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Another Bankrupt California City Shirks Pension Pain


Stockton, California, is well on its way to repeating the mistakes of its sister bankrupt Golden State city, Vallejo: The city manager of Stockton has proposed a deal in bankruptcy court that involves zero pension cuts. Opting instead for slashing workers and health benefits, extending payments and selling buildings, the deal, if approved, would leave Stockton’s ruinous pension system untouched. The Sacramento Bee reports:

Bob Deis, the city manager of insolvent Stockton, is proud of fashioning a bankruptcy plan that avoids cuts in city workers’ pensions.

Were pensions to be reduced, Deis says, “There’ll be a mass exodus of those employees, and we won’t be able to fill those positions.”

Vallejo decided to cut several expenses in bankruptcy, but, out of fear of legal tussles with the quarter-trillion-dollar California Public Employees’ Retirement System (Calpers), it left its pension obligations in tact. Now, with Calpers raising its contribution rates, pension payments are eating up more and more of Vallejo’s general fund.

The city’s desire to keep its employees in Stockton is understandable, as is the need to let future public workers know that, come hell or high water, the city’s pension promises are safe. But if they’re not, in fact, safe, it’s not clear to us how it does anyone any good to pretend that they are and just hope the problem goes away. Stockton is putting its post-bankruptcy future at risk—all to avoid reckoning with a growing problem that they should have faced up to years ago.

One last hope for salvation comes at the very end of the SacBee’s report:

Voters may weigh in next year on a proposed state ballot measure that would allow local governments to cut future pension benefits they cannot afford.

One can only hope.

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  • rheddles

    ‘Were pensions to be reduced, Deis says, “There’ll be a mass exodus of
    those employees, and we won’t be able to fill those positions.”’

    Oh? The unemployment rate for potential public employees must be a lot lower than the average worker. I never knew it is so hard to replace civil servants. And when they quit, they lose their pension if not vested. Sounds like a win-win, Bob.

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