CA Town Bankruptcy Provides Lessons
February 28th, 2008From the Associated Press today:
“Our financial situation is getting worse every single day,” said Councilwoman Stephanie Gomes. “No city or private person wants to declare bankruptcy, but if you’re facing insolvency, you have no choice but to seek protection.”
Like many California cities, Vallejo promised its employees salaries, benefits and retirement packages that it can’t afford to pay, signing generous labor contracts during economically flush times, said Marcia Fritz, vice president of the California Foundation for Fiscal Responsibility.
“It’s a nightmare for city governments because they have to continue to pay these benefits that were granted when they had extra money from real estate and sales tax,” Fritz said.
More California cities may file for bankruptcy because they face the same toxic mix of falling tax revenue, rising payroll expenses and a slumping housing market, experts say.
“I don’t think Vallejo is unique,” said Mark Levinson, a bankruptcy attorney hired by Vallejo. “Vallejo is not the only city in California or the U.S. that is saddled with employee contracts that are burdensome.”
Loading ...
February 29th, 2008 at 10:25 pm
It is coming to Las Vegas We cannot keep taxing and raising salary and plush retirement. Retirement ages must be raised or lower the retirement amount before 65 years of age. Social Security is also changing. Better to act now befor the bankrupcy hits Las Vegas.
March 1st, 2008 at 6:05 am
Hey Bob, why don’t you bring up a bill to scale back these benefits and retirment ages? Why are we forced to pay twice for state employees who are retired and fund their healthcare for life? Also,
they should be paying for their own healthcare. Someone needs to do this or the whole state will be in the same mess that
Vallejo is.
I also LOVE the ballot initiative to make all tax increases subject to a 2/3 vote of the taxpayers. Where do I sign up?
March 1st, 2008 at 7:20 am
It is very difficult to take these benefits away from those who already have them. People are funny. If everyone is poor, everyone is happy. If we see someone else with something we do not have, we become unhappy until we get the same thing. Enter politicians who tell us that we can have all those things others have with no effort or cost, and we bow to their altar. Our new pals continue supporting our new addictions (usually only for the chosen few) until the system breaks. It seems like the politicians do not care about the aftermath, just the immediate need to stay in power. I guess this is inevidable when humans are involved because every Government throughout history was destroyed through this selfish need to lord it over others. No matter what their intentions, and our founding fathers had very good long-term intentions, Governments always devolve to corruption and power. It is apparently true in a system such as ours where the people have control (on paper, if not in fact). The ultimate torture is being “poor” once you have been “rich”. Now you are poor, but not happy.
Anyway, it is clear that the true, long-lasting value that can transcend these type of actions are two:
The knowledge you can put in your head, and,
The network of people you have treated honestly.
All else can be taken from you and taxed up to 100% by oppressive Government. Got “safe” Vallejo municipal bonds which earn interest tax-free? Well, it looks like they are not so safe anymore. Could T-Bills be far behind?
Anyway, this is a good lesson for all. If you have a Government pension, retirement annuity, medicaid, medicare, social security stipend, or other Government reliance, you better get a skill and develop a support network. The writing seems to be on the wall, thanks to the leaders of Vallejo, California and their ilk (sounds a bit like the current crisis in Nevada, doesn’t it?).
March 1st, 2008 at 10:14 am
Well, well, well……It’s starting, not enough tax dollars to go around, imagine that. We have been swindled and will continue to be swindled until taxpayers wake up.
Google CAFR, that stands for Comprehensive Annual Financial Report. Almost all government entities have one. When Googled there are thousands of hits, almost all are actual CAFR’s and hardly a mention in the media, could the media be part of the conspiracy?
According to the folks a CAFR1.com, our “poor” governments have over $110 Trillion in assets! That works out to over $350,000 per person in the US!
It is simple, government is thievery! Instead of increasing it’s revenues and size we should put a bounty on it!
Another thing you may want to look into is how many billions of dollars in public employee pension funds are invested in overseas concerns?
March 1st, 2008 at 12:29 pm
Why doesn’t Government change to defined contribution benefit plans like private industry has had to do. Would this be too simple?
March 3rd, 2008 at 9:59 am
Who would have thought there could possibly be a mathematical equation conflict?
Say you pay a government worker an average of 50k a year, less in the early years, more in the latter, but still an average of 50K. Then they retire and receive retirement, usually more than their average pay through the years (due to the last 3 years game). The cost of that employee was double due to the benefits, sick time, per’s, etc, etc… Now the cost is actually 100k average for 20 year or 2 million. And the same 100K cost per year in retirement.
So what kind of money do you have to set aside to pay for this? Seeing how a good to average return on money is around 5%, you need that same 2 million to make that 5% or 100k. Wow! 2 mil for the time worked, and 2 mil for the time not working = 4 mil for 20 year or 200K a year! Who would have thought there would ever be a problem with a 50k employee costing 200k? But shhhhhh, don’t tell anyone the norm is approaching 100k for our government employees, or 400k in annual cost! It might scare people.
March 8th, 2008 at 9:37 am
Stop Picking On the worker? Focus On The REAL Problem,The ILLEGAL Alien and His Family And Children. We have a gold Mine Here In Nevada. Tax Any Money transfers To Mexico. Say a State Tax Of Lets Say 20% Or 28% On ANY Wire transfers From Anywhere In the state To ANY Country outside America. Pass a State Law demanding Proof Of Legal Citizenship Before “ANY” benefits Will Be Paid By Legal Citizen residents Of Nevada To “ANY” Non American Citizen and their Children. Then,You Complaining Citizens won’t have To Complain about retired County Or State Workers! Wake Up………..! Go After The Parasites From Mexico and Central America Here With their children!
March 8th, 2008 at 1:44 pm
Simple solution:
Secure the borders, and the drag on All our state and federal programs which are designed to reward illegal aliens for invading our country will be sufficient to help those who did enter the country in the proper manner.
Lets see, that means that you would need to pump less tax money into the state and local coffers to support the various welfare and medical programs etc.
Just think, the locale law enforcement agencies wouldn’t have to spend much needed revenue on the capture,housing , and processing of invaders of our country.
Why are we going broke? HMMMMMM, All you Liberal milk soops out there who want to feel sorry for the law breaker invaders of this country, this is what you get, so don’t complain, its what you wanted. Your cities and states are in financial distress because you haven’t the ability to say no and cause these people to return to their own country, which by the way is a very wealthy country(oil and other resources) which doesn’t treat its people with equality. The way their country treats them, is not our problem. When are you going to get it? Well you go ahead and complain about your financial problems, because you caused them your self by not supporting border security. If you go down the drain, its not our fault and we refuse to help fix it because we have been telling you for a long time. If you want money to fund your employee programs, you need to fix the probelem where the money is going. Welfare, housing,medical, education etc. to invaders of our country. We do not mind helping those who come here legally and comply with all our laws. This is your fault and if you want to fix it, really want to fix it, you know where to start. Don’t whine to us.