Stockton seeks solvency by slashing

June 21, 2012

Hoping to avoid becoming the latest — and biggest — U.S. city to enter bankruptcy, officials of the California Delta city of Stockton hope to avoid that eventuality by skipping payment of $10.2 million in debt service and slashing employee pay and benefits. (Bloomberg News)

Stockton, with 292,000 residents and known as one of the nation’s top-ten violent crime centers, currently has an operating shortfall of $25.9 million.

A plan will be presented June 26 to the city council to address the situation, said City Manager Bob Deis.

The official has pointed to escalating health costs for pensioners and overstatement of municipal revenue as major reasons for the city’s insolvency. His plan would generate a general-fund surplus of $39,000 by shaving $12 million in expenditures, including $7.1 million in payments for retiree medical benefits for one year. Those retiree payments would then be eliminated the following year.


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11 Comments

  1. Russ J says:

    Stockton has the same problems every other California town has, with humungous benefits promised to average government dolts. This originated in the dot-com boom era when no one was paying attention. Over the past decade, Stockton officials compounded this massive financial draw by building a very expensive waterfront that was supposed to be a high end boaters destination. It turned out to be a flop that sits vacant and unused. Good luck valley towns. Moonbeam may come to the rescue though, with his “high speed” rail. Oops, that’s only another 100 billion or so – vote to spend, spend, spend, you suckers!!!!! You deserve what you get.

    (2) 2 Total Votes - 2 up - 0 down
  2. Maxfusion says:

    Brilliant, let’s not spend what we don’t have. Are these folks fiscal geniuses or what?

    (2) 2 Total Votes - 2 up - 0 down
  3. Structure says:

    I’d like to know more about the actual source of the budget fiasco. Are these police and fire pay and benefits? Others? What’s the ratio of management/administrative salaries to workers? Compared to other cities of this size? Without more data this doesn’t mean much but that they are collapsing. With the sort of crime they face, they have to find a way of dealing with it (which will mean lots of police and intervention), but there’s no way of knowing from this article whether the crisis is indeed driven by “inflated” public sector benefits as some suggest or by collapsing property taxes and huge resource demands (crime and poverty).

    (2) 4 Total Votes - 3 up - 1 down
    • kayaknut says:

      Part of the problem is the whole compare to like cities scam. When cities do that they find the ones they like that help them raise public salaries and benefits. Cities need to compare to salaries in their own city’s private sector jobs, Many say ” Well there are no like jobs to compare to in the public sector” and this is understandable only in part, there are many public sector jobs that don’t have similar private sector ones, well yeah, because many public sector departments are unique to the government, so why not use jobs that require the same education and job skill level. Also, what other benefits are the local private sector jobs providing? And use that info to provide similar benefits and retirement packages for the public sector jobs. I’m sure they can find that, and would likely help the problem. If the salaries, benefits and retirement packages the local private sector workers are getting for a certain city are what the employers in a certain area can provide to survive and work with the regulations of that area, then they should be good enough for the public sector workers who are working for those private sector workers.

      (1) 1 Total Votes - 1 up - 0 down
  4. The Gimlet Eye says:

    Maybe they should just close the city down for a year or two.

    (2) 4 Total Votes - 3 up - 1 down
  5. abigchocoholic says:

    hope to avoid that eventuality by skipping payment of $10.2 million in debt service and slashing employee pay and benefits.

    and

    currently has an operating shortfall of $25.9 million.
    _________________
    They are right there with Cuesta college and Cuesta’s 5m shortfall this year.

    It’s game over. They’ve spent their way into the grave. G a m e over!

    (20) 22 Total Votes - 21 up - 1 down
  6. womanwhohasbeenthere says:

    Overpaid employees with bloated benefits the private sector can only dream of are the chief causes of the economic meltdown in cities, counties and yes even states across the country. Public employees are the one percenters. NO ONE in the private sector can work a salaried job, retire at 55 with lifetime health insurance and a guaranteed pension of 2-3% of his/her highest rate of pay multiplied by the number of years of employment with the company. This is a defined benefit pension, the standard for government employees. Many of these employees pay little or nothing toward this cushy retirement and some are exempted from paying Social Security as well! NO ONE gets this kind of a deal in the private sector, at least not around here and certainly not in Stockton. Visit http://www.pensiontsunami.com for a daily dose of news from California and around the nation on how pensions are crippling local governments.

    (22) 44 Total Votes - 33 up - 11 down
  7. dante0182 says:

    A study conducted by Capitol Matrix Consulting found that,

    “. . .retirement benefits for California public employees are often two or three times greater than benefits in the private sector, where pensions and retiree health coverage are dwindling.”

    http://calpensions.com/category/public-vs-private/

    (24) 46 Total Votes - 35 up - 11 down
    • OnTheOtherHand says:

      I don’t know how objective and accurate the figures are that you link to but your point is substantially correct — in general. The question is whether or not this applies to Stockton and to what degree it is responsible for Stockton’s problems. Do you know?

      (0) 2 Total Votes - 1 up - 1 down
    • Structure says:

      Public sector workers should certainly be paid more as a way of attracting the most talented. That’s the way markets work right? However, the latest research suggests that in fact they are somewhat underpaid:

      http://slge.org/publications/comparing-compensation-state-local-versus-private-sector-workers

      (-4) 6 Total Votes - 1 up - 5 down
  8. pasoparent5 says:

    My parents had the good sense to move us out of Stockton in the mid-70’s. It was a hellhole then and it’s only gotten worse. Thanks, Mom & Dad!

    (25) 27 Total Votes - 26 up - 1 down

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