yesterday as the city manager offered up the unthinkable for so many - bankruptcy. Like many cities in California, Vallejo has been stung by the recession, crumbling housing market and spiraling cost of public employee salaries. It also has suffered years of instability at City Hall, where seven people - including, briefly, the chief of police - have served as city manager in four years.

Tax reformers, labor unions and state politicians have all been watching Vallejo as a possible harbinger of things to come. While the city's payroll is comprised of 74% dedicated to police and fire (about 25% more than the average city) - demographics and public salaries and benefits are often blamed for the precarious financial position cities are increasingly finding themselves in.

Vallejo's city manager advised the City Council on Friday to declare bankruptcy next week after weeks of negotiations with police and fire unions failed to turn around the city's economic tailspin.

If the council votes Tuesday to file for Chapter 9 protection, the city of 117,000 people would be the largest in California to declare bankruptcy - and the first to do so because of long-term economic woes.

City Manager Joseph Tanner made the recommendation after city officials scrambled for two months to fix the budget before the fiscal year ends on June 30, when the city faces a projected $16 million shortfall for the coming year and will have no money in reserve.

Full story in the San Francisco Chronicle.

The Sacramento Bee editorial page also carries an op-ed piece from Marcia Fritz, calling out for unions to lead reform efforts - remember that name and that you heard it here first at CCN - she's likely to be the next statewide champion calling for pension reform.

Has anyone noticed this issue isn't going away? Unions had best lead this effort lest they beget something revolutionary they won't like...