Now that cities in California are going bankrupt, can we buy the municipal buildings from the bondholders?
Vallejo’s Bankruptcy `Failure’ Scares Cities Into Cutting Costs
When Vallejo, California, filed for bankruptcy in 2008 after failing to win union pay cuts, Councilwoman Stephanie Gomes said officials around the U.S. would have their eyes trained on the city of 120,000.
She was right. The lesson they’ve taken from the two-year- old case, which has cost Vallejo .5 million in legal fees and made it a nationwide symbol for distressed municipal finances, is that out-of-court negotiations yield better results.
http://www.bloomberg.com/news/2010-12-14/vallejo-s-california-bankruptcy-failure-scares-cities-into-cost-cutting.html
Los Angeles on the Brink of Bankruptcy
Los Angeles is facing a terminal fiscal crisis: Between now and 2014 the city will likely declare bankruptcy. Yet Mayor Antonio Villaraigosa and the City Council have been either unable or unwilling to face this fact.
According to the city’s own forecasts, in the next four years annual pension and post-retirement health-care costs will increase by about .5 billion if no action is taken by the city government. Even if Mr. Vicarages were to enact drastic pension reform today—which he shows no signs of doing—the city would only save a few hundred million per year.
Los Angeles’s fiscal woes can be traced to two numbers: 8% and 5,000. Eight percent has been the projected annual rate of return on the assets in Los Angeles pension funds. Four years ago, we strenuously warned Mr. Villaraigosa of the dangers behind the myth of that 8%, only to be told by the city controller’s office that our warnings were "based on faulty assumptions which are largely disputed."
How faulty were our assumptions? Over the last decade, the two main pension funds in Los Angeles have seen their assets grow at just 3.5% and 2.8% annually.
Five thousand is the number of employees added to the city’s payroll during Mr. Villaraigosa’s first term as mayor. According to California’s Economic Development Department, when Mr. Villaraigosa took office there were 4.73 million jobs in Los Angeles and 252,000 unemployed people. Today, there are just 4.19 million jobs in Los Angeles and over 632,000 unemployed people
http://online.wsj.com/article/SB10001424052748704608104575218392603082622.html
Labor costs boosting SF’s deficit
employee costs will deal a 0 million blow to San Francisco coffers next fiscal year despite wage concessions.
Pensions rank among the most escalating labor costs for San Francisco. Less than a month after voters rejected Proposition B, which would have increased employees’ pension contributions, a 9.8 million deficit projection was released this week. It shows The City’s annual pension investment will grow by .1 million next fiscal year.
The labor costs — salaries, health benefits and pensions — will force government expenditures to increase by 1.1 million in the fiscal year that begins July 1, according to data from Mayor Gavin Newsom’s budget office. Labor costs are one-third of The City’s projected 3.4 million of increased spending for the upcoming fiscal year. Also, San Francisco officials project a loss of .4 million in revenue.
http://www.sfexaminer.com/local/2010/12/labor-costs-boosting-sfs-deficit#ixzz19Y5StjxU
