Stockton Offers a Glimpse at Detroit's Future
At night, Stockton, Calif., becomes a ghost town. Streets lined with boarded-up buildings and rubbish-strewn parks are mostly empty except for drug dealers and their customers, says Dave Macedo, president of the local firefighters' union.
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#1 Jul 25, 2013
The biggest chunk of Stocktonís debt is the $900 million owed to CalPERS, the California Public Employeesí Retirement System, a statewide pension service.
creditors and unsecured private creditors expect Stockton to fulfill its obligations to them, and they say itís unfair for pensioners to get preferential treatment.
Even while Stockton negotiates with its creditors, it continues to pay into the pension fund. But that doesnít mean it hasnít cut other services. So far, the city has trimmed pensionersí health care and negotiated new contracts with city employees, such as police and firefighters, who had already faced a series of cuts before the filing. Senior centers, library programs and recreational services have all been axed.
The pension problem is not unique to Stockton ó Vallejo, Calif., which exited bankruptcy in 2011 paying some creditors as little as 5Ę on the dollar, didnít even try to challenge its obligation to CalPERS, likely because of the sky-high legal fees that would have come from lengthy court battles, says bankruptcy attorney Karol Denniston, who is representing a group of taxpayers in the Stockton bankruptcy. Itís not yet clear if Stockton will challenge its obligations to CalPERS when it files its final plan of adjustment this fall. But Stockton has defended its obligation to CalPERS by citing the importance of providing a pension plan to employees. Without a stable pension plan, Stockton might risk losing its dwindling police officers and firefighters, says Macedo.
Gotta luv this battle between public servants (I know, it's a dated phrase) and creditors over who gets more of the city tax payer dollars. The Golden Goose has been plucked clean by the scavengers leaving those who have to feed the Golden Goose with only the bones. Happy feasting creditors and public servants. We who are about to die salute you.
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