Sunday, October 19, 2008

Bankrupt Calif. City May Be a Harbinger

Link

Employee unions, meanwhile, displayed impressive focus. They helped make the "City of Opportunity" the first in California to send arbitration issues to an outside party, which frequently ruled for the unions. Police and firefighters routinely won contracts so bountiful that in 1993 a panel of citizens predicted that, absent an interruption of the upward cycle of raises and benefits, Vallejo would go bankrupt in 2010.

The reckoning was bumped forward two years by the housing crash and a dip in sales taxes that accompanied the closure of a car dealership and a Wal-Mart. Fiscal 2008 found the city with no reserves and 80 percent of the general fund obligated to police and fire services.

"They should be well paid. There's a risk to the job," said Marc Garman, a local watch repairman who, seeing what was coming, started a Web site called Vallejo Is Burning. "But there comes a point where it just becomes abusive."

The salaries come with extravagant benefit packages. For every $100,000 paid in salary, the city must send $29,000 to California's public pension program. Firefighters earning any kind of degree -- literature, dietetics -- get a raise. Public safety personnel retire after 30 years with 90 percent pay. And after five years on the job, the employee has health coverage for life. So does every member of the employee's family.