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: email@example.com TWITTER: @joeyferguson
- Which U.S. cities are the best for upward...
- What consumers need to know about chip...
- Saving just $4 per day can make you a...
- Which Utah city is ranked highest for upward...
- Vail set to announce that 2 Utah ski resorts...
- Fed is likely to delay 1st rate hike in 9...
- With Boston out, another Salt Lake Olympics...
- Many taking too many risks on public Wi-Fi,...
- A more family-friendly minimum wage 27
- With Boston out, another Salt Lake... 14
- Hillary Clinton offers energy plans,... 10
- Saving just $4 per day can make you a... 7
- Court orders EPA to relax air-pollution... 4
- Fed is likely to delay 1st rate hike in... 3
- The art of complaining about a product 2
- Vail set to announce that 2 Utah ski... 1