Vallejo tries to avoid bankruptcy

April 21, 2008 12:00:00 AM PDT
In Vallejo, city officials are racing against the clock to present a long-term financial plan to the council or face bankruptcy. Last March police and firefighters took a temporary pay cut to keep the city afloat, but on Tuesday the city must make a crucial decision.

Downtown Vallejo is a patchwork of crumbling facades, vacant storefronts, and discount shops.

"That's why I'm down here. To bring some cheer. Ha ha! I'm trying," says Angie Pauletich, of Angie's Famous Hotdogs.

Pauletich, who grew up in Vallejo, laughs to keep from crying. Business is slow and she says downtown Vallejo is in desperate need of redevelopment.

"Probably in the 70's, maybe the 80's. It was still a great place to walk downtown and go shopping and eat and take your children. I don't know. It just went away," says Pauletich.

Now the city is facing a $13 million dollar budget deficit, and a tough decision. Should it try to stay afloat or file for bankruptcy?

"Bankruptcy has to be the absolute last option," says Mayor Osby Davis. He believe bankruptcy would definitely make it harder to redevelop downtown Vallejo.

"And you probably won't be able to float bonds in order to do your infrastructure. There are all kinds of difficulties and negative ramifications with bankruptcy," says Mayor Davis.

Behind closed doors on Monday, the Council met with firefighter and police union leaders to work out a deal. The union salaries make up 74 percent of the city's budget.

"If you can come up with the financial arrangement with the labor groups, than you can come up with the solutions," says Mayor Davis.

Neither side would discuss details of the meeting, but the unions acknowledge they're trying to offer ways to trim their salaries and benefits. Bankruptcy would wipe the slate clean and call for a new labor contract.

"Can early retirement help you guys at all?" asks ABC7's Alan Wang.

"Well it can only help us if we have cash. We don't have a whole lot of cash right now," says Mayor Davis.

It's not clear how the council will vote, but some council members seem think bankruptcy is the only option.

Another private negotiation meeting is scheduled for Tuesday at 4:45 p.m., followed by the moment of truth. The city council meeting at 7:00 p.m. Tuesday.


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