BK judge slams taxpayers on Stockton pensions
by John Seiler | November 2, 2014 1:57 am
In boon to public pensioners and a shock to taxpayers throughout California, federal Judge Christopher M. Klein approved a bankruptcy plan[1] to put Stockton city retirees at the top of the heap. That means taxpayers are at the bottom.
Also stiffed will be bondholders. That puts at risk other municipal bonds throughout California. And it will mean higher costs to service future bonds, such as the $7.5 billion in water bonds on the Nov. 4 ballot as Proposition 1[2]. Investors understandably will demand higher interest rates for any bonds emanating from the Pyrite State.
Which means taxpayers again will pick up the tab.
The city sensibly argued that Klein’s action also puts it at risk for another bankruptcy. “But Klein said Thursday that Stockton’s plan for paying creditors over the years was adequate and passed all legal tests,” reported the Los Angeles Times[3].
But that’s just what has happened to Vallejo after its 2008 bankruptcy also left it forced to pay full pension benefits. As CNN reported in March[4]:
“The California city of Vallejo emerged from bankruptcy just over two years ago, but it is still struggling to pay its bills. The main culprit: Ballooning pension costs, which will hit more than $14 million this year, a nearly 40% increase from two years ago.”
Meanwhile, the California Public Employees Retirement System has been spiking pensions again[5].
Next up: San Bernardino’s bankruptcy. In September, Judge Meredith Jury ruled[6] the city unilaterally could cut firefighter pensions. We’ll soon see if her ruling sticks.
Meanwhile, as James Poulos reported on our website[7], the state is spending so much on pensions its roads are crumbling to dust.
Well, I guess it’s ok to make sure state pensioners, more than 16,000 of whom[8] now pull down $100,000 or more a year, can enjoy their retirements in Lucullan [9]luxury on their Idaho ranches.
- approved a bankruptcy plan: http://www.latimes.com/business/la-fi-stockton-pension-court-ruling-cuts-20141029-story.html
- Proposition 1: http://ballotpedia.org/California_Proposition_1,_Water_Bond_(2014)
- Los Angeles Times: http://www.latimes.com/business/la-fi-stockton-pension-court-ruling-cuts-20141029-story.html
- CNN reported in March: http://money.cnn.com/2014/03/10/pf/vallejo-pensions/
- spiking pensions again: http://www.utsandiego.com/news/2014/aug/22/calpers-triggers-pension-spiking-bonanza/
- Judge Meredith Jury ruled: http://www.reuters.com/article/2014/09/11/usa-municipals-bernardino-idUSL1N0RC32J20140911
- James Poulos reported on our website: http://calwatchdog.com/2014/10/31/pension-spikes-crumbling-ca-roads/
- 16,000 of whom: http://www.ocregister.com/articles/pension-639019-public-club.html
- Lucullan : http://www.merriam-webster.com/dictionary/lucullan
Source URL: https://calwatchdog.com/2014/11/02/bk-judge-slams-taxpayers-on-stockton-pensions/