Vallejo, California goes bankrupt - Is Tulsa in jeopardy?
by Charles Biggs
Vallejo, California is broke – dead broke. Earlier this month the city declared bankruptcy.
It’s not the first city in California to go bankrupt and it won’t be the last. In 2001, Desert Hot Springs (near Palm Springs) lost a lawsuit and that city of 20,000 declared bankruptcy.
The problem in Vallejo is that the city borrowed too much money and couldn’t cope with repairing streets and fighting crime with more cops.
Does that sound familiar?
This couldn’t happen in Tulsa, could it? After all, cities in Oklahoma can’t “borrow” money and they have to have balanced budgets.
Right.
Vallejo is a Navy city on the north side of San Francisco. It has a population of about 117,000 - a little bit bigger than Broken Arrow and about one-fourth the size of Tulsa.
Houses were way overpriced in Vallejo and when the mortgage scandal hit, prices fell like a rocket and subsequently property values and property taxes plummeted.
This is what happens in a recession and it can and will happen in Tulsa. If all the county property were valued at $1 billion, for example, and a recession caused those values to drop to $900 million, every property owners’ tax bill would have to go up 10 percent to meet the “bonded indebtedness.”
That’s how cities and school districts borrow money when it’s illegal to “borrow money.”
If a hotel or restaurant goes out of business, and some in Tulsa will, the owner of that newly empty building has a right to petition for a lower property tax and therefore lower taxes.
Another problem with Vallejo was city personnel costs. Police and fire unions kept upping demands and the mayor and city councilors repeatedly gave in without proper regard for the budget. A Vallejo police captain makes $306,583 in salary and benefits while a police lieutenant gets $240,146. A Vallejo fire captain earns $206,890 while a firefighter earns an average of $171,250, according to a city financial report.
Those are unbelievable figures, but remember – the Bay Area is one of the most expensive places to live in America.
Reports say the city was $16 million short in the general fund. Since 1937, 543 cities in the United States have gone bankrupt. In at least two thirds of those, municipal bond payments were a huge factor.
Vallejo saw its sales tax revenues drop 7 percent, a drop of almost $2 million for its general budget. Spending for roads, health services and libraries was cut. They don’t have enough police to investigate property crimes. Potential homebuyers are scared away but the financial crisis. The only hope for the city is to restructure its debt. with huge tax increases and other “revenue enhancements.”
Are there parallels in Tulsa?
Yes. Tulsa just spent more than $76 million on a new City Hall it didn’t need. That’s debt.
Tulsa is constantly borrowing money against its bond issues for streets and other infrastructure. Mayor Kathy Taylor added huge utility hikes in her latest budget. She has raised virtually every fee (tax) in Tulsa.
Don’t look for the state of California to bail Vallejo out. The Golden State is staring at its own budget deficit.
California financial experts are worried that Vallejo will be an example for other cities that face financial woes.
Taylor is always active in looking for ways to overspend city money – a new city hall, raises for city workers, expensive and unnecessary studies, change orders for projects, overpaid personal staff, etc.
As a multi-millionaire, she makes a public point of not taking her $105,000/year salary while spending too much money on the wrong projects and pushing as hard as she can for higher taxes.
If Tulsa does go bankrupt, the credit will go to Taylor, the City Council and her willing allies in the liberal news media.
What do we do to stop this? Cut off the money flow. Vote against any tax increase until the city can prove it can spend money responsibly.
And in 2009, elect a mayor who is more interested in the good of the city than personal fame and power.
• Vandals had set fire to a farmers haystack which then spread to his barn. ?While he surveyed the wreckage, his wife called their insurance company ?and asked them to send a check for $50,000 the amount of insurance on the barn. “We don’t give you the money,” a company official explained. “We replace the barn and all the equipment in it.” “In that case,” replied the wife, “cancel the policy I have on my husband.”
• Driving home after working late the other day, a man was stopped by a police officer for speeding. He explained that he was rushing home to be with his wife on their first anniversary, which was the truth. However, instead of being let off with a warning, the officer said, “Congratulations!” and then proceeded to write out the ticket. As he handed it to him, he said, “The first year is paper, right?”
• A drunk staggered up to the hotel reception desk and demanded his room be changed. ”But sir,” said the clerk, “you have the best room in the hotel.” ”I insist on another room!!” said the drunk. ”Very good, sir. I`ll change you from 502 to 555. Would you mind telling me why you don’t like 502?” asked the clerk.
”Well, for one thing,” said the drunk, “it’s on fire.”
• A man is in bed asleep with his wife when there is a rat-a-tat-tat on the door. He rolls over and looks at his clock, and it’s half past three in the morning. “I’m not getting out of bed at this time”, he thinks, and rolls over. Then, a louder knock follows. “Aren’t you going to answer that?” says his wife. So he drags himself out of bed, and goes downstairs. He opens the door and there is man standing at the door. It didn’t take the homeowner long to realize the man was drunk.
“Hi there.” slurs the stranger, “Can you give me a push?”
“No, get lost. It’s half past three. I was in bed,” says the man and slams the door.
He goes back up to bed and tells his wife what happened and she says “Dave, that wasn’t very nice of you. Remember that night we broke down on the pouring rain on the way to pick the kids up from the baby-sitter and you had to knock on that man’s house to get us started again? What would have happened if he’d told us to get lost?”
“But the guy was drunk,” says the husband.
“It doesn’t matter.” says the wife. “He needs our help. The right thing to do would be to help him.”
So the husband gets out of bed again, dresses, and goes downstairs. He opens the door, and not being able to see the stranger anywhere he shouts: “Hey, do you still want a push?” He hears a voice cry out, “Yeah, please.”
So, still being unable to see the stranger he shouts: “Where are you?”
And the stranger replies: “I’m over here, on your swing.”