Wednesday, January 19

Vallejo, Ho

Vallejo filed for bankruptcy two years ago. It ain't pretty either : the police 50% staffed; the fire department closed; public teaching posts unfilled, vacant houses and pot holes everywhere (three guys to fill them). Untidy lots, garbage uncollected and general malaise. Citizens abandoning ship - at least, those who can. A sad state of affairs for a once proud blue coller community on the northern edge of the San Francisco Bay Area where HW 80 and 780 connect. 

Vallejo across the Cartinez Bridge and Katie and I competed at the neighboring Benicia Blue Dolphins Aquatics Center - I recall hot summers, green grass lawns, a beautiful outdoor 50-meter pool, healthy kids and families - all seemed Ok. Vallejo today follows a dwindling property tax base from a decline in industrial activity+the after-math of decades of generous pay and pension deals for city workers - many allowed, for instance, to retire in their 50s with 90% of their salaries. 

Vallejo should have seen it coming, too, with the '95 closure of the naval base but somehow never got around to adjusting itself. Marc Levinson, Vallejo's banruptcy lawyer, notes that "Vallejo is just the first, the [union] contracts were the most outrageous and the resources got exhausted first." A friend recently pointed an accusatory finger at me : "California is a mess."

Californians tried to change with the "recall" in 2003 that made Arnold "Girlie-Girl" Schwarzenegger Governor with his central pledge to reduce California's indebtedness. During his seven years, the state's debt trippled. So let us remember that, As of July 1, 2003, California had a total of $27.6 billion in general obligation bonds and a total of $23.2 billion in authorized but unissued bonds.

Today, it is $77.8 billion in outstanding general obligation bonds and an additional $42.8 in authorized but unissued bonds according to state Treasurer Bill Lockyer. General obligation bonds are paid from revenues coming from the state's general fund, meaning that debt payments reduce funds available for other services. In fact, along with its overall debt burden, California's debt payments have tripled, from $1.8 billion paid in the fiscal year ending June 30, 2004, to $5.5 billion in the current fiscal year ending June 30, 2011. In June 2009, Schwarzenegger, facing state insolvency, called for $24 billion of budget cuts or one-fourth the state's budget. Moonbeam to the rescue.

Sacramento's inability to raise taxes (Prop 13 comes home to roost) or cut spending or just plain govern has left the Golden State on its knees. The political parties refuse to meet in the middle somehow and bonds roll things over .. again .. and again. The first cracks occur in small towns like Vallejo but eventually we may see the state's credit rating harmed (currently A1 and A- by Moody's and S&P) making borrowing more dear. And so downward, ho.

One day I hope to fight the battle for the state I love dearly but that may prove to be another life.

"Our wallet is empty, our bank is closed and our credit is dried up."
--Governor Arnold Schwarzenegger