Spending on public safety employees currently takes up three-quarters of the city's general fund.
The documents filed by San Francisco attorney Dean Gloster on behalf of Vallejo's firefighters and police officers challenge the city's eligibility for bankruptcy.
Gloster told Reuters by telephone that Vallejo can avert bankruptcy by accepting an offer for $10 million in salary reductions and by raising revenues and selling surplus property.
"We had a well-respected government consulting firm figure out how they could react to things like all other cities and counties in California, and they found the city's own staff had recommended 18 separate revenue increases," Gloster said.
"They're not insolvent," he added. "The city is financially troubled, there is no question about that, and controlling their labor costs has to be part of the solution -- but not the only solution ... Vallejo has been so badly managed it can't even afford reasonable labor costs."