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