I have been closely watching the bankruptcy proceedings of the city of Vallejo, California. It is a medium-sized suburb of San Francisco that found its finances shattered by this economic downturn. A major reason for its bankruptcy was its onerous public employee union contracts. Unions refused to renegotiate their contracts as the municipal finances collapsed.
Bankruptcy judge Michael McManus has ruled that Vallejo can void its union contracts as part of its restructuring. The repercussions of this could be huge… hugely POSITIVE for taxpayers!
“My understanding is that a lot of cities are watching this and particularly this motion,” said Woodruff. “If the city of Vallejo succeeds in using bankruptcy to void union contracts I am sure others will follow,” she said.
Vallejo attorney Norman C. Hile of Orrick, Herrington & Sutcliffe’s Sacramento, Calif. office said, “This is a decision that is somewhat groundbreaking.”
Of course the unions will challenge this ruling. Let’s hope the decision stands and public employee pay can be scaled back to more realistic levels everywhere. Public employee pension and benefit costs are a ticking time bomb and the sooner the bomb is defused the better off all taxpayers will be.
The entitlement mentality needs to be dismantled one piece at a time. Why should union members not suffer the same pain and grief that the rest of us are enduring in this downturn?
Somebody in California buy Judge McManus a beer!