Vallejo Votes For Bankruptcy

The following is an example as to what will come in the future in cities and towns across America. Year after year school boards, communities, state governments and the federal government have spent beyond their means and signed unfulfillable contracts and promised outlandish pensions that can't possibly be fulfilled. You can read more about it at Pension Tsunami.

Vallejo Votes For Bankruptcy


After nearly five hours, the Vallejo City Council voted unanimously late Tuesday night to file Chapter 9 bankruptcy protection.

The city faces a $16 million deficit in the 2008-2009 budget starting July 1 and unsuccessfully negotiated with its police, firefighter and electrical workers unions for contract concessions through 2012. Public safety salaries comprise 74 percent of the city's general fund budget.


Most of Tuesday night's 30 speakers urged the council to file bankruptcy so the city can restructure its finances.

John Riley, president of the International Association of Firefighters, said he is disappointed by the 7-0 vote to file bankruptcy.

"I think it was premature. I don't think they exhausted all their options," Riley said.

Riley said an independent auditing firm disputes the city's numbers supporting the decision to file bankruptcy. He called for an independent state audit.

The council and several speakers said the city simply will have no money on July 1 and cannot tell its employees to come to work because there is no money to pay them.

Councilwoman Stephanie Gomes, an ardent supporter of the city's filing for bankruptcy, said, "I want to make sure the City Council is in charge of this city and not those who comprise 80 percent of our general fund."

Countering the assertion that bankruptcy would tarnish the city's image, Gomes said, "Who wants to move to a city that can't address its problems?"

Mayor Osby Davis said bankruptcy would be "a long, hard, difficult process."

"We will rise out of this darkness and we will shine again," Davis said.

Davis said he believes the city should honor its contracts with the unions, but he was persuaded the city can't pay its debts at this time.

"It's time to do something different. I wish there was another way. I will support this resolution and I don't want anyone clapping for me. It's something I must do as the mayor of this city."

Council members noted the city can still negotiate with its unions on long-term contracts and if that is successful, the city can "pull the plug on bankruptcy."

Vallejo joins a small number of municipalities that have declared bankruptcy should officials decide it's their only option.

Orange County declared bankruptcy in the 1990s after then-Treasurer Robert L. Citron borrowed hundreds of millions of dollars while speculating in high-risk securities investments that depended on low interest rates.

The county lost $1.64 billion.
Desert Hot Springs also filed for bankruptcy in 2001.