Vallejo On Brink Of Bankruptcy
VALLEJO, Calif. -- by John Boitnott, Web Producer, NBC 11
The city of Vallejo is on the brink of becoming the first California city ever to declare bankruptcy, City Council members said Tuesday.
Vallejo may run out of cash as early as March, council member Stephanie Gomes said.
"Not only that, but now we have 20 police and fire employees retiring because they are afraid of not getting their payouts," Gomes said. "That means we have another few million dollars in payouts that we had not expected. So the situation is quite dire."
Looks like a "run" on the "retirement bank" is getting underway in Vallejo. Considering how vulnerable many communities are to health care and pension payouts, this may be a trend worth watching. Probably Vallejo will be able to patch something together, but in the face of stagnant or declining house prices, it will be tough for them.
UPDATE: More on the slow-rolling budget crisis in California -
Governor orders cuts in state agencies now
By Judy Lin, Sacramento Bee
Gov. Arnold Schwarzenegger on Tuesday ordered additional cuts across the state bureaucracy that will slow down state hiring and nonessential service contracts – a move he said could save the cash-strapped state $100 million by June 30.
The governor ordered all agency secretaries and department directors to immediately begin reducing their current budgets by 1.5 percent by cutting nonessential services and activities. The order, which takes effect immediately, directs secretaries and directors to find savings, whether it's on personnel, travel or equipment...
...He likened the deficit to a triathlon with one portion finished – the midyear cuts. Lawmakers, he said, still must deal with more challenging cuts to the 2008-09 fiscal year and agree to his call for a constitutional amendment that would establish a rainy day fund and tie state spending to revenues.
"There should not be one single day's rest," Schwarzenegger said.
But for the second time in less than a week, Assembly Republicans rejected a Schwarzenegger-backed proposal to eliminate a tax break for some owners of boats, airplanes and motor homes. The break allows owners to take possession outside the state's boundaries and avoid California sales taxes if they leave them out of state for a specified period...