[taxabletalk] Russ: Vallejo Bankrupt

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Posted by Russ:
Vallejo Bankrupt
http://www.taxabletalk.com/posts/1210296243.shtml


   The [1]city of Vallejo, in Northern California, [2]will declare
   bankruptcy sometime in the next few days. Why?
   Vallejo has a declining industrial base. That's not a surprise--all of
   California has that problem. Companies that can move do (or don't add
   to their existing facilities in California).
   Vallejo had a huge employer--the Navy. However, the Navy left Vallejo
   several years ago and no one replaced them.
   Vallejo (and many other cities in California) have huge labor costs
   for public employees. The public employee unions wouldn't accept the
   cuts that the city asked. It's certain that during bankruptcy that the
   city will ask for the contracts to abrogated.
   Is Vallejo a harbinger of what impacts all of California? For some
   cities, perhaps. Cities in California that are dependent on a single
   employer, and have high fixed costs need to be watchful. It will be
   interesting how this plays out with the background of California's
   huge budget deficit playing out.

References

   1. http://www.ci.vallejo.ca.us/
   2. http://www.reuters.com/article/bondsNews/idUSN0837779220080508?sp=true