The WSJ today reports some expenditure details of Vallejo, northern California, pop. 117,000. Vallejo declared bankruptcy earlier this year after having unsustainably ramped up public spending in response to unsustainable tax revenues stemming from unsustainable property-values stemming from unsustainable mortgage-lending practices.

Over the last decade, the Journal reports, state and local practices pushed Vallejo’s public-sector wages, particularly in the police department, to ridiculous heights. Plus, following California law, Vallejo allows officers and firefighters “to retire at 50 years of age with 3 percent of their highest salary — multipled by the number of years served,” the paper notes. In 2005, Vallejo hiked officer salaries by 20 percent; including benefits, the total cost of each officer today is nearly $200,000 annually.

Now, Vallejo is cutting back, with deterioration in the city’s quality of life evident.

It’s true that Vallejo competes with Jefferson County, Alabama, to be the worst-managed municipality in the United States. But Vallejo differs from many other U.S. cities and states not in kind but by degree.

Over the past five years, New York, for example, has increased spending on municipal salaries, pensions, and health benefits by 22 percent after inflation. And, as E.J. reports in the post below deck, the city continues to approve similarly outsized increases.

The problem is that in a downturn, these payments are sticky while revenues are slippery. And since it’s hard to cut back current salaries or even future benefits after revenues slide, the city will be tempted to cut back on people, including more police officers than the 1,000-police-officer hiring delay New York has already budgeted, if things don’t get better fast.

You may also like

New York State Has Dug Itself Into Its Deepest Hole On Record

"State's Financial Hole Deepens" is the headline on Comptroller Thomas DiNapoli's press release accompanying the August cash flow report. Read More

State’s Per-Recipient Medicaid Spending Rises to 3rd Highest in the U.S.

New York's per-recipient Medicaid spending has soared to the nation's third highest rate, a sign of fiscal trouble for one of the state's most important programs. Read More

New York Medicaid Spending Is Projected to Jump 6% in Fiscal Year 2021 (UPDATED)

Despite a round of cost-cutting this spring, New York's Medicaid spending is on track to jump by 6 percent this year thanks to a massive influx of federal aid. Read More

New York’s Post-Pandemic State Budget Picture Is Looking Worse

Governor Cuomo continues to burn while pols in Washington fiddle around the issue of providing more aid to states and localities in yet another federal stimulus bill. Meanwhile, New York State's plummeting revenues still haven't hit their post-pandemic bottom, according to the First Quarterly Update to the state's FY 2021 Financial Plan. Read More

New York’s Medicaid Enrollment Surges to an All-Time High

New York's Medicaid program is growing at its fastest rate in six years, with a quarter-million additional enrollees landing in the safety-net health plan during the first three months of the coronavirus pandemic.  Read More

New York’s Medicaid Roller Coaster Takes an Unusual Turn

The state's Medicaid spending was significantly lower than projected in the first quarter, but that's not necessarily a positive sign for state finances. Read More

Essential Plan surplus hits $3B

As Governor Cuomo pleads for financial help from Washington, one of his state's programs is sitting on $3 billion in unspent federal aid: the Essential Plan. Read More

A grim toll gets worse

The full toll of the coronavirus pandemic in New York is likely thousands higher than the official death tallies, according to newly released federal data. Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100
Fax: 518-434-3130
E-Mail: info@empirecenter.org

About

The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.