Bankruptcy

California City on Brink of Bankruptcy

By J. Michael McBride

The city of Vallejo, with a population of about 117,000, would be the first large city in California to declare bankruptcy as a result of revenue shortfalls used to pay its day-to-day operating costs. The city has been slammed by the weakening housing market and will run out of money from it's general fund for expenses by March 31st. With a 'the glass is half full' attitude one council woman was quoted as saying, "The only plus is that it's an opportunity to get this city cleaned up, so we'll never have to be here again."

The city council meeting held yesterday packed over 250 people divided over whether the city should file Chapter 9. Several blamed the money problems on the 15% raises given to its safety workers (police and firefighters) since 2006. These union leaders, however, say the salaries are high because of the staff shortages and the need for large amounts of overtime. The city is considering eliminating those raises as well as closing two fire engine companies a day. The union leaders had met with city officials about their contracts and came to an agreement late last week for wage cuts, but the city manager, Joseph Tanner, vetoed that deal Monday.

The city council is scheduled to meet again tonight to decide whether to go forward with the bankruptcy filing.

You can read the entire article at: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/02/27/BAP9V90U7.DTL&hw=bankruptcy+california&sn=001&sc=1000

Chandra

Full post as published by Texas Lawyer Blog on February 28, 2008 (boomark / email).