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Thursday, July 19, 2012

Bankrupt California Cities List

This is a list of California Cities and Municipalities in or Near bankruptcy taken from the article California Cities and Municipalities In Or Near Bankruptcy.
Cities can file for bankruptcy if they are insolvent which means they are unable to pay debts that are due. When in bankruptcy, a city doesn't have to pay its creditors while it negotiates a plan for dealing with its debts. Municipal bankruptcies are extremely rare because cities have the power to tax. Since they can tax their citizens, cities have a hard time convincing a bankruptcy court that they truly cannot pay their debts.

  1. June 18, 2012: Stockton, with 300,000 residents
  2. July 2, 2012: Mammoth Lakes with 7,700 permanent residents
  3. July 10, 2012: San Bernardino with 209,000 residents
The dominoes are starting to topple. 

How many cities are "solving" their problems with dual pay structures where new workers get lower salaries and pay for or contribute more to their pensions like "regular" taxpayers that fund the cities?

How will dual pay scales affect moral and ability for public safety employees to work well together?


  1. Pulled from a news report on Spain....

    Riot police cordoned off the entrance to a sprawling police facility to prevent 100 plainclothes police officers from disrupting a graduation ceremony for some 1,200 cadets about to enter the force.
    As National Police chief Ignacio Cosido addressed the graduating class and highlighted their task of "guaranteeing harmony, social peace and respect for all citizens' rights", police demonstrators in plainclothes a few hundred meters away all but drowned him out by blowing plastic horns. Demonstrators yelled out, calling him "a scoundrel."

    The starting salary of a National Police officer is about (EURO)1,400 a month, which is slightly above average in Spain. Lorenzo Nebrera, a police union spokesman, said officers get their uniform and service weapon but have to pay for the rest of the equipment, like bullet-proof vests, "handcuffs that work" and flashlights.

    "In the end, all these cuts sap morale among the police because they feel that conditions out on the street are more and more dangerous, and if these cuts continue the safety of the police will be jeopardized," Nebrera said. "It is an added risk for a job that is already dangerous."

  2. This data is on page one of the link in my signature

    Average monthly service retirement allowance all retirees: $2,332
    Average years of service, all service retirees: 20.3
    Average monthly service retirement for 2010-11 retirees: $3,065
    Average monthly service retirement allowance for school
    miscellaneous members: $1,251
    Average years of service school miscellaneous retirees: 16.9
    Average monthly service retirement allowance for State misc. members: $2,598
    Average years of service State miscellaneous retirees: 23.2
    Average age at retirement, all members: Service: 60
    Disability: 50
    Industrial Disability: 46

    then.... from Social Security Online

    >> The average monthly Social Security benefit for a retired worker was about $1,230 at the beginning of 2012.

    >> The maximum benefit depends on the age a worker chooses to retire. For example, for a worker retiring at age 66 in 2012, the amount is $2,513. This figure is based on earnings at the maximum taxable amount for every year after age 21.

  3. From Bloomberg:

    "Stockton, one of a growing number of California cities in financial collapse, said it asked bondholders and other lenders owed more than $300 million to take less than full repayment as part of an unsuccessful bid to avert the biggest ever bankruptcy filing by a U.S. city.

    Under a proposal made public yesterday, Stockton told unsecured bondholders owed about $124.3 million they would no longer receive any debt payments from the general fund, the main account used to pay for services like police and fire protection. Secured bondholders, who hold debt guaranteed by assets, were asked to accept smaller interest payments and a longer, 40-year repayment term.


    Stockton said it made a “good faith” effort to negotiate a restructuring plan that would adjust its debt to a level it could afford to pay, City Manager Bob Deis said in the statement. He blamed the bankruptcy on the city’s inability to convince bondholders and retirees to accept the requested cuts. "

    Stockton is just taking a page from President Obama's book on how he handled GM bondholders. I recall TPOTUS called Bondholders GREEDY for wanting their money back.

    I think there should be no doubt now why I don't currently own any muni bonds....


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