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Thursday, May 08, 2008
California City Declares Bankruptcy, Citing Housing, Economy
The New York Times reports today that the Vallejo (CA) City Council voted unanimously Tuesday night to declare bankruptcy in the face of dwindling tax revenues, the housing market meltdown and a faltering economy. Vallejo has 117,000 residents.
Given the steep decrease in property and sales taxes and transfer fees as a result of weakness in the housing market, municipal bankruptcy is "something that one hears about a lot more now," said John Quigley, a professor of economics at University of California, Berkeley. "And in California, you hear about a lot of cities being pushed to this sort of thinking by the housing crisis."
"We've been doing more with less forever," said Detective Mat Mustard, vice president of the Vallejo Police Officers Association, which opposed the bankruptcy declaration. "We're going to start losing people. Who wants to work for a company or a city that's bankrupt?"
Posted by Dana Chasin
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