Stockton, Calif. about to become the largest municipality to file bankruptcy

Victor Joecks

Two of the biggest factors in the upcoming bankruptcy in the city of 300,000: sweetheart deals for union employees and failed government-led economic development efforts.

Within the next three months, Stockton could become the nation’s largest city to file for protection from creditors under U.S. bankruptcy code. Using a new California law, the City Council is trying to slow or stop the bust by entering mediation with creditors, including public employee unions. In the meantime, the Central Valley port city of 300,000 has suspended several bond payments and will not cash out vacation or sick time for employees who leave. …

[Former president of the Stockton Chamber of Commerce Joe Bryson] lives across the street in the historic Stockton Hotel, one of downtown’s beautifully restored buildings, now given over to low-income housing. The city provided more than $2 million in redevelopment funds to get Paragary’s restaurant on the hotel’s ground floor. Gone now is the aroma of hand-cut rosemary noodles with seared chicken that would drift up to the rooms of the people who couldn’t afford to eat out.

There’s a lot of blame going around Stockton, Bryson says, but he still thinks past leaders should be given credit for trying to transform the city’s gritty urban core, where grand brick buildings had become flophouses along a waterfront where most of California’s export agricultural bounty sets sail.

“They didn’t know people were going to stop paying their taxes,” he says.

This brings Guy Domench, a repairman who was working on the bar’s jukebox, to his feet.

“People are paying plenty of taxes. This is a high-tax town,” he said. “The problem is the sweetheart deals they gave the employee unions. I’m 56 and I can’t retire; I’d go broke. But these public employees have tremendous retirement deals. I want to see the city go bankrupt now. Break the deals.” (Emphasis added.)

Doling out redevelopment money to private businesses and organizations? Overpaying government employees? Does that sound familiar to anyone living in Nevada … or to everyone living here?

The financial problems in Stockton aren’t unique. Many other cities around the country, like Harrisburg, Pa., which just defaulted on its bond payments, and the City of North Las Vegas, are facing the inevitable consequences of overpaying unionized employees, stockpiling debt and funneling money into redevelopment projects.

One reason believers in limited, accountable government say that the exorbitant salaries and pensions most government employees in Nevada receive are unsustainable is that those salaries and pensions are, as Stockton and Harrisburg show, unsustainable.

Two reasons believers in free enterprise say that it is wrong for the government to take from one business to subsidize its competitor are that A) it’s unjust for government to take money from one business or individual to subsidize another business and B) government usually makes terrible business decisions.

It’s (way past) time to end collective bargaining for local government employees, which is largely responsible for the enormous salaries and pensions those employees receive, and to end government’s attempts to pick economic winners and losers under the guise of economic development.