Municipal Bankruptcy

There are several stories, here and here, but I found this one story to be the most complete. This part is especially interesting

Vallejo’s police and fire unions have been meeting almost daily with city staff to renegotiate their contracts, which include salary, benefit and retirement packages that comprise more than half of the city’s general fund expenses.

Firefighter union President Kurt Hanke told the council that the union reached an agreement late last week with city negotiators for wage cuts that would have reduced Vallejo’s deficit to zero. But he said (City Manager ) Tanner on Monday vetoed the deal.

There is no explanation as to why Tanner vetoed the deal or why he was not actively trying to solve the problem.

Bankruptcy is scary for a number of reasons, most especially for those who have done business with the city.

In Vallejo, contractors the city owes money would be most directly affected by a bankruptcy filing, receiving about 30 cents on every dollar they’re owed, Gloster said.

From a distance it is impossible to tell what is going on here, but if people are willing to negotiate in good faith, every problem is solvable.