Unions, pensions drove Stockton, California to bankruptcy
Gosia Wozniacka, Associated Press
STOCKTON, Calif. — California officials must now assign blame to Stockton’s bankruptcy as mandated by its state law.
But who is to blame?
According to one analyst, it was cumbersome pension promises and public union salaries that sent Stockton under, not the housing crash.
“Union pensions wrecked Stockton,” said Mike Shedlock, investment advisor at Sitka Pacific Capital, in his article at Business Insider. “The only way to escape the death-grip of inane pension promises is bankruptcy.”
Shedlock said the U.S. should expect to see more cities file for bankruptcy.
The investment adviser also offered some potential solutions other than bankruptcy, including halts on defined benefit pension plans and collective bargaining for public union workers.
Stockton plans to default on $10.2 million in debt and cut $11.2 million in employee pay and benefits. The cuts have led to high crime and unemployment rates.
“The city is fiscally insolvent and must seek Chapter 9 bankruptcy protection,” Stockton said in a statement to Bloomberg. “In addition to the bankruptcy petition, the city will file a motion with the courts to share information from the confidential mediation.”
EMAIL: firstname.lastname@example.org TWITTER: @joeyferguson
- $1.8B project to take Salt Lake City...
- New solar energy project at Utah Olympic Oval...
- Company plans to hire up to 1,000 new...
- Balancing act: Survey says lack of balance,...
- Obama gives protection to gay, transgender...
- Future of Draper Park School building uncertain
- Beef pollutes more than pork, poultry, study...
- Comic-Con offers toy designers a chance to go...
- $1.8B project to take Salt Lake City... 17
- Would you permanently leave your family... 6
- Obama gives protection to gay,... 4
- Future of Draper Park School building... 4
- Weird ways our brains control our money... 3
- Microsoft CEO pivots sharply with... 2
- Project aims to improve wireless... 2
- New solar energy project at Utah... 2