I hope our "Leaders" are paying attention
Michael McDaniel
On Feb 20th 2008 I summarized the crisis unfolding in Vallejo California HERE. The Associated Press reported today (May 7th 2008) that Vallejo in fact has taken the legal steps to file for BANKRUPTCY. This is the largest California city to fail on this level. As noted in our Feb 20th piece Vallejo budgets over 85% to employee benefits (wages, pensions, healthcare).
Jason Dearden of the Associated press writes,"Many officials and residents attribute Vallejo's fiscal troubles to
overly generous pay and benefits to the city's police and firefighters.
The salaries for police and firefighters currently take up 75 to 80
percent of the city's general fund."
More insight into this epidemic can be found in the answers of hopeful California assembly members Sue Horne and Dan Logue. According the CABPROReport (HERE) each of them believe that California has been hijacked by employee unions.
Don't forget the size of this crisis folks... Our Governors pension crisis committee started HERE by executive order. Just 2 years later this bi-partisan committee reported to the Governor that the state of California is not strong enough to battle the employee unions. The state of California backed down from a fight against employee
unions. Schwarzenegger and his bi-partisan team analyzed the odds of
defeating the employee unions and decided that such a battle would only
increase the state's deficit.
Vallejo and Bankruptcy
Don't Make Me Say,"I told you so."
Nevada County Leaders PAY Attention
Michael McDaniel Feb 20th 2008
Early last month George Rebane PhD and I published a report on the ill health of our communities finances due to unfunded liabilities. The report was met with jubilation from readers within the private workforce (taxpaying) community. The very same report was downplayed by the elected officials at the County of Nevada, The City of Grass Valley and The City of Nevada City. Dear "leaders" of GV, NC and Nevada County, consider yourselves forewarned...case and point; Vallejo.
The numbers speak for themselves and now the numbers in the City of Vallejo have gotten to loud to ignore.
Note worthy stats on Vallejo:
- 87% of the annual budget of Vallejo is spent on employee salaries and benefits.
- The present value of employee pension benefits is over $135 million
- Union contacts promise employee pay raises AND minimum staffing requirements (no lay offs allowed regardless of cities financial position)
- For every dollar paid to a public safety employee another $.28 is added by taxpayers to the employees pension plan (does not include amounts also added for social security, health insurance, vacation time, sick pay, family time off, dental, disability, etc)
- In 2007 in Vallejo, 98 firefighters made more than $100,000 and 10 made more than $200,000.
The City of Vallejo has a general budget of over $82 million. According to the Comprehensive Annual Financial Statement dated 2/20/2008 council members expected (hoped) to cut the pay for police and fire employees in 2007/2008. But, after further review of labor contracts drafted by the employee unions the cities hands were tied until negotiations in 2010. Enter in a bad real estate market and wham! you got trouble. The real estate market downturn and the strength of the employee unions have teamed up to crush Vallejo. To add insult to injury, 21 public safety employees abruptly retired last week to insure that their $4 million in sick/vacation pay was not forfeited due to bankruptcy. The labor unions and poor negotiating of employees salaries and benefits in the past may force Vallejo to be the very first City in California history to file for bankruptcy.
Vallejo Comprehensive Annual Financial Statement: http://www.ci.vallejo.ca.us/GovSite/default.asp?serviceID1=688&Frame=L1
and
https://www.calpers.ca.gov/index.jsp?bc=/employer/actuarial-gasb/contrib-rates/rates/employer-results.xml&employer_code
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