The Governator on 60 Minutes; More California Towns Potentially Going Bust

By: TraderMark Tuesday, December 23, 2008 11:38 PM

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And why not? Most of these deals are done at town meetings that only show on local public cable (who pays attention to those?) and the "costs" of which are only borne years later - you know - things like when 56 employees of Vallejo make over $180,000-$300,000 a year. Now sift around your medium sized non government workplace (not for you investment bank types) and try to think how many make $180-$300K. (May 8: It Pays to be a Firefighter in Vallejo)

Below are charts of the $200-$299K and $180-$199K ranges. Dominated by firefighters (and some policemen). Again, I have no bones with these people being compensated for tough work but when private industry is being battered by falling wages, and low(er) paying jobs - how can our tax dollars continue to pay such wages? As I wrote in my earlier piece

What I've been amazed to watch locally is how local governments (in a 1 state recession we've had for about 4 years now) won't cut jobs or benefits (for themselves) while private enterprise is cutting jobs, benefits, wages left and right. I guess they will hold on - until they go BK. But we need to either see very sizeable tax increases and/or job cuts/services lost to pay for our excesses of the housing bubble.

Well the bill for these disconnects is coming due. It looks like a few more California towns are on their way to joining Vallejo ....

California may soon have more bankrupt towns on its hands. The city of Vallejo, Calif., gained national attention earlier this year by filing for Chapter 9 bankruptcy protection. Now, two neighbors are fighting to avoid the same fate, as the state's economic crisis spreads.
Isleton and Rio Vista, small towns roughly 50 miles northeast of San Francisco, say they have begun consulting with bankruptcy lawyers as they draw up plans to deal with their mounting budget crises. The towns' leaders say they hope to avoid bankruptcy, but concede the move may eventually be their only option.
"We're strapped for cash and by the end of March or early April we may not have enough money to pay for payroll," says Hector De La Rosa, Rio Vista's city manager.
"California's fiscal house is burning down," State Treasurer Bill Lockyer said in a statement.
Rio Vista began to see the trouble last year, when property-tax revenue began to falter. The city lacks revenue sources such as big-box retailers and depends heavily on two auto dealerships for sales-tax revenue, Mr. De La Rosa says. But the dealerships have hit hard times.

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