There's much disagreement among fiscal conservatives on the usefulness of municipal bankruptcy in helping cities and counties get out from under the crushing public employee compensation burdens they've placed on themselves over the past decade or so. Vallejo emerged from bankruptcy without abrogating pension deals, but nevertheless unions are fearful that a wave of municipal bankruptcies could harm their pay and benefit packages. Whatever one's views,
Chris Reed of the San Diego Union-Tribune and formerly my colleague at the Orange County Register penned this piece for CalWatchdog that recalls the dark days of OC's 1994 bankruptcy. The key point: Bankruptcy was useful for the county and didn't cause any of the shock waves that initially were predicted, but it didn't stop new boards of supervisors from causing new problems. Since bankruptcy, Republican boards have retroactively increased pensions twice and one of the key pro-union troublemakers is about to win another seat on the board. There is no fiscal mechanism that can counteract bad governance.