Atwater. This farm city in the Central Valley declared a fiscal emergency in October with a $3 million deficit and appeared poised for a bankruptcy filing. City leaders say they pulled the city back from the brink after winning concessions from unions to cut costs. The deal cuts pay 5% for city workers, including police. Last month, voters approved a half-point sales tax increase to 8%. The city has cut jobs but struggled as costs on a new water treatment plant exceeded $85 million in bond financing.
• Azusa. This city east of Los Angeles saw its credit rating downgraded in 2012 by Moody’s and branded with a negative outlook by Standard & Poor’s. Analysts cited low general fund reserves, which fell to $50,000, or 0.17% of expenses, last August. A 2011 audit found the city’s general fund balance was almost entirely in restricted land assets.
• Compton. Bond-rating agency Standard & Poor’s downgraded, then stopped rating, this Los Angeles County city’s credit, citing the lack of an independent auditor’s opinion, structural deficits and weakened finances. The city has ran annual deficits that reached $40 million and are still projected at more than $9 million this year, and borrowed from dedicated accounts when its general fund ran short. It has laid off 15% of its employees and reduced services, from law enforcement to canceling a popular annual gospel concert. Standard & Poor’s said a 2011 audit was incomplete because of allegations of fraud and abuse of public money and a lack of response from the city to auditors’ questions. The city once known for crime disbanded its police force and now relies on Los Angeles County sheriff’s deputies — and was saddled with $369,000 in late fees for falling behind on payments to the county for those police services.
• Fresno. This Central Valley agricultural hub has been beset by annual deficits despite big cuts in spending and services, including a 25% reduction in the city workforce since 2009. Its credit rating was downgraded in 2012. The city has a $16 million deficit this year. In January, Standard & Poor’s gave Fresno’s credit a negative outlook “due to our view of the city’s significantly deteriorated financial position.” The city faces bigger annual payments for retired public workers because of poor investment returns for its defined benefit plan, the agency said. Fresno, like neighboring Stockton, has seen its financial stress compounded by double-digit unemployment in the region. The city is asking voters in June to approve privatizing garbage collection, which would produce a cash windfall of more than $10 million plus $2.4 million a year in franchise fees. City workers are fighting the change and petitioned to force a public vote on the plan.
• Hercules. This Contra Costa County city near San Francisco saw its credit ratings collapse seven grades to non-investment quality in 2012 as finances weakened and analysts questioned the city’s future willingness to repay debts. The city notified creditors last September that it “does not anticipate there will be any available funds” for debt payments “in the foreseeable future.” S&P says the city plans to use $4.5 million in unspent bond proceeds to pay debt service on other bonds but questions whether payments will be made when that money is exhausted. State Controller John Chiang issued audit reports in March saying, “The city’s books were so poorly managed that I must question their use of every single federal and state dollar.” Hercules has laid off 40% of public workers and last year defaulted on a bond payment, triggering a lawsuit.
• Mammoth Lakes. The mountain resort city filed for bankruptcy protection, then withdrew its petition last year after agreeing to a budget restructuring plan making settlement payments on a lawsuit that it lost. A developer, Mammoth Lakes Land Acquisition, filed suit charging that the city had breached a 1997 agreement to develop a hotel and condo project. The Hot Creek project stalled over federal objections that it would be too close to a planned airport runway expansion. A $30 million judgment, plus legal fees, against the city was upheld on appeal, and the city’s liability grew to $42 million, 2½ times its general fund budget. Standard & Poor’s says the city remains under financial pressure and rates its bonds at junk status.
• Monrovia. Standard & Poor’s sharply downgraded the city’s credit rating, citing a “substantially weakened general fund and liquidity position” coupled with the possibility it could lose pending litigation with a developer. It said the city’s general fund consisted “entirely of restricted and non-spendable assets.” Faced with declining tax and other revenue sources, the city cut staff 17% and reduced services, including street repaving, to balance its budget. Monrovia is 20 miles east of Los Angeles and one of several small cities along the foothills of the San Gabriel Mountains.
• Oakland. Plagued by high crime and lower revenue, this city on the east side of San Francisco Bay has cut police and other services while struggling to stay solvent. It has endured budget shortfalls of $318 million over the past six years and since 2008 has eliminated 16% of its workforce, or 720 jobs, while reducing pay and giving workers unpaid furloughs. Even with a recovering economy, the city is facing a $19 million shortfall in the coming year and projects a deficit of $35 million or more in 2015 as financial concessions made by public-employee unions expire and pension and retiree health benefits climb. The city has reduced its police force by 25% since 2009, to 626 officers, and the California Highway Patrol is helping police the city.
• San Jose. Being home to much of Silicon Valley’s tech riches has not spared the nation’s 10th-largest city from financial stress. The city has run 11 consecutive general fund deficits, and though it still has reserves, Standard & Poor’s downgraded San Jose’s credit rating in 2012 and branded it with a negative outlook, saying it still faces “long-term structural pressures.” The city has cut workers’ pay 10% and outsourced jobs but still foresees a $5.5 million deficit next year and nearly $14 million the year after. City officials say their biggest problem is retirement costs, which soared from $73 million in 2001 to $245 million last year. Cuts in public pensions approved by voters last fall are being challenged in court by unions. “Long-term budget obligations have outgrown the current revenue structure,” Standard & Poor’s said in January.
• Vernon. The smallest incorporated city in the state, with a population barely over 100, is an industrial center neighboring Los Angeles with 1,800 businesses and 55,000 jobs in 5 square miles. Vernon has a history of corruption and was the subject of a scathing report by the state auditor last July that said the city doesn’t have enough revenue to pay for the services it provides. The audit found Vernon operated with annual deficits in its general fund for more than 20 years, increasing spending and salaries while tapping dedicated funds, reserves, asset sales and other transfers. The audit said Vernon engaged in speculative investments without effective risk evaluation, including an “unreasonable” natural gas deal that has cost it millions. It cited loose contracting practices and found problems in 21 of 25 city contracts examined, including lack of competitive bidding. It said Vernon had weak internal financial controls and “may have provided legally questionable retirement benefits to certain current and past executives.” The city turned back efforts in the Legislature to disincorporate it last year and adopted reforms, but the auditor said some policy changes have not been implemented and others will take years to achieve. USA Today
Not far behind these ten are Chico, Oroville, Red Bluff, Marysville and Paradise. California now leads the nation in municipal bankruptcy filings. Stockton is the largest city yet to file for bankruptcy, marking a new low point in a trend sweeping California. Thank you democrats! Could you possibly be doing any worse?
Liberal democrats in Sacramento have single handedly taking the richest and most highly rated State down to it’s knees like a 3rd word country in the hands of a dictator. The policies of liberal democrats have ruined the State’s credit, ruined the school system, increased the drop out rate, raised welfare and more. Speaking of welfare did you know that California accounts for 32.62% of all the welfare rolls in the entire country? In 2013 we added an increase of 6.5%!
Democrats have forced on us the highest paid legislation in the nation, the highest paid state workers to be found anywhere, the worst performing legislature in the nation that must take full credit for chasing away businesses and jobs at a record rate. These fat cats in Sacramento have caused us to pay the most in taxes and get the least for it and they’re still raising taxes (see ACA 8).
Police and fire layoffs, bankrupt cities, failing schools, massive welfare, over regulation…none of this seems to matter to the voters of California, they voted the rascals in and they will re-elect them. That much you can count on! -Jack
Progressivism is liberally lousy!
Most of these Cities are drowning under the cost of police and fire. Specifically the cost of their pensions and benefits. Here in Chico, they pay nothing toward their medical and pension and can retire at age 50.
The tax payers are having a hard time affording this.
One solution is to bring their benefits in line with the private sector.
What do you say?
Jim, I think you are correct, and we’re going to be forced to do something about those costly retirements whether we want too or not because we can’t afford them. However, there’s another problem that should be addressed. By the time a cop is 50 years old he really should be thinking about having a desk job, because he’s getting too old to be fighting with rough men half his age.
Being 50 and being on the street is statistically risky, even risky to the citizens who may be counting on your physical ability. Cops after 50 are simply more injury prone and that gets costly too! That was the main consideration behind the early retirement plan.
Now here’s another problem. What can we do with cops who are fat, out of shape and smoke? That’s 3 big strikes that will put a cop out of action at an early age and it costs taxpayers.
I worked at a police department for 16 years and I swear most of the department was in bad physical condition. We had almost a 100% turn over every 5-6 years. Low pay, hard work and danger took its toll. Our officers were always getting in fights or worse. A long time sergeant I once worked with when I started, spent half his time after age 50 until he retired on some sort of disability! He was way too easy to become injured because he never work out, he had poor muscle tone, he smoked a pack a day and he eventually died just a couple of years after his retirement. I also worked with another guy who was 150 pounds overweight, he never exercised and he smoked at least a pack a day too. He also died soon after retirement, although he didn’t spend much time on disability but on because he rarely left his desk. I tried to get both of these guys into some sort of work out plan for years. You wouldn’t believe how hard I tried…but, they just weren’t interested and I couldn’t force them. They were huge liabilities to the department, they knew it, but they didn’t care and what could we do? Nothing.
Granted, anyone can get hurt, that’s the nature of police work, but if you don’t work out, if you have unhealthy eating habits and you’re a heavy smoker, you’re just asking for trouble. There were a few other guys who were really tough by the time they hit 50-55, but they were the exceptions. Most of those fit guys are still going strong in their 70’s because they took good care of themselves and didn’t let the job destroy their health…mental and physical.
So how do we address the injury factor that comes with older people? The game is hard on them and they break down earlier than in other professions. In that sense cops are kinda like today’s sports professionals. You just can’t be on the street until age 65, it’s too risky and maybe age 50 is too young to retire too, but it all depends on how in shape they are, right? It’s a big problem. Any ideas?
Jim I think that’s pretty much how it has been for all state and federal workers. And I agree, your solution makes absolute sense!
I agree with Jim’s solution for those sitting behind a desk, but not for first responders who run into burning buildings to carry out a 200 pound unconscious person. They should contribute towards their own pension. But, I doubt many would want their life depending on a 65 year old firefighter or even working with one.
Thanks for your thoughtful reply.
My Dad was a US Customs Inspector. He started at the SF airport, then worked for years at the Port of Oakland, and finally at Oakland international postal terminal. He could have retired at 65 with full benefits yeah, they expected you to work back then) but he chose not to. As long as he could pass the physical and the range qualification tests, he could keep his job. He believed in earning his pay, so he continued working full time till 75.
As for our local public safety workers. 50 seems kind of young to retire. I know plenty of construction workers, PG&E linemen, and others in physical demanding jobs who are much older. There are also plenty of retired police and fire who continue working other jobs. So obliviously they can still work. Many will live long enough so that they will collect retirement longer than they worked.
There are others who have skated out on stress disability or minor physical disabilities.
Being a police officer is a very tough job, there is no doubt about that. But the government shouldn’t just throw money at the problem. The tax payers just can’t afford to continue pay so much for public safety.
Of course we got the same nonsense at city hall where they retire at 55 or 60. This is ridiculous. How old is our Governor? (75) Many in private business work well into their 70’s.
There has got to be a better solution. Older workers and ones who are physically unable to continue “on the street” should be transitioned to less physically demanding jobs. With their experience, they would be very valuable as administration or other supervisory jobs.
Do you have any other ideas?
Great background information Jack and Jim. As I was reading it occurred to me that politics has really done all of us a great disservice. Jim’s dad is an example of the old ingrained personal responsibility/work ethic. Following generations have been pulled away from individual responsibility with the addition of government incentives that invite people to become takers rather than providers.
What incentive is there to worry about staying in shape when you know you can retire early with healthcare and a full pension? If we pay officers and firemen a good wage for work actually done we have fulfilled the obligation. All individuals should be responsible for providing for their needs including healthcare and retirement. This model keeps people on their toes and acts as an incentive to be awake to the realities of life.
Two other things. Our education system should include economic instruction so that people understand how expensive life can be and what it takes to cover the basic nut. Training for firemen and police officers should include diet and exercise and keeping the job should include basic requirements that must be met.
Jobs for life without risk just don’t work. Public servant jobs must not become the easy, secure, panaceas that we have made them. It is bad for the individual, bad for the community, bad for the local government budget, and bad for the taxpayer who foots the bill.
If the big worry is that people won’t do the things they should to provide for retirement and healthcare then a private but mandatory system might be the next best thing.
The upside overall is that if individuals begin to pay for these services personally, either through deductions from the paycheck or out of personal pocket, the cost of these services will come down and our investments will be more secure. This boom and bust stuff is largely a result of interference with the free market and BAD regulation.
Bottom line is it all comes down to contract negotiations.
When both sides of the table are representing the same side the results will be a contract that benefits the workers and not their employers, us the people.
Here’s an article, “How Bureaucrats Captured Government”, you all might find interesting. It’s about the federal bureaucracy but it applies everywhere to some degree, humans being human.