Here's something you might be interested in.
The Wall Street Journal of today (Feb. 18) has an excellent story on Chapter 9 municipal bankruptcies. It focuses on Vallejo, which filed Chapter 9, and Harrisburg, the capital of Pennsylvania, which seems likely to file. "People believe that municipal debt is safe based on assumptions that are no longer true," warns an executive with a firm that works with ailing municipalities. Says the story, "In San Diego, political leaders have faced outside pressure to file for Chapter 9 as a way to get around benefits packages for public workers. San Diego Mayor Jerry Sanders has publicly dismissed the idea." The Journal doesn't mention that City Attorney Jan Goldsmith decided that pension promises could not be touched under the law, and Sanders, the former police chief, bought the idea. But a bankruptcy judge can overthrow state and municipal laws if there is simply no money to pay outrageous benefits, such as exist in San Diego. The Journal story does not mention that at the same time sober people are talking about a Chapter 9 in San Diego, the mayor is pushing for a convention center expansion, new library, new city hall complex, and probably a subsidy of hundreds of millions of dollars for the San Diego Chargers football team. This word should get out nationally. It took a New York Times headline, "Enron by the Sea," to wake up San Diego several years ago.
The Wall Street Journal of today (Feb. 18) has an excellent story on Chapter 9 municipal bankruptcies. It focuses on Vallejo, which filed Chapter 9, and Harrisburg, the capital of Pennsylvania, which seems likely to file. "People believe that municipal debt is safe based on assumptions that are no longer true," warns an executive with a firm that works with ailing municipalities. Says the story, "In San Diego, political leaders have faced outside pressure to file for Chapter 9 as a way to get around benefits packages for public workers. San Diego Mayor Jerry Sanders has publicly dismissed the idea." The Journal doesn't mention that City Attorney Jan Goldsmith decided that pension promises could not be touched under the law, and Sanders, the former police chief, bought the idea. But a bankruptcy judge can overthrow state and municipal laws if there is simply no money to pay outrageous benefits, such as exist in San Diego. The Journal story does not mention that at the same time sober people are talking about a Chapter 9 in San Diego, the mayor is pushing for a convention center expansion, new library, new city hall complex, and probably a subsidy of hundreds of millions of dollars for the San Diego Chargers football team. This word should get out nationally. It took a New York Times headline, "Enron by the Sea," to wake up San Diego several years ago.