NCPA - National Center for Policy Analysis


June 26, 2008

To escape the crushing burden of its gold-plated benefits packages for city workers and retirees, Vallejo, Calif., is filing for bankruptcy in a federal court, says Alexis Simendinger of the National Journal.

Vallejo, a mid-sized California city home to nearly 120,000 people, can no longer afford the jaw-dropping salaries it has provided city workers, says Simendinger.  The city's generous payments to public safety workers stand apart, even in the pricey region of the San Francisco bay.  For example:

  • Last year, 292 out of 411 Vallejo employees were paid more than $100,000.
  • Vallejo's city manager earns nearly $317,000, more than even Vice President Cheney.
  • A police captain earns $306,000 a year in pay and benefits (six times what the average Vallejo schoolteacher earns).
  • A police lieutenant earns $240,146 a year.
  • The average firefighter earns $171,000 a year.
  • When public safety workers retire after age 50, they receive 90 percent of their top salary.
  • Wages and benefits swallowed more than 75 percent of what was available in the city's general fund in 2007.
  • Vallejo is currently facing a daunting deficit of nearly $17 million dollars.

After nearly two years of difficult debate, the major and council decided last month that it was worth the stigma of being the largest city in California to seek bankruptcy protection if it helps Vallejo escape its crushing financial commitments. 

Experts agree that other state and local governments may face a similar predicament in the future.  Judging from the ominous mix of mounting costs for energy and food; declining property-tax and sales revenue; rising pension and health-care commitments to public workers; and greater demand for city services during hard times, they may be right, says Simendinger.

Source: Alexis Simendinger, "Generous to a Fault," National Journal, June 14, 2008.


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