Municipal bankruptcy: not a magic pill

As Mammoth officials continue to hand over information to Mammoth Lakes Land Acquisition so they can eventually negotiate payment of Mammoth’s $41 million debt, the option of bankruptcy remains

stephaniegomes

Vallejo City Councilwoman Stephanie Gomes talks bankruptcy reality.

a possibility.  Advisor to the Town, Marianna Marysheva-Martinez continues to say she does not prefer bankruptcy.  It is believed MLLA agrees.  Martinez did share with Sierra Wave an article on details of the City of Vallejo’s bankruptcy.

The article appears on InsideBayArea.com and quotes Vallejo City Councilwoman Stephanie Gomes who appeared at a meeting of the Contra Costa Taxpayers Association.  The article quotes Gomes as saying that bankruptcy is not a magic pill for cities struggling to balance their budgets.

In the case of Vallejo, a number of financial issues hurt the city, including closure of the Mare Island Naval Base and the disappearance of its federal funds.  The loss of the base created a major economic vacuum.  The article said Vallejo had also failed to cost out pensions and benefits and employee unions gained in power.

In a downhill loss of the tax base, general fund and reserves were depleted by 2008 and the Vallejo City Council voted to file for bankruptcy.  Unions fought the bankruptcy but lost.  The article on Vallejo said that “The city won a precedent-setting legal point: that a bankruptcy court could void public employee contracts.”

The City of Vallejo still has problems but did gain power over employee unions, according to the article written by Peter Langley, a former city councilman from Martinez, CA.

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Mark
Mark
11 years ago

Orange County filed for bankruptcy in the early 90’s and now that county is better off now than before bankruptcy.

Wayne Deja
Wayne Deja
11 years ago

Coming soon to the Eastern Sierra……..Another tourist attraction…..The Ghost Town of Mammoth Lakes…

Nancy Tucker Baker
Nancy Tucker Baker
11 years ago

I agree with Johndoemi and Jake Steel. Yes, I’m sure our credit rating already sucks. I also know that municipal bankruptcy would preserve vital services such as road plowing, etc. I can’t really see that bankruptcy could possibly do any more damage at this point. We need to file soon…that… Read more »

Jake Steel
Jake Steel
11 years ago

“MLLA agrees”… who cares what these people like.. FILE NOW and send that $4000 a week lady HOME as well!

and if MLLA ever thinks they are getting land and building they can plan on having picket signs all around and a local boycott for LIFE!

Ken Warner
Ken Warner
11 years ago

What worries me is that the same people who got us into this mess are now negotiating a settlement. Well, not exactly the same people but pretty close.

johndoeml
johndoeml
11 years ago

I don’t think any of the commenters recommending bankruptcy think of it as a “magic pill”, through which all problems vanish. However, the problems faced by Mammoth Lakes dwarf the typical problems other towns have balancing the budget. Assuming a population of 8,000 individuals, the debt is $5,125 per tax… Read more »

johndoeml
johndoeml
11 years ago
Reply to  johndoeml

I’d like to correct a misstatement. The debt is $5,125 per citizen. It’s probably close to $10,000 per taxpayer.

downthecreek
downthecreek
11 years ago
Reply to  johndoeml

Here is a new concept for TTOML .”ask the citizens for a loan”
the town in the link below is asking just that

http://oregoncapitolnews.com/blog/2011/08/05/missing-money-from-city-coffers-leads-to-oakridge-plan-b-ask-citizens-for-a-loan/

get your check book out RUSTY

Rob
Rob
11 years ago

“The city won a precedent-setting legal point: that a bankruptcy court could void public employee contracts.”

So something good could come of this

upthecreek
upthecreek
11 years ago

It may not be the MAGIC PILL
however it is the Reality Pill
Tic, Tic, Tic