SACRAMENTO – Few non-local people pay much attention to the goings-on in Stockton, a hard-pressed Gold-Rush-era industrial city of 300,000 that sits in the agriculturally rich San Joaquin Valley at the eastern edge of the California Delta. But bond-holders, taxpayers and government officials throughout the country will be listening to U.S. Bankruptcy Judge Christopher Klein’s expected ruling on Monday as he decides whether the city may remain in bankruptcy and pursue a plan that stiffs its bond-holders.
If Klein sides with the city, then municipalities will face a disturbingly low bar for pursuing bankruptcy. They will be emboldened to choose Stockton’s course…..without having to confront the main reasons that they went bankrupt in the first place, such as lush pensions.…the city plan has put pension debt off the table, arguing that pension payments and benefits cannot legally be touched…….If Stockton gets its way, then cities can spend anything on pensions and there is no way to ever get out from under that debt….. “In the 1990s, Stockton granted its employees some of the most generous and unsustainable labor contracts in the State of California… Safety employees could now retire at the age of 50 …. . Many safety retirees today earn 90 to 100 percent of what they made when they were still on the job.”……Stockton pulled back on some abuses, but has left the main problem in place……To Read More….
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