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Image      City Staff Recommends Bankruptcy

                          Vallejo in Throes of Fiscal Cardiac Arrest

 

May 2, 2008

By Katy Miessner

 

VALLEJO – After many heated meetings to discuss the very real possibility of bankruptcy, the City Staff has absolutely and unequivocally recommended the City of Vallejo file for bankruptcy under Chapter 9 of the United States code.

 

The Council will decide whether to adopt this historic recommendation at the City Council meeting, Tuesday, May 6 at 7:00 pm in Vallejo City Council Chambers, 555 Santa Clara Street. 

 

The City Staff Report states bankruptcy is now the City’s only option: facing a 2008/09 deficit grown to $16 million, the City’s reserves will be depleted and the City will be insolvent by June 30; in violation of the City Charter no viable General Fund budget has been identified for 2008/09; and no budget has been identified for the next fiscal year within the bounds of the existing labor contracts and no new contract modifications have been negotiated. Absent labor concessions and without bankruptcy, the General Fund will not have the legal authority to continue to provide services after June 30.  If the City does file for bankruptcy, it will enable the City to continue to provide services to residents because it will freeze certain debt and protect the City from lawsuits by the Public Safety Unions and other entities, and will allow the City the time to negotiate a settlement where all the City’s expenses and resources can be accounted for—not just the demands of the Public Safety Unions.

 

The sole reason for not filing bankruptcy has been the threat that the City will not be able to float bonds needed for the downtown and waterfront revitalization.  However many are even more concerned that the chaotic state the City’s finances has been in for years is actually more harmful to the City’s bond ratings and revitalization plans. Filing for bankruptcy will create a stable environment in which the City can restructure the relationship between revenues and expenses, in an environment that removes the enormous pressure from the Safety Unions, to create a true long-term viable and sustainable fiscal plan.

 

Link to Agenda with Staff Report:  HERE   Go to Page 113