Why do some cities in California go bankrupt while others are prospering? While Stockton, San Bernardino, Mammoth Lakes, and Valleho have all gone bankrupt in recent weeks, West Sacramento, according to its mayor, Christopher Cabaldon is surviving. Cabaldon tweeted:
“4th CA city just voted to declare bankruptcy tonight, if you’re in West Sacramento worry not…our city is in solid fiscal shape.”
Cabaldon says the West Sacramento government has been cut 25 percent over the past 4 years, boasting, “We have, in West Sacramento, been making reductions, putting our fiscal house in order so we can make sure that our citizens will be protected.”
Rancho Cordova, 14 miles from West Sacramento, is not only surviving, but doing very well indeed; it has enjoyed eight straight years of surplus. Rancho Cordova City Manager Ted Gaebel said:
“We don’t just pass a budget and hope things turn out ok in the hand, we manage a budget on a day to day basis. If that means cutting several million dollars during the year is what I need to do.”
Bankruptcy isn’t always the best way out, as the city of Vallejo discovered.
The city filed for bankruptcy because they claimed salaries and benefits for its public-safety workers were killing them. It had to close two of its fire stations and its police and firefighters are half the number of what they were. Only 10 percent of its roads have been fixed. Stuck with $10 million in legal fees, Mayor Osby Davis thinks that Vallejo would have done better to negotiate with the workers and says bankruptcy is a mistake:
"It takes an enormous toll on everyone. And you have the stigma of being a bankrupt city. How do you come out of being labeled a bankrupt city to one that is a desirable place to live?"
But, of course, that is not so easy; unions have grown increasingly confident that with their Democratic buddies in the California Legislature, they’ll be protected.
Bankruptcy experts have said that cities are being bankrupted by weak property- and sales-tax revenues as their pension obligations keep growing. Stockton couldn’t agree with its employee unions and creditors on a plan to close a $26 million gap in its general fund. San Bernardino’s obligation to its employee retirement system doubled from 2007 to 2012. Pension spending grew an average of 11.4 percent a year in California’s biggest cities between 1999 and 2010, almost twice as fast as spending on public safety, social services, recreation, health and sanitation.
Is there a long-term solution in sight? Proposition 32 is trying to break through the brick wall of Democratic legislators and their union supporters by banning direct corporate and union contributions to state and local candidates, banning contributions by government contractors to the politicians who control contracts awarded to them, and banning automatic deductions by corporations, unions, and government of employees’ wages to be used for politics.
Will the people of California finally wake up?