Possibility of largest city in US history to file for Chapter 9 bankruptcy

[Dacien]

Stockton, California, is heading for the first steps of Chapter 9 bankruptcy. At a population of 300,000, it would be the largest city to file for bankruptcy in US history. The problem is they simply don't have enough money to pay their bills.

But what bills, exactly? During better times in the 90's a boom was underway. The city spent freely, including a new marina, a minor-league baseball stadium, and a hockey arena. But what's really hurting them now is the generous concessions that were made to the city workers. Today, 80% of Stockton's entire budget goes to city employees, both working and retired. So when cuts need to be made, there really is only one place: city employees.

So you might think, with the city sinking under such crushing unfunded liabilities, that the unions would agree to dial themselves back to save the city. But this has not been the case. Firefighters make up 30% of the budget, and agreed to reduced staffing, but the police officers' union (which makes up 52% of the city budget) took the city to court to keep pay raises and benefits bestowed during better times.

But if the pay going to current employees is hurting the city, the pay and benefits going to retirees is the killing blow. Illustratively, Stockton suffers from having 94 retirees with pensions of at least $100,000 a year - more than twice as many as some comparably sized California cities. The free lifetime healthcare alone has become a $417 million unfunded liability. Stanford professor Joe Nation said it plainly: “From Stockton to San Diego, government pension costs are crushing local governments.”


This is a sad story, and it reminds us of other states and cities fighting this battle. I'm not against workers getting a fair shake, but let's not ever forget that people are people, whether they push dollars on Wall Street, or they work for your city. Get involved, vote, make sure that everybody is getting a fair shake, including us.


http://www.bloomberg.com/news/2012-0...-greenhut.html
http://www.bloomberg.com/news/2012-0...collapsed.html
http://www.ocregister.com/opinion/ci...ankruptcy.html




Update 6/27/12:

And it will be official soon. Stockton is filling for bankruptcy. A sad day for those of us who live here.

http://sacramento.cbslocal.com/2012/...cy-protection/

[Twiddly]

Pensions of 100,000 dollars a year, good for them I guess. I wonder what jobs they had before. Pretty crazy story really.

[Dacien]

Pensions of 100,000 dollars a year, good for them I guess. I wonder what jobs they had before. Pretty crazy story really.

Mostly retired police sergeants and higher, I'd imagine.

[Laize]

This is why I fucking HATE modern unions. ESPECIALLY government unions.

New Jersey is in the midst of a war against the Unions as we try to stay afloat ourselves.

[Dacien]

This is why I fucking HATE modern unions. ESPECIALLY government unions.

New Jersey is in the midst of a war against the Unions as we try to stay afloat ourselves.

People are so fixated on the evils of Wall Street and "The 1%", they don't even realize that the same greed is right next door to them in their own city. They may not be living an opulent lifestyle, but they are living on unreasonably high salaries and pensions and benefits for what they do. And they're bankrupting cities and states across the country, especially in states like California and New Jersey.

And when the situation gets dire, what do you hear? The rich! The rich aren't paying their fair share! It's all... very frustrating.

[Zeta333]

People are so fixated on the evils of Wall Street and "The 1%", they don't even realize that the same greed is right next door to them in their own city. They may not be living an opulent lifestyle, but they are living on unreasonably high salaries and pensions and benefits for what they do. And they're bankrupting cities and states across the country, especially in states like California and New Jersey.

And when the situation gets dire, what do you hear? The rich! The rich aren't paying their fair share! It's all... very frustrating.

Im sorry what? People who work their whole life, most into thier 60's put into a retirement fund or pension deserve it, Becuase your some 20somthing year old have havnt put shit into it doesnt entitle you to talk down on those who worked for their retirement. The whole 1% movement is just a bunch of lazy ass hippys who dont want to work to earn money.

[Twiddly]

Funny story about unions, my dad is required to join the AFL for his state job, and pay dues, all that. He does not support them or there political views, but still has to join. That is not the big issue at all though really, the big issue is what the union is currently doing.

They are closing places down ("Group homes") for a couple weeks at a time, then re-opening them with newly hired, fresh staff that get paid a lot more. You would think the union would be against something like this, yes? Nope. They get the same amount of union dues as they would from the veteran staff. People working for the state for 20 years are getting downsized, then instantly replaced. I thought this was something unions fought against?

They say they are to busy with things, I guess they mean political rallies, and the magazine they put out that is just democrat propaganda, the entire way through. This is not me being biased, it is a downright fact. Union dues go to support politicians instead of helping the workers. Sad really.

[Dacien]

Im sorry what? People who work their whole like, most into thier 60's put into a retirement fund or pension deserve it, Becuase your some 20somthing year old have havnt put shit into it doesnt entitle you to talk down on those who worked for their retirement. The whole 1% movement is just a bunch of lazy ass hippys who dont want to work to earn money.

I'm 28-years-old, and have been working for years in the private sector. In my OP, I clearly state that I'm all for people getting a fair shake, but when salaries and pensions get so high that they gobble up 80% of a city's entire budget? And then the city is on the brink of bankruptcy, and the city workers refuse to give ground on pensions and benefits that outsiders call "unheard-of" in their generosity? I think you're misinformed about the gravity of what's befallen states like mine.

[Twiddly]

Im sorry what? People who work their whole life, most into thier 60's put into a retirement fund or pension deserve it, Becuase your some 20somthing year old have havnt put shit into it doesnt entitle you to talk down on those who worked for their retirement. The whole 1% movement is just a bunch of lazy ass hippys who dont want to work to earn money.

Yes, but look at my post please. It is happening right now in Minnesota. The union is not standing up for workers at all anymore here, they are merely allowing the state to do it, only because they still get the same amount of dues. Corruption is the only word I can think of for it.

[durza]

theres only one thing to say here.....fuk da police!

[Dacien]

Yes, but look at my post please. It is happening right now in Minnesota. The union is not standing up for workers at all anymore here, they are merely allowing the state to do it, only because they still get the same amount of dues. Corruption is the only word I can think of for it.

People view public sector workers as "one of them". They're neighbors, they're friends. But people simply do not realize that these people have unions who will go down on a sinking boat, refusing to cut a golden anchor.

[skatblast]

Pensions of 100,000 dollars a year, good for them I guess. I wonder what jobs they had before. Pretty crazy story really.

Youd be suprised what hard work and loyalty to a company can get you. Somebody in my family worked at GE for 40+ years and gets a pension like that, he was never anything special.

[HisaeDalv]

At the rate things are going now; those currently in their 20s probably wont even see pension/benefit or will see a fraction of what people are getting now in order to make up for the massive amount of people that will be out of workforce.

as for the california issue.. dang thats ridiculous 52% of a city budget on police alone

[Dacien]

Funny story about unions, my dad is required to join the AFL for his state job, and pay dues, all that. He does not support them or there political views, but still has to join. That is not the big issue at all though really, the big issue is what the union is currently doing.

They are closing places down ("Group homes") for a couple weeks at a time, then re-opening them with newly hired, fresh staff that get paid a lot more. You would think the union would be against something like this, yes? Nope. They get the same amount of union dues as they would from the veteran staff. People working for the state for 20 years are getting downsized, then instantly replaced. I thought this was something unions fought against?

They say they are to busy with things, I guess they mean political rallies, and the magazine they put out that is just democrat propaganda, the entire way through. This is not me being biased, it is a downright fact. Union dues go to support politicians instead of helping the workers. Sad really.

A very common complaint down here in LA from teachers is having to provide good test scores from illegal immigrant students who speak little, if any, English. But their very union dues go to support Democratic candidates who promote, support, encourage, and condone illegal immigration.

---------- Post added 2012-03-05 at 08:23 PM ----------

Youd be suprised what hard work and loyalty to a company can get you. Somebody in my family worked at GE for 40+ years and gets a pension like that, he was never anything special.

That is genuinely surprising. Pensions have all but been abandoned in the private sector in favor of more reasonable 401k plans. The private sector has learned that pensions are simply not sustainable.

[darkwarrior42]

They say they are to busy with things, I guess they mean political rallies, and the magazine they put out that is just democrat propaganda, the entire way through. This is not me being biased, it is a downright fact. Union dues go to support politicians instead of helping the workers. Sad really.

I've had personal experience with two unions, without being a member of either one. I work in security, so I've had the opportunity to work very close to unions and factories and see what the people go through, without actually being a member myself... and what you're describing is unfortunately very common, at least in my experience

One of the unions I was working with locally was told by the company straight out that the company could not afford to give the union a pay raise. It was a supermarket chain, and there was a *lot* of competition locally (two other supermarket chains, plus wal-mart put in a supercenter) that was really killing them. The union's response? They organized a strike, and got the local press on their side... they "won" quite handily, because the company simply couldn't afford the bad press on top of the competition. About a year later, the company filed for bankruptcy, and less than 6 months after that every single member of that union was out of a job. Given the way the company was going, I'm not sure they would have survived either way... but the strike and the higher costs per employee definitely brought the end about much quicker.


When unions were first formed, they were an absolute necessity that fought for the rights of the worker... and I do think that if all unions were to go away, we'd slip back into bad straits pretty quickly ("at-will employment" is already pretty bad in some industries)... but it is sad that so many unions support politicains or political agendas instead of the workers, and many of the unions that do try to help the workers do so in ways that cause more harm than good



I'm not sure it's really feasible or fair to reduce pensions that have already been earned, but future pensions and salaries in California obviously need to be brought down a bit. There's no point trying to pay that much money if you don't have it to give out in the first place. Moreover, states need to remember that good times and economic booms don't last forever, and stop promising things during good times that they won't be able to afford when things get tight.

[majesta]

I live in Stockton. The city has been plagued by bad government for a few decades. Check the Stockton Record past stories on this. One of the issues in this area is the city relied upon the ever growing housing market and the income from property taxes. Those issues combined with an extremely large migrant worker population and lack of tech jobs, remember that the Stockton area is largely agricultural so high paying jobs are far and few between causing the city to have a low to medium income base.

The city has been on the Forbes most miserable places to live list for several years and luckily this past time we avoided the top 5 list. There are some really bad areas of Stockton and then there are some decent areas such as Pacific Avenue (Miracle Mile), Lincoln Village, Brookside and Morada. Then there are areas where some nice revitalization took place such as Waterloo Road and the Stockton Gateway however they have fel into disarray because of the local community, Stockton politics and lack of maintenance. Maintenance has been a big issue in Stockton for some time now. The trees are over grown and unmaintained, the roads are un-drivable in some areas with 1-2foot wide potholes and the graffiti\liter problem is pretty bad too.

The community has been trying to improve Stockton's image but there is only so little the general public can do. It simply comes down to a funds issue. Not enough money to cover the basics let alone deal with large union pensions. I feel bad for this area as all the non-profits are having a difficult time from the local Redcross to the local SPCA, they are in dire need of financial support.

Some links:
Stockton Gateway
http://www.recordnet.com/apps/pbcs.d...0803/202100314

Bankruptcy stuff
http://www.recordnet.com/apps/pbcs.d...230328&cid=mmc

and some hope from former city manager:
http://www.recordnet.com/apps/pbcs.d...NEWS/120229901

[SageKalzi]

I'm 28-years-old, and have been working for years in the private sector. In my OP, I clearly state that I'm all for people getting a fair shake, but when salaries and pensions get so high that they gobble up 80% of a city's entire budget? And then the city is on the brink of bankruptcy, and the city workers refuse to give ground on pensions and benefits that outsiders call "unheard-of" in their generosity? I think you're misinformed about the gravity of what's befallen states like mine.

Uh... Why exactly did they "suddenly" gobble up 80% of the cities budget? I mean, obviously there was a reason they were there in the first place, it wasn't like they over-hired firemen and policemen just before this and then went "80% of our budget!". Plus, if I were in the same position, I would do the same thing. I wouldn't give an inch of ground to them, it is not my fault that the economy is in a bind. And I'm a government worker who works a dangerous job? Yeah, I'll take my money and they can shove it.

Also, the state in general has been in shambles for many many years. The whole illegal immigration thing kind of is tearing down over 10 BILLION dollars a year in that state, that leads to lower budgets for each city, no matter what. So, maybe start working on illegal immigration and you guys will have at least a bit more of a budget to work with and REQUIRED staff in the government won't have people getting pissed at them for doing their job and expecting to keep the money they earn.

Sorry, but that illegal immigration stuff has to be thrown in here, and it is NOT directed at any single group, it is a general statement so if anyone gets offended, that's your problem.

Edit: Dacien, none of the questions were answered in your post OR the links provided. The only thing close to an answer regarding the 80% of budget thing is "Cops are getting more money while the city goes bankrupt." Considering it is, again, a required job (Less cops = higher chance of higher crime rate. Less firemen = same amount of fires with less people to respond.) I don't see why you can suddenly go "Okay, I know we said you guys would be getting raises according to your contracts but... Y'know... We're just gonna not do that." That'll lead to unnecessary lawsuits.

[Dacien]

Uh... Why exactly did they "suddenly" gobble up 80% of the cities budget? I mean, obviously there was a reason they were there in the first place, it wasn't like they over-hired firemen and policemen just before this and then went "80% of our budget!". Plus, if I were in the same position, I would do the same thing. I wouldn't give an inch of ground to them, it is not my fault that the economy is in a bind. And I'm a government worker who works a dangerous job? Yeah, I'll take my money and they can shove it.

Also, the state in general has been in shambles for many many years. The whole illegal immigration thing kind of is tearing down over 10 BILLION dollars a year in that state, that leads to lower budgets for each city, no matter what. So, maybe start working on illegal immigration and you guys will have at least a bit more of a budget to work with and REQUIRED staff in the government won't have people getting pissed at them for doing their job and expecting to keep the money they earn.

Sorry, but that illegal immigration stuff has to be thrown in here, and it is NOT directed at any single group, it is a general statement so if anyone gets offended, that's your problem.

These questions could really be answered by just re-reading my OP, or by clicking the links.

In better times in the 90's the city conceded to the unions salaries, benefit packages, and pensions as if the gravy train would never end. Responsible people would say, "Hey, the city is about to go bankrupt because of these lucrative deals, then nobody wins. Let's dial it back to something more reasonable." But they don't do that. It's as if the public employee unions think that the city has some hidden stash of cash somewhere that they won't let go of. It's really bizarre.

[eriseis]

A very common complaint down here in LA from teachers is having to provide good test scores from illegal immigrant students who speak little, if any, English. But their very union dues go to support Democratic candidates who promote, support, encourage, and condone illegal immigration.

---------- Post added 2012-03-05 at 08:23 PM ----------



That is genuinely surprising. Pensions have all but been abandoned in the private sector in favor of more reasonable 401k plans. The private sector has learned that pensions are simply not sustainable.

How do they condone illegal immigration?

I feel unions are necessary for some work categories (for lack of better word), however, sadly, these can become self-servient.

Animal Farm is too true of a story, sometimes...

[Dacien]

How do they condone illegal immigration?

One of the biggest contributors to now-Governor Jerry Brown's campaign was the teacher's unions. Jerry Brown is very, very pro-illegal immigration.