Jeff Smith noon, March 8
Vallejo to Emerge from Bankruptcy -- Bruised
According to a story in the May 4 Wall Street Journal, the city of Vallejo, which entered bankruptcy in 2008, should emerge by July. The city of 120,000 is 30 miles northeast of San Francisco. In the years leading up to the bankruptcy, the city's expenses grew by 11% annually while revenue only went up 3%. Salary and benefits for police and firefighters accounted for 70% of the $65 million budget, according to the Journal. The city reduced the police from 150 officers to 90, closed fire stations and reduced firefighters from 120 to 70. Healthcare benefits for 400 city worker retirees and surviving spouses will be be reduced, with the city contributing $300 a month premiums, down from $1,500 for some retirees. But current pension payments will remain in place. Original bondholders came out unscathed, but Union Bank, which had insured the bonds, was owed about $50 million but will receive 40% less than that. The bankruptcy cost Vallejo more than $9 million, largely from legal fees.