The city of Vallejo filed for bankruptcy protection today to deal with a ballooning budget deficit caused by soaring employee costs and...
SAN FRANCISCO — The city of Vallejo filed for bankruptcy protection today to deal with a ballooning budget deficit caused by soaring employee costs and declining tax revenue.
The San Francisco Bay area suburb of about 120,000 residents became the largest California city to declare bankruptcy.
Mayor Osby Davis said the city’s attorneys filed papers seeking Chapter 9 bankruptcy protection in federal court in Sacramento.
“We’ve exhausted all avenues at this point, and this is all we had left,” Davis said. “I had hoped to avoid it all the way up until yesterday. It’s something we can’t avoid. … We can’t pay our bills.”
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Vallejo, like many California cities, has been hard-hit by declining property-tax revenues due to the housing and credit crises.
The city council voted to authorize the city manager to file for bankruptcy protection on May 6 after months of failed negotiations with its public safety unions.
Some officials blame Vallejo’s chronic financial problems on labor contracts that they say provide overly generous pay and benefits to the city’s police officers and firefighters. Those city workers comprise about three-quarters of Vallejo’s general fund.
The unions say compensation for Vallejo’s public safety employees is in line with that of other Bay Area cities.