Stockton, California Went Bankrupt. Is Your City Next?
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- čas přidán 6. 08. 2012
- Stockton, California made history in June 2012 when it became the largest U.S. municipality in history to file Chapter 9 bankruptcy. It wasn't the first Golden State city to do so, and what's happening in out west is spreading to the rest of the country.
Stockton, like many U.S. city governments, spent lavishly throughout the 1990s when the real estate bubble filled public coffers with property tax revenue. Public officials approved big public works projects such as a new arena, a waterfront park and a grand, new city hall building that the city government never had the money to occupy. But even this spending pales in comparison to Stockton's crippling public employee contracts. The city is on the hook for more than $800 million in unfunded liabilities for pensions and other post-employment benefits.
"We're saddled with this debt that we don't have the revenues any more to service," says Stockton's Vice Mayor Kathy Miller.
Miller lays much of the blame at the feet of former city manager Dwayne Milnes, who she says was tired of dealing with public employee unions and who, through his loose accounting, enabled city council members to give in to nearly every union demand.
"[The information] was not always accurate. And in some cases, I think it was almost misleading," says Miller.
Milnes now runs an association representing the interests of the city's retired public employees, which opposes cuts to some of the very benefits Milnes now admits might have been a mistake to approve. Milnes believes that Stockton would be broke regardless of the decisions made in the '90s.
"When you ask who's going to tip over, it's not 'Who is providing the pension benefits?,' it's, 'Who is providing the pension benefits in an economic environment that they can't support it?'" says Milnes.
Reason Foundation senior analyst Adam Summers says that Stockton's story is becoming an increasingly common one for cities across the U.S.
"There's a real kind of moral hazard, whereby [city officials] have incentives to offer goodies to people, knowing that they won't have to bear the costs of those decisions," says Summers.
In Stockton, residents, taxpayers, and retirees are bearing the costs of short-sighted political decisions. Stockton's general fund, meant to be for basic city services such as police and fire, has been gutted by the poor fiscal decisions, resulting in a 26-percent reduction in city police. Last year, a record murders took place in Stockton. This year, they've already had 34.
Stockton officials hope bankruptcy proceedings will allow the city to opt out of some of its more stifling contracts (PDF) and to avoid repaying all of the bondholders while maintaining some money in the general fund to keep its most basic city services. Such a solution might give Stockton some breathing room but most of the hard work of rebuilding the town's economy, tax base, and creditworthiness is still ahead of it.
This much is certain: With cities across the country locked into expensive long-term contracts, Stockton's title as the largest U.S. city ever to go bankrupt might be short-lived.
About 9 minutes.
Written and Produced by Zach Weissmueller. Music by Case Newsom, Century of Aeroplanes, and Dexter Britain.
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Let's take a lesson from Iceland, jail the elected officials that so mishandled our money.
It's simple, but people don't care about the important issues that effect social justice.
Problem is democracy is a cancer. Low iq ppl vote for the free shit politicians.
Yes, you can try the Iceland way, but first mishandling public money would have to be classified as a crime, and second, they'd have to be convicted. And the judge would be determining their time in prison.
@@jameshorton3692 Correct. Thomas Sowell often talks about the "race hustlers", such as Al Sharpton and Jessie Jackson, whom the less-educated public keep in power positions due to freebie handouts.
It’s getting full pensions after 4-8 years, that’s where all this stems from.
Honolulu is next with our light rail being built and close to 1 billion dollars in the hole already and it hasn't been completed yet!
The media(international ones too, as I am not in the USA nor from USA) never miss a chance to talk about Trump's bankruptcy. But some how they miss reporting all this; All this that has resulted from big govt and socialist policies. When I tell my friends and relatives all this they think I am weirdo or something.
Spending a billion a year will screw your city up that's for sure
Drug cartels are just operating there completely unhindered. If you are a parent with small children I strongly recommend you leave there and as soon as possible, it's not going to get any better
But DON'T move to a Republican state! Just go to another democrat run city that's not as bad... yet.
The Bohemian Grove cartel has been there before USA inc.
@@johnmagill9496 Republican states have crime too. Just look at Texas.
@@putler965 You're right, in every Republican run state there are cities and neighborhoods where there are enclaves of democranazis. Anywhere you have a democranazi, you have crime, drugs and violence.
@@johnmagill9496 So it's still the Democrats, even though the Republicans run the state? Please explain why Mississippi is such a poverty stricken shithole, Einstein. And when you are done with that, perhaps you can explain why Republican Springfield, MO has a per capita violent crime rate of 1,519 per 100,000 residents and had 356 rapes there in 2019 (five times the national rate). I suppose in your simplistic view of the world there must be some hidden Democrat somewhere who is actually responsible. You voted for Trump, didn't you?
What they don't address is that pension plans are match based and partially funded by the employees. So ultimately it's the government's fault for not planning ahead not the employees fault for wanting to collect what they paid into. These funds are suppose to be investment based and ran through an investment firm.
Yes the city not funding it is a major part of the problem but being dumb enough to think those benefits were feasible were the employees problem. Anyone with half a brain could see that those sweetheart pensions weren't possible forever. This is what happens when Democrats use unions for votes. The city never says no because they need to keep their do nothing jobs while unions turn a blind eye to them not contributing to their pensions like promised.
Yes, I'm quite disgusted with that bureaucrat who was involved with it all saying, "It's not my fault."
As soon as I saw that box on the wall that visually displayed the votes of the councilmembers, I rolled my eyes. How does that machine benefit residents and taxpayers AT ALL? Some contractor probably got $10,000 for putting that piece of shit on the wall and installing the buttons in the desks. What's next, Stockton? A monorail?
Detroit a yr later.
Stop giving these thieves in control a slap on the wrist deep audit them consistently and track down all who are responsible a public servant does not deserve 150 250 300 thousand a year, that's not what a public servant deserves maybe 20 to 55 thousand at best
Harrisburg, PA
Keep voting Democrat until the rest of the USA looks like Stockton.
REpublicans are the right hand of the same bird, were past voting cause it's rigged.
@@alfredomontez9641 No. There are some. Rand Paul and Thomas Massie are wonderful Republicans who fight for the constitution.
Yes, continue to buy into the fake red/blue dichotomy. Republicans are democrats 10 years late.
Any city hall is a nightmare to work with. They don’t help , just sit and gain weight.
It's a classic case of a system whose function is dependent on growth. The moment the growth slows, stops, or reverses, it collapses. We call this a ponzi scheme, or a bubble waiting to pop. The whole suburbs are like this, but new suburbs are just so much worse about it.
Leave it to a corrupt politician and law enforcement to fuck up a free lunch. It's what they do best.
America's entire political system needs to be reworked top to bottom,they're spending on the military needs to be reduced by at least 50% so that the country can rebuild but it's politicians are pretty much corrupt or outright evil so I see very little hope outside of revolution.
Our military spending is big, but not nearly as big as most people think
Making improvements to the City was not lavish spending. A few million would not have made much of a difference with a short fall of 40 million.
Stockton was hit hard by the housing crash.
But you are correct that retierment benefits are overly generous, esp. w/ 40% shortfall.
I wish that the bureaucrats and politicians who signed these "contracts" would be personally liable for the servicing of those contracts.
Watch as those politicians just walk away.
Public employees should not be allowed it engage in collective bargaining.
nobody wants to listen to the guy who actually knows what he's doing.
So what happens to the ridiculous retirement benefits for firemen, police , etc. Hopefully it down to a reasonable amount
Public servants, really?
where the public are the servants
yes I agree. The thing is, when shtf, the gig is up. We can then begin to make a difference. It's the only thing IMHO that will have a world wide sobering effect. Thee are some people hanging on to jobs. I've noticed on my end. And I'm never out of work. Business are closing left & right. People are hoarding for the "just in case"
Thanks
My family on my mother's side is from Stockton CA. Who ever saved it. We Thank You. U better believe it. It's not a game
As an Australian I endorse defined contribution plans. Our system is called Superannuation, basically 9% of your income is set aside, taxed less, and saved for your retirement. It has to be saved in a superannuation plan, not just under your mattress. But you can put it in any plan you choose, and tell the plan what sort of thing your money will be doing until you retire. High growth or safe cash with low interest? Your choice and no govt will go bankrupt on it.
I hope NYC under DeBiasio, doesn't lead this city into becoming a Detroit or Stockton, California.
You can't be too sure of that. The Big Apple was very close to bankruptcy in the mid 1970s. It could repeat itself unless the new mayor keeps a tight rein on union spending.
That maybe so, look what happened in Detroit, they went belly up, because of unions, and that city is going through an austerity crisis. When you talk about NYC, my mom told me at the time, it went though a lot of chaos. Those days in the seventies, the city went the same ordeal. Now, NYC, has a new mayor, and I hope he doesn't lead this city that I live goes into another Detroit,Michigan.
You spelled his name wrong, it is warren wilhelm junior
the stuff you don't hear in the mainstream....
The metropolis of the Inland Empire(Riverside-San Bernardino-etc.) may be bigger, but the city limits of San Bernardino only hold about 200,000. Stockton at 300,000 is the largest local government to crap itself.
Gee, bloated Government entitlements ending up in a spiraling murder rate and pensioners left out in the cold.
Who could have seen that happening?
Could you please do a video on a city (or state) that is proving to be financially sound and how they have managed in these tough times? I know my family has made it. We've always been frugal. Is there such a thing as FRUGALITY IN GOVERNMENT?
There is one town in Georgia that refuses to take on any spending that would result in borrowing.
What's next? Detroit
Detroit is already fucked beyond repair, anyways.
They sell a dream they can't deliver when the nightmare comes they run off with the money they stole !
3:33 Translation: The question isn't who has managed their budget in a manner which income is sufficient to cover expense. The question is, who can we borrow more money from, regardless of the terms, so I'm not responsible for negatively affecting my community and I can sleep at night?
We love y'all
"Is your City next?"
We've got Chris Christie, so I'm cautiously optimistic.
Get rid of the unions should be the first thing to do
We have hired city execs & given current city execs anywhere from $15-$27K raises. The city manager get a $400K package which included all the benefits he is saying is toxic plus a $17K a year housing allowance to name a few. He works 5 years & get retiree medical.
I don’t know how much more the tax payers can afford of California’s liberal policies
The military also has a 401k program now. You can still get a pension if you've been in before 2018. Come on Stockton get on the ball.
They forgot to say that San Bernardino just went bankrupt as well
What will the city employees do when there's no more credit to pay them?
What great mindful intellect you possess there!
Am I the only one thinking this is partially a good outcome? Now maybe private companies can take over some of the service previously driven by the city.
Why is it that every city, county and state entity has unions and make their own promises to themselves about compensation and pensions?
Why don't taxpayers get to approve how the people's money is spent? I don't think they'd be spending it all on their 'public service' pensions when most taxpayers receive no pension.
Obamacare. What they don't tell you is that most Americans that are allowed to have healthcare pay a high monthly rate that requires the buyer to pay up to $5000/yr. before any coverage is started after that they only pay 70 % up to 250k, and are subject to being denied several times. Obamacare is a max of $3800/yr and coverage is complete. One must ask themselves are the reps fascist that are opposed?
Thank God
I'm from Stockton
Key word. From
🙏👼. 😁
Keep in mind that California is a "may issue" state for CCW. The people in Stockton need to take responsibility for their own safety and stop depending on "city services".
the ppl that work in the city jobs are the wrong ones they put money in their pockets when u go pay a bill 🙄I seen that shit I wonder if that had anything to do with it .and did anyone notice any family get rich right after this happened🤔that would be the responsible party😁
Open more monopoly boxes and throw that money into the system. It's all paper anyways.
Why are government employees the only ones who still receive pensions
Rosie Lee Clayton -Brown I miss you grandma picking onions
Does this mean those people with the 200k retirements will no longer be getting their money each year?
Rest in peace Mama
Video Update released:
Directed by John Carpenter
Starring Kurt Russell
As
Snake Plissken
Looks like these mayors never played SimCity
think about this. These Cali cities are tanking when interest rates are at RECORD LOWS. Imagine what happens when interest rates rise, it will be an utter tsunami
so they just spent their pension payments?
Ding ding ding. You can't spend what you don't have. Think people, think before you put laws and pensions in place.
Got me Fucked up!!
It was $400K she invested.
No need to ask what political party was involved and was anyone shocked to hear that Unions and pensions were involved?
How often do we hear about the investigations for fraud and gross negligence in the wake of such pillaging?
This is so old though I mean how about an update
No, you're not the only one. But the other part of the outcome is definitely not good. I think we're looking in the face of the largest economic meltdown/crash/deflation ever. It's necessary, but it's not going to be good. Consider, what happens to the millions of local/state government employees when they lose their jobs and are thrown into the labor market to compete? Increase labor supply = decreased labor price. Right or wrong, almost everyone loses, and it's pretty much going to suck.
some people like such places, its more quiet, more real, less bullshit.
Now imagine what it's going to be like when this happens to Detroit.
So the same guy that gave the excessive pensions is now fighting for them to be paid? Sounds like a scam to me.
Is the city manager in jail??
Anybody see a common theme in all these democrat-run cities and states?
@J.D. Thompson I don't know what shape those states are in but I do believe they've been run by democrats most of the time for as long as I can remember.
The State may have a Republican leader but the most crime and homeless ridden cities are largely Democrat run. Cleveland, Youngstown, and Dayton, Canton, and Toledo (one of the worst cities in the USA), are all in the State of Ohio and Democrat run. The Kentucky House has been Democratically run for 95 years up until 2016. I am guessing their worst cities are Democratic run also. I can only guess that West Virginia's worst cities are also run by Democrats. @J.D. Thompson
The guy saying that it would have gone bankrupt either way is just full of it. They spent like little kids at toys r us and now they don't have enough to do anything else.. It's the consequences people face in the real world, maybe they'll learn a valuable lesson.
The "it's the economy's fault" people are so full of it
In what economic environment could you support $800 million that you never budgeted a cent for?
Teachers should have pensions similar to cops and fireman. Percentage Adjustments can be made since one can teach into their late 50s or early sixties. The men and women who teach in a classroom are the grunts of the edit system. Support staff and administration can receive the same pensions as the private sector. Many of them end up there because teaching in the classroom is too intense for their coping abilities.
Cops are among the biggest gamers of the pension game. In LA, you have LAX police making more money than the LA Police Chief. They rack up so much overtime, then in their final year or two claim a disability so in the end they get huge retirement pay + disability, much of which is tax-free.
@@hajime2k Boston is similar one year the top 4 or 5 employees were detectives who had earned 400k because of overtime and a one time bonus
Sell city property, bring in big businesses and give them a tax credit, lower taxes.
I rode my bicycle through Stockton it's a real shit hole
Thank God. We are buried there Cherokee Memorial Lodi CA
Stockton inadvertently defunded the police. They were ahead of their time.
Correction I meant 'relaxed its' controls on the economy'
I never turn my back on StocKton. U gon have to Kill me!!!
These politicians are playing verbal hot potato passing the blame back and forward.
he who defaults first defaults best
Who was dumb enough to loan this city money? Who was dumb enough to think they're pension was safe if it was backed by this city's tax base?
FDR once said in a speech in 1934, "City, State and Federal workers, should not be able to join Labor Unions". I ? he was right people! Only private sector workers should have the right to join Labor Unions!
Why didn’t armies of imported foreign workers keep CA booming?
Guy in the pink shirt milking a dead cow buddy, wake up.
I hope the present GOP isn't supporting a democracy. Democracy means "majority rule." That's why we are a constitutional republic. So we agree with the crimes of "free" trade. The difference between you and I is that you expect the government (taxpayer) to provide the citizenry with "stuff"; e.g., housing, health care, etc. Those are goods that you work for. You, and only you, are responsible for yourself. And I'm glad the GOP is obstructing Obama. He needs to be stopped.
Declare bankruptcy shrug off all your public employee pension obligations problem solved. Also arrest the idiots who made IOU promises without putting money aside to pay for the pensions.
Actually, it is nowhere near the largest municipality to go bankrupt in California. Remember Orange County?
what do you expect from a democratic public sector run city
Respectfully speaking, who ever told you that chit is a liar, It is just the opposite if we don't implement Obamacare the insurance companies will rip you off. You should study the law, before commenting; unless you are a insurance company troll.
Time to beat the snot out of gov ppl. Courts take too long and are never fair
Stupid should HURT
too bad, that with those stupid unions also all other people will suffer for years
NYC went Bankrupt before
O.k let's here your side of the story.
China did not do terribly well until she started abandoning Communism. One of the sectors of the Chinese economy that is under strict central control is real estate, and they have managed to create the mother of all real estate bubbles. Once it pops, we'll be hearing a lot less happy talk about the Chinese economy.
dont know who is making the money, but what sickens me is that men and women who have worked their whole lives for a home lose it because they can't afford healthcare costs for their families. I agree that it could have been done better, but the republicans never came up with a plan to protect working people from the number one reason for losing everything, mainly health care costs, while illegals, criminals get health care for free, Healthcare needs to be affordable, The republicans have had their fingers in their ass, hoping and not caring for about the working lower middle income people. People with small businesses that can't afford $3000 per month for health insurance in addition to house payment etc. People that have worked their whole lives who are between jobs, or breadwinners that are 50 years old or so, and won't find a job. Especially jobs that will afford you the incredible cost of health insurance. It is repulsive that republicans don't care . Republicans bitch and moan about democrats, but how about a solutio
Harrisburg tried this..
It really sucks to be a Republican living in Los Angeles, Ca
Once again cops are treated above everyone else
Lol, "largest city to go bankrupt." Detroit took the title from them barely a year later.