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Old 04-01-2013, 19:38   #1
Mr981
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Stockton CA enters bankruptcy, now the fun begins

http://hosted.ap.org/dynamic/stories...04-01-09-11-42

CALPERS has been getting a full contribution to the fund recently while other creditors have been taking a haircut.

The question that will be settled in the courts will be whether Federal bankruptcy laws trump CA state laws regarding pension payments.

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Old 04-01-2013, 21:59   #2
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This will be intesting. The bankruptcy court and get funds back from a creditor that has receieved preferential payments. I am not sure that pension payments will fall under that. I do not recall if they can claim payroll funds back. The pension payments are essentially payroll payments. I don't think I have heard of a bankruptcy court getting back employer social security payments back from the government or income tax payments.
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Old 04-01-2013, 22:18   #3
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It's not quite as much fun if you just lost your retiree medical coverage for which you contributed money for years.

The only interesting part is that current employees are paying for retiree medical they will never get.

Then there is the outright theft of accrued benefits like vacation and sick leave. People used to bank these funds until retirement so they could have some take-away money. Now the city refuses to pay these amounts when people leave the job. These are accrued benefits - STOLEN by the city.

No wonder they can't keep officers. There's no point in staying with a city that arbitrarily eliminates your retiree medical and steals your accrued benefits. There are better jobs elsewhere.

And that's why Stockton set a record in homicides last year!

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Old 04-02-2013, 06:56   #4
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I wasn't trying to infer that anyone that takes a cut in benefits is going to enjoy any of this, but rather this case will help determine the issue of which set of rules--federal or state laws--are used in a municipal bankruptcy.

The determination will have huge implications going forward, given the numbers of cities struggling with trying to pay the tab for public employee contracts signed years ago.

I'd expect this to eventually end up in front of the SC.
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Old 04-02-2013, 07:02   #5
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Somehow we will all be paying for this.
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Old 04-02-2013, 08:02   #6
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Stockton PD is so short staffed these days they are close to having to give up federal grant money they took to keep officers employed. They are losing them to agencies all over the place.

Vallejo went through this a few years ago and this issue with fed vs state law never came up. Probably because Vallejo didn't build a bunch of useless buildings like stadiums and concert halls they are never going to use.

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Old 04-02-2013, 08:07   #7
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The number of taxpaying citizens decreased and the number of tax eating citizens increased. At some point those numbers crossed on the graph.

The rest of us are not immune to that. Its become very popular for government to promise people that they can have what they want without paying for it. Today California, tomorrow maybe your state.
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Old 04-02-2013, 08:18   #8
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Somehow we will all be paying for this.
You got that right.
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Old 04-02-2013, 08:42   #9
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City Elites paid Neil Diamond ONE MILLION DOLLARS to open the new arena.
couldn't even give-away tickets afternoon of show

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Old 04-02-2013, 09:07   #10
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There was a huge amount of money flowing into city and county coffers due to the inflated home prices. It looked like it would never end. Money DID grow on trees!

It was a lot like musical chairs: All fun and games until the music stopped.

Stockton had become a bedroom community for Silicon Valley even though SV is 90 miles away. Even with inflated home prices, it was still a lot cheaper than buying something in SV. And then the bubble burst...

Stockton soon became the foreclosure capital of the world. It has taken a few years for home prices to bottom out because there was so much inventory. Today there are some signs of life in the real estate market and in another few years things should be better. Assuming no other shocks to the system.

As to Stockton's bankruptcy? Who know how that will turn out? There are several other cities in California just waiting to see. Some are dipping their toes in the water because there just isn't enough money to pay the bills.

One thing is certain, the municipal bond market is going to take a hit and they won't be happy. I would expect bonds to price in more risk of defaults and everybody is going to pay for this, regardless of where they live. Munis aren't going to be considered a safe shelter any longer.

Richard
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Old 04-02-2013, 11:58   #11
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Stockton is the first... there will be others. With a $127.2 billion in negative net worth it's just a matter of time... California is the canary in the fiscal coal mine... the bill liberal democrats and their failed policies have accrued are now coming due... it's gonna hurt.
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