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The Vallejo City Council voted last night on a deal with its public safety unions that may help the city avoid filing for Chapter 9 bankruptcy. But will it be enough?¹

Vallejo may become California’s first city to declare bankruptcy as payouts to retiring police and fire employees drain needed cash from the City. In Vallejo’s case, it appears that the City’s public employees are putting the City at risk for bankruptcy.²

The cuts are intended to keep Vallejo afloat through June 30. But the city needed to come up with a long-term solution to its financial woes by April 22, allowing it the minimum amount of time to declare bankruptcy if necessary.³

Vallejo, like many California cities, wanted to maintain a high services and low tax environment, and has found this is not possible, especially when an artificially-created bubble bursts. Instead of accepting responsibility and seeking new revenues to balance the city’s books without endangering the public, city leaders chose to blame the public workers for the problems and declare bankruptcy instead of avoiding the underlying issues.⁴

The city’s mayor, Osby Davis, resisted filing for bankruptcy, arguing that it would stigmatize Vallejo and hurt future economic development. But after months of personally negotiating with the unions, Davis conceded Tuesday that there were no other options that he could find.⁵

Orange County filed for bankruptcy in 1994 after a series of bad investments. And Desert Hot Springs, a town of 20,000, sought Chapter 9 protection several years ago after a crushing court judgment on an environmental matter, said Marc Levinson, Vallejo’s bankruptcy attorney.⁶