Vallejo, Calif., once bankrupt, is now a model for cities in an age of austerity

  • Posted by a hidden member.
    Log in to view his profile

    May 28, 2012 2:51 AM GMT
    Of course there are extremists here who claim austerity can't be done and that the unions are underpaid. The reality is a bit different.

    http://www.washingtonpost.com/business/economy/vallejo-calif-once-bankrupt-is-now-a-model-for-cities-in-an-age-of-austerity/2012/05/23/gJQAjLKglU_story.html

    The first couple of years were ugly. After this working-class port city became the largest in America to declare bankruptcy in 2008, crime and prostitution surged as the police force was thinned by 40 percent. Firehouses were shuttered, and funding for libraries and senior centers was slashed. Foreclosures multiplied and home prices plummeted.

    But then this city of 116,000 began to reinvent itself. It started using technology to fill personnel gaps, rallying residents to volunteer to provide public services and offering local voters the chance to decide how money would be spent — in return for an increase in the sales tax. For the first time in five years, the city expects to have enough money to do such things as fill potholes, clear weeds, trim trees and repair tennis courts. [...]

    During happier times, Vallejo’s salaries for city employees had ballooned, with a number of top officials making $200,000 or $300,000. More than 80 percent of the municipal budget went toward compensation.

    The city’s credit rating dropped to junk status, and as part of its bankruptcy settlement, Vallejo paid only five cents for every dollar it owed to bondholders. On the labor side, officials cut workers’ pay, health care and other benefits but left pensions intact. [...]

    The police went high-tech, investing $500,000 in cameras across the city that allow officers to monitor a larger area than they could before. The department deputized citizens to participate in law enforcement by sharing tips on Facebook and Twitter.

    Gomes, whose husband is a retired police officer, focused on public safety. The couple went neighborhood to neighborhood setting up e-mail groups and social media accounts so people can, for instance, share pictures of suspicious vehicles and other information. “There have been countless cases where ordinary people have stopped crimes this way,” Gomes said.

    The number of neighborhood watch groups jumped from 15 to 350. Citizen volunteers came together monthly to paint over graffiti and do other cleanup work.

    And the city council struck an unusual deal with residents — if they agreed to a one-penny sales tax increase, projected to generate an additional $9.5 million in revenue, they could vote on how the money would be used. The experiment in participatory budgeting, which began in April, is the first in a North American city.

    The approach was pioneered in Port Alegre, Brazil, as a way to get citizens involved in bridging the large gap between the city’s middle-class residents and those living in slums on the outskirts. Individual districts in New York and Chicago are also experimenting with the process, and residents there have expressed interest in spending money on things such as more security cameras and lighting, public murals, and Meals on Wheels for seniors.
  • Posted by a hidden member.
    Log in to view his profile

    May 28, 2012 5:02 AM GMT
    More here:

    http://blogs.the-american-interest.com/wrm/2012/05/25/california-city-saves-itself-by-ditching-blue-model/

    Cities and towns all over the country should take a close look at these ideas, especially those in dire financial straits. The trick, however, is to do these things before going bankrupt, to provide better government at a lower price. Then you can cut taxes, attract new industry and businesses—and give your residents a better life with more money and lower taxes.

    It’s simple really, but it involves breaking some blue taboos. Mayors and governors willing to break the taboos can make a difference; over time, new models of state and local governance will appear that do a better job of providing essential services at a much lower cost. It’s called progress, and even if not everybody likes it, it’s a good thing.
  • Posted by a hidden member.
    Log in to view his profile

    Jun 12, 2012 5:57 AM GMT
    One model not to follow - Detroit:

    http://www.nationalreview.com/exchequer/302257/detroit-moral-story

    One lesson to learn from Detroit is that investing unions with coercive powers does not ensure future private-sector employment or the preservation of private-sector wages, despite liberal fairy tales to the contrary, nor do protectionist measures strengthen the long-term prospects of domestic firms competing in highly integrated global markets. We cannot legislate away comparative advantage or other facts of life. But the problem of unions’ coercing distortions in the private sector is at this point a relatively small one, given the decline of unionization outside of government. Organized labor being a fundamentally predatory enterprise, its attention has turned to the public sector, where there are fatter and more stable rents to be collected.

    The second important lesson to be learned from Detroit is that there are hard limits on real tax increases, a fact that will be of more immediate significance in the national debate as our deficit and debt problems reach crisis stage. Even those of us who are relatively open to tax increases as a component of a long-term debt-reduction strategy must keep in mind that our current spending trend is putting us on an unsustainable course in which our outlays will far outpace our ability to collect taxes to pay for them, no matter where we set our theoretical tax rates. The IMF calculates that to maintain present spending trend the United States will have to nearly double (88 percent increase) all federal taxes to maintain theoretical solvency. Those tax increases are sure to have real-world effects on everything from investing to immigration. At some point, the statutory tax increases will not increase actual revenue.

    Even the best tax regimes are cannibalistic: Every tax is an incentive for the taxpayer to relocate to a more friendly jurisdiction. But tax rates are not the only incentive: Google is not going to set up shop in Somalia. Healthy governments create conditions that make it worth paying the taxes — which is to say, governments are a lot like participants in any other competitive market (with some obvious and important exceptions). The benefits of being in Detroit used to be worth the costs, but in recent decades millions of people and thousands of enterprises large and small have decided that is no longer the case. It is not as though one cannot profitably manufacture automobiles in the United States — Toyota does — you just can’t do it very well in Detroit. No one with eyes in his head could honestly think that the services provided by the city of Detroit and the state of Michigan are worth the costs.

    The third lesson is moral. Detroit’s institutions have long been marked by corruption, venality, and self-serving. Healthy societies have high levels of trust. Who trusts Detroit? This is not angels-dancing-on-the-head-of-a-pin stuff. People do not invest in firms, industries, cities, or countries they do not trust. Corruption makes people poor.
  • Posted by a hidden member.
    Log in to view his profile

    Jun 12, 2012 7:36 AM GMT
    Excellent examples, but no amount of proof means anything to the ideologues. Eventually these results and the examples such as Wisconsin are leading to removing the politicians and eliminating the unbalanced union influence.
  • Posted by a hidden member.
    Log in to view his profile

    Jun 12, 2012 1:14 PM GMT
    riddler78 saidOf course there are extremists here who claim austerity can't be done and that the unions are underpaid. The reality is a bit different.

    http://www.washingtonpost.com/business/economy/vallejo-calif-once-bankrupt-is-now-a-model-for-cities-in-an-age-of-austerity/2012/05/23/gJQAjLKglU_story.html

    The first couple of years were ugly. After this working-class port city became the largest in America to declare bankruptcy in 2008, crime and prostitution surged as the police force was thinned by 40 percent. Firehouses were shuttered, and funding for libraries and senior centers was slashed. Foreclosures multiplied and home prices plummeted.

    But then this city of 116,000 began to reinvent itself. It started using technology to fill personnel gaps, rallying residents to volunteer to provide public services and offering local voters the chance to decide how money would be spent — in return for an increase in the sales tax. For the first time in five years, the city expects to have enough money to do such things as fill potholes, clear weeds, trim trees and repair tennis courts. [...]

    During happier times, Vallejo’s salaries for city employees had ballooned, with a number of top officials making $200,000 or $300,000. More than 80 percent of the municipal budget went toward compensation.

    The city’s credit rating dropped to junk status, and as part of its bankruptcy settlement, Vallejo paid only five cents for every dollar it owed to bondholders. On the labor side, officials cut workers’ pay, health care and other benefits but left pensions intact. [...]

    The police went high-tech, investing $500,000 in cameras across the city that allow officers to monitor a larger area than they could before. The department deputized citizens to participate in law enforcement by sharing tips on Facebook and Twitter.

    Gomes, whose husband is a retired police officer, focused on public safety. The couple went neighborhood to neighborhood setting up e-mail groups and social media accounts so people can, for instance, share pictures of suspicious vehicles and other information. “There have been countless cases where ordinary people have stopped crimes this way,” Gomes said.

    The number of neighborhood watch groups jumped from 15 to 350. Citizen volunteers came together monthly to paint over graffiti and do other cleanup work.

    And the city council struck an unusual deal with residents — if they agreed to a one-penny sales tax increase, projected to generate an additional $9.5 million in revenue, they could vote on how the money would be used. The experiment in participatory budgeting, which began in April, is the first in a North American city.

    The approach was pioneered in Port Alegre, Brazil, as a way to get citizens involved in bridging the large gap between the city’s middle-class residents and those living in slums on the outskirts. Individual districts in New York and Chicago are also experimenting with the process, and residents there have expressed interest in spending money on things such as more security cameras and lighting, public murals, and Meals on Wheels for seniors.
    OMG.. A TAX INCREASE!
    OMG! OMG! OMG!
  • Posted by a hidden member.
    Log in to view his profile

    Jun 12, 2012 4:24 PM GMT
    The differences between Vallejo and the United States:

    1. Vallejo still sucks and nobody wants to live there because it sucks.
    2. Who is going to volunteer to do federal jobs like delivering the mail, collecting taxes, and fighting wars...for free?
    3. Vallejo had the good sense to raise taxes to fill some budgeting gaps, something that today's rabid, frothing-at-the-mouth right wing Republicans will not allow the federal government to do.

    In order words, good for Vallejo, but this is not applicable to anywhere with a population bigger than around 100,00 people, nor to any place in which "low taxes for the rich" Tea Party Rethuglicans have any sway.
  • Posted by a hidden member.
    Log in to view his profile

    Jun 12, 2012 4:30 PM GMT
    socalfitness saidExcellent examples, but no amount of proof means anything to the ideologues. Eventually these results and the examples such as Wisconsin are leading to removing the politicians and eliminating the unbalanced union influence.


    Quite. The same old tired refrains by the leftist shrills who can't see anything beyond tax increases which are more aimed at jealousy over the rich than trying to empower and raise the conditions of the poor let alone any sense of fiscal responsibility.
  • roadbikeRob

    Posts: 14360

    Jun 12, 2012 5:23 PM GMT
    TroyAthlete, Vallejo,CA sucks, that sounds exactly like Niagara Falls, NY. If any town sucks, it is definitely Niagara Falls, NY. Probably Niagara Falls should try to do the same thing that Vallejo did with its government services, hey it cannot get any worse or can iticon_question.gif