Municipal Bankruptcy in California (aka “Scott Walker looking better every day”)

Courtesy of the Washington Post:

STOCKTON, CA, said it will file for bankruptcy after talks with bondholders and labor unions failed, making the agricultural center the biggest U.S. city to seek court protection from creditors.

The city is fiscally insolvent and must seek chapter 9 bankruptcy protection,” Stockton said in a statement released yesterday after its council voted 6-1 to adopt a spending plan for operating under bankruptcy protection. “In addition to the bankruptcy petition, the city will file a motion with the courts to share information from the confidential mediation.”

The budget for the fiscal year beginning July 1 calls for defaulting on $10.2 million in debt payments and cutting $11.2 million in employee pay and benefits under union contracts that could be voided by the bankruptcy court. The city of 292,000 may file its petition as soon as today.

“It’s a sad day in the city of Stockton,” Mayor Ann Johnston said before the budget vote. “I see no other solution to this.”

Hey, you know what would have been an option prior to this? I’m thinkin’….maybe to not spend so much money?? I know….that’s just silly; heck, it’s crazy talk.

And yet.

If the municipalities and/or school districts were given a real option between what the public sector unions say they HAVE to do, and what makes the most SENSE, those municipalities and school districts might actually take….the option that makes the most sense.

For instance, JUST for a comparison, let’s take a peek at what happened up in Wisconsin, which was well on its way towards a similar fate as Stockton, until Scott Walker showed up. From, last month:

“Once it was enacted, the bill President Obama once described as “an assault on unions,” became a pathway to independence. Wisconsin schools and local governments were given the freedom to live within their means when they were granted the ability to hire, fire and compensate based upon performance. The nonpartisan group, Wisconsin Taxpayer’s Alliance, reported that the savings from employee benefits “allowed districts to reduce costs” allowing districts like the Kaukauna school district to control their own destiny and convert a $400,000 deficit into a $1.5 million surplus.”


So, if I’m reading between the lines on this properly, it appears that today’s lesson is:

  • Make the common-sense fiscal decisions, and then don’t yield to the Public Sector Unions = SUCCESS!!
  • Punt on all the tough decisions, keep raising taxes, and/or cave to the Public Sector Unions = BANKRUPTCY.

Yeah, I think I can remember that.

3 responses to “Municipal Bankruptcy in California (aka “Scott Walker looking better every day”)

  1. Everybody has been saying that California was heading down this path toward bankruptcy so nobody should be surprised. This won’t be the last town in California to go bankrupt, they had all better wise up soon.

    • Unfortunately, you’re likely right, Blaine.
      California cities, as well as the state itself, have been kicking the can down the street for so long now, it was just a matter of time before this began to occur.

      I hope they get someone in there who will turn it around, or they’ll go down like the Titanic: in legendary fashion.

  2. It’s not just California. If enough of the cities go down to bankruptcy in CA, the Feds will be looking to the other states for a bailout without asking permission.

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