U.S. cities going bust
In what may be the beginning of an explosion of city insolvency across the U.S., the city of Vallejo, Calif., with a population of 117,000 in the San Francisco Bay area, has filed bankruptcy, Jerome Corsi’s Red Alert reports.
“The study highlighted a shocking level of enrichment,” Greenhut wrote, noting pay and benefit packages of more than $300,000 a year for police captains and average firefighter compensation packages of $171,000 a year.
“Pensions are luxurious: regular pubic employees can retire at age 55 with 81 percent of their final year’s pay guaranteed, come hell or a stock-market crash,” he wrote. “Police and fire officials in Vallejo, as in much of California, can retire at age 50 with 90 percent of their final year’s pay guaranteed, including cost-of-living adjustments for the rest of their lives and the lives of their spouses.”
Corsi explained that the possibility of a double-dip recession bodes ill for public pension funds that remain unfunded in numerous states even as the stock market has rebounded.
“Underfunded public pensions mean state and local governments have to come up with new tax revenue to cover the shortfall as pension liabilities come due,” he explained.
Red Alert has reported that some 10 states currently face bankruptcy.
State and local governments, already struggling to avoid bankruptcy, are in an increasingly difficult position to meet public pension funding demands.
Unless states and local governments are willing to tackle public employee pension obligations, Red Alert predicts the state bankruptcy crisis will only intensify in coming years.