Stockton (CA) in bankruptcy, public sector unions in denial

[Master Shake]

Stockton, California, which is heading toward the first steps of Chapter 9 bankruptcy, is described as a crime-racked wretch designated by Forbes magazine as the most miserable city in America.

But it would be wrong to believe that the troubles in the city of almost 300,000 residents in the agricultural San Joaquin Valley are not necessarily a sign of things to come in more upscale municipalities across the state.

Unfortunately, the financial mess in Stockton echoes problems throughout California, even though public-sector union leaders and Democratic state legislators are in denial about this reality. In cities as affluent and diverse as San Jose and San Diego, municipal finances are hitting the wall, driven by unsustainable pension debt and health-care promises made to government workers during more flush economic times.

Stockton has not been a prime location since the Gold Rush, but only a few years ago it was a reasonable destination for commuters who couldn’t swing the prices in San Francisco, about 80 miles west. Now the murder rate is at record highs, and the police union is in a pitched battle with the new city manager. The debt-laden downtown redevelopment area looks like a ghost town, and the city is littered with foreclosed properties.

Stockton is also in the news as the test case for a new state law intended to put the brakes on municipal bankruptcy. It’s a reminder not just of how far and fast a city can fall, but also of problems that are festering everywhere.
‘Ponzi Scheme’

“There was no money set aside to fund those commitments,”Stockton City Manager Bob Deis told Capital Public Radio in reference to $760 million in city debt and unfunded liabilities. “While that was a legal decision they made over 20 years, it was an unsound decision and it has similarities to a Ponzi scheme.”

Rest here.

http://www.bloomberg.com/news/2012-0...-greenhut.html

[Thailandnotes]

Re: Stockton (CA) in bankruptcy, public sector unions in denial

I'd be really surprised if there are only 15,000 people drawing a government pension above 100,000 dollars in the state of California. If that number is accurate and 94 of them are in Stockton, then municipal salaries there were truly inflated.

City managers, police chiefs, school superintendents, etc routinely earn six figure salaries, and 100,000 + pension are not out of whack. Healthcare, pension, and other benefits are budgeted into the cost of hiring employees whether in the the private or public sector. When they are not budgeted in or the money is not being set aside, you are usually talking fraud and criminal behavior.

“Blaming past councils, Deis pointed to a health-care plan that pays the entire cost of care for every city employee and spouse for life, after only one month on the job.”

This doesn't pass the smell test. Any itulipers out there near Stockton?

[don]

Re: Stockton (CA) in bankruptcy, public sector unions in denial

An adjoining county, Solano, does not continue health benefits for retired county sheriffs. Retired city workers in Vacaville pay a minimal amount for healthcare until they reach 65, when it terminates. This comes from two neighbors who are in the respective groups.

[don]

Re: Stockton (CA) in bankruptcy, public sector unions in denial

The federal government employee group, by far the largest, was benefit structured as 2% per year towards retirement, with accrued annual leave paid out at the time of retirement and accrued sick leave added to the time in service. Healthcare benefits continued at a similar rate of individual contribution. A higher-end HMO for two people today has a monthly cost of around $1100. An employee with 20 years service would receive 40% of their high three years. Retirement is fully taxed, with the exception of SS withholding. The above is the old civil service system, which many retirees are drawing on. The new civil service retirement capitulated to 401Ks.

[lektrode]

Re: Stockton (CA) in bankruptcy, public sector unions in denial

I'd be really surprised if there are only 15,000 people drawing a government pension above 100,000 dollars in the state of California.....

me too....

but i wouldnt be surprised at _anything_ that the politicians (mostly dems) in california have pulled off over the past few decades - and the evidence is 'clear as a Bell'

http://en.wikipedia.org/wiki/City_of_Bell_scandal

http://abcnews.go.com/US/bell-califo...ry?id=13028339

The man at the center of what may be the worst corruption scandal in California history was in court today, dozing off.
Robert Rizzo, the former city manager of Bell, Calif., shocked the nation when it was revealed that his salary in office was $800,000 a year.

Now, the Justice Department has uncovered a document that may help explain, in part, how city leaders financed their lavish salaries. The one-page memo was titled "Bell Police Department Baseball Game."


"All of this was just a means by Rizzo to nickel and dime the community to death to get more money out of them," Christina Garcia, a community activist, said.

just imagine what his pension woulda been, had they not caught on to them?

[Thailandnotes]

Re: Stockton (CA) in bankruptcy, public sector unions in denial

Rizzo wasn't a civil servant. He's a felon going to jail.
The L.A. Times won a Pulitzer and the Bell taxpayers have been clawing back stolen money.

[don]

Re: Stockton (CA) in bankruptcy, public sector unions in denial

on the other hand . . .

Had breakfast with a guy that was heavily involved in labor contract negotiations with the city of Lodi last year. He told me the head honcho of San Joaquin County, who was fired by Solano County for his incompetence and then hired by SJ, makes $350,000 a year and could retire at anytime on a mere $24,000 a month. This is par for the course for this circle of misfits.

In the age of FIRE, corrupt government officials with a fiefdom to sell into debt, are always both in supply and well rewarded.

[Master Shake]

Re: Stockton (CA) in bankruptcy, public sector unions in denial

on the other hand . . .

Had breakfast with a guy that was heavily involved in labor contract negotiations with the city of Lodi last year. He told me the head honcho of San Joaquin County, who was fired by Solano County for his incompetence and then hired by SJ, makes $350,000 a year and could retire at anytime on a mere $24,000 a month. This is par for the course for this circle of misfits.

In the age of FIRE, corrupt government officials with a fiefdom to sell into debt, are always both in supply and well rewarded.

I think it has much less to do with FIRE than with one party control of a municipality or state.