Vallejo Can Void Union Contracts

17 Mar

Vallejo Can Void Union Contracts

Category: Commercial Real Estate

Mish has all the details regarding the latest ruling in the Vallejo bankruptcy case in Judge Rules Vallejo Can Void Union Contracts.

In a groundbreaking ruling as well as a rare victory for common sense and the overall good of taxpayers, Bankruptcy Judge Rules Calif. City Can Void Union Contracts.

In the first ruling of its kind, a bankruptcy judge held the city of Vallejo, Calif. has the authority to void its existing union contracts in its effort to reorganize, holding public workers do not enjoy the same protections Congress gave union workers at private companies.

If you recall, the city of Vallejo, CA filed bankruptcy over the high costs that it was having to pay for public services. I wrote more about the problems facing California’s cities here and here.

Tags: bankruptcy case, CA, city of vallejo ca, Vallejo

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Posted Tuesday, March 17th, 2009 at 3:02 pm
Filed Under Category: Commercial Real Estate
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566ResponseVallejo+Can+Void+Union+Contracts2009-03-17+22%3A02%3A47Peter+Maclennan to “Vallejo Can Void Union Contracts”

Jeffrey Hare
March 18th, 2009 at 7:34 pm

Undoubtedly, there will be a groundswell of support from the Unions to appeal this ruling and seek Congressional action to change the law, since the ramifications of this ruling could be so widespread. What is unknown at this point in time is the full extent of the debt that most municipalities face for these largely unfunded and underfunded pension plans, due to weak accounting regulations. In some cities, the amount of debt service for pension plans is equivalent to the budget for their largest department, or to put it another way, cities are paying more for people who don't work there anymore than they are for the ones that do. To the extent that this debt was being serviced by investments, the overall hit on municipal budgets will go up. In terms of total dollars, it will make the AIG bailout seem trivial, but won't make the headlines. Thanks for shedding light on this important issue.

Peter Pays Paul