Courtesy of Mish.
On May 6, 2008, the Vallejo City Council voted 7-0 to file for Chapter 9 bankruptcy. At the time it was the largest city in California to do so.
In March of 2009 I noted Judge Rules Vallejo Can Void Union Contracts.
Vallejo foolishly refused to do so, and I predicted it would soon be back in bankruptcy over the same reason it went bankrupt in the first place: absurd union wages and even more absurd pension promises.
Sure enough, here we go again.
Vallejo Still Can't Afford its Pricey Pensions
CNN Money reports Once Bankrupt, Vallejo Still Can't Afford its Pricey Pensions
The California city of Vallejo emerged from bankruptcy just over two years ago, but it is still struggling to pay its bills.
The main culprit: Ballooning pension costs, which will hit more than $14 million this year, a nearly 40% increase from two years ago.
Amid threats of legal action from the state's pension giant, CalPERS, Vallejo did little during its nearly three-year stint in bankruptcy to stem the growth in its pension bills.
As a result, Vallejo continues to dole out large sums of money for retirees. Except for new hires, Vallejo's police and firefighters can retire at age 50 with as much as 90% of their salary — for life. Public safety workers who retired in the last five years have average annual pensions of more than $101,000.
And the pension costs are expected to continue to rise, with a projected increase of up to 42% over the next five years.
Moody's recently warned that Vallejo's pension obligations could force it to file for bankruptcy protection a second time. The credit rating agency said the city offers a cautionary tale for two other California cities teetering on the brink: San Bernardino and Stockton. …
