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
- Shoppers skip turkey for a shot at...
- 4 reasons why you shouldn't shop on Black Friday
- Adults expect to spend $720 on gifts. Here's...
- Our complete guide to Black Friday, Cyber...
- These two things are helping California's...
- Immigration reform will boost the economy,...
- 5 ways to talk about money with your family...
- Working on Thanksgiving Day? Here's why most...
- Working on Thanksgiving Day? Here's why... 12
- Immigration reform will boost the... 7
- Thanksgiving trumps Black Friday for deals 4
- Facing health law hikes, consumers mull... 4
- Shoppers skip turkey for a shot at... 2
- US stocks inch further into record... 1
- 3 Reasons holiday shoppers will spend... 1
- Millions expected to shop on Thanksgiving 1