Our View: Learn lessons from Stockton bankruptcy
by Press Editorial Board
Jun 29, 2012 | 6168 views | 14 14 comments | 23 23 recommendations | email to a friend | print
Stockton, the seat of our county government and the largest city in shouting distance, is bankrupt. It’s a black eye for our region, and a warning for Tracy.

Ten years ago, no one, including Stockton’s leadership, anticipated the economic crash we experienced in the Central Valley, California, the nation and the world. But ambitious dreams requiring ongoing financial support made Stockton vulnerable when the economy faltered.

Its leaders saw a future of steadily increasing tax revenue and growth, and set their goals and employee compensation to match in hopes of shaking Stockton out of its old reputation as another valley cowtown and into an All-American city.

Stockton built a waterfront marina, baseball park, events center; purchased a new and bigger city hall; invested in its workforce.

But when the real estate market tumbled, it all suddenly became unsustainable. And now, the city has filed for protection from its creditors.

The case of Stockton might be a study in hindsight, but it is still a poignant warning to anyone in government — and to the candidates looking to enter it this November.

While Tracy is not now on a path to bankruptcy, the lessons of Stockton apply.

Leaders must be judicious in negotiations with employees, balancing the city’s need to trim millions off its general fund while maintaining a happy and competitive workforce. The contracts recently reached with six groups of employees, including the Tracy Firefighters Association, seem to strike that balance.

More negotiations loom in the future, however, and without union cooperation and management’s diligence, Tracy might someday stare down the same gun barrel facing Stockton.

Elected leaders also must be vigilant to not write a check the city can’t cash in the form of unsustainable capital improvements.

Almost everyone agrees there’s a need for competitive and recreational pools in Tracy. But such a facility must not put an outsized burden on the general fund.

The city already supports the Grand Theatre Center for the Arts. While we believe that modest expense is worth adding a first-class theater, gallery and art studio space to downtown, such a balance must also be struck with any swim center.

A lavish water park that would rely on the city’s general fund dime should not be on the agenda at a time the city is trying to cut every ounce of spare flesh it can.

When votes come up for such facilities, we ask the Tracy City Council to remember the example of Stockton. Because the city on the edge of the Delta isn’t the first in the country to declare bankruptcy — and we bet it won’t be the last.

Comments
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pinkwillow
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August 02, 2012
Paitentype,

As my buddy Ornley would say, y'all Ned ta learn tu reed.

I said only one COP collects 100 grand a year, and it's "I got mine Maciel". no cops that have retired prior to him or after collect 100 grand a year.

Again, little Timmy, READ, COMPREHEND, RESEARCH, THEN STILL GIVE THE WRONG INFO. We're you crop dusted as a child?

So now let's move to the math lesson. Name the yearly retiree increases you say there have been. take Maciel, and now show the yearly increases, there were a whole bunch of retirees this past year, so I'm sure you will be able to show hundreds of $100 grand retirees from Tracy.

No mention from you about that lifetime medical you said they all get, where did you find that FACT? Does the short bus have seatbelts?
PatientType
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July 04, 2012
The lesson from Stockton, and Vallejo and San Jose is this ... clear and simple: A municipality can only pay so many employees $100,000 or more per year in pension benefits and provide free health insurance for life for so many employees and their spouses before the city goes bankrupt.

Trying to increase local taxes by putting "temporary" sales taxes or increasing property tax assessments or, worse, issuing bonds and paying off current expenses with future revenues will only delay the inevitable need to retrench.

Basing pay & benefit negotiations on a temporary housing bubble was nice while it lasted. But, no, it is not responsible to create city budget and long-term employee contract commitments on the come, with the expectation that there will always be enough future economic growth to absorb current over spending.
pinkwillow
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July 05, 2012
Hey patientype,

There are no city employees in Tracy that have lifetime medical. And guess who is the ONLY cop in the entire history of Tracy to get $100 grand a year in retirement.

The honorable councilman mike Maciel.

The lesson here is, do your research before making dumb misleading comments.
rayderfan
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July 05, 2012
And Maciel is one of the people pushing to cut employee benefits. That should tell everyone something about his priorities.

In his view (I got mine and to heck with the rest of you) he could care less about the city employees who provide services to the citizens of Tracy.

Even when he was a Cop he never did anything for the betterment of Tracy or its citizens.

Vote anybody but Maciel this November.
ertion
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July 05, 2012
PatientType, take a look at this New York Times article (http://www.nytimes.com/2012/05/28/nyregion/fragile-calculus-in-plans-to-fix-pension-systems.html) that details the vice the city is in.

The CalPers retirement system has been run for decades assuming a 7 to 8% return. No chance of that now, with Treasury bills yielding between 1 and 2%. So day by day the shortfall increases, a shortfall currently estimated at between $50 billion and $300 billion (http://blogs.sacbee.com/the_state_worker/2011/12/new-stanford-study-pegs-pension-shortfall-at.html). EMPLOYERS, in our case, the city of Tracy, have to make up the shortfall, dumping more and more money into CalPers.

This kind of detail, appears to be missing in the Tracy city budget, is unfortunate in its omission because it hides significant liabilities and the true cost of police and fire employees, as well as the highly paid city administration personnel.
PatientType
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August 02, 2012
@pinkwillow

Do my research? Perhaps I should ask you to do the same. The number of $100K Tracy public safety retirees is increasing yearly.

You say there are none? Really?

Then who are all these people? If you take time to search the Internet to see public records, you'll confirm that they're recently hired Tracy Public Safety personnel.

Terry Hein, Fire Dept, $108,187

Jeffrey Mason, Fire Dept, $113,067

Mark Mehring, Fire Dept, $112,493

James Oliviera, Fire Dept, $100,481
Wobbley
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July 03, 2012
We certainly won't have the trouble Stockton did! I was enticed to the city of tracy for several reasons.

1. Tracy triangle technology park.

never happened.

2. Great Public School system!

4000 kids at West and gang fights on a regular basis.

3. Water park nearby.

Never happened.

4. Tracy mall.

Mostly Empty.

Most of my neighbors have been foreclosed on and some houses twice turned over since 2003. We used to have TWO hobby shops (now none).

At least we have a Macy's, wonder how that is going, because I never set foot in it.

Stockton at least had some vision, however miopic it was.

The shining star here is the Tracy PD and the apparent winning war against the gang bangers.
Wobbley
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July 03, 2012
Oh, I forget, the Delta Community College system

*(A bunch of trailers off of Mountain House now).
ertion
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July 03, 2012
It could have been worse. You could have chosen to live in Stockton.

Or worse yet, in San Jose. San Jose is in the same predicament as Stockton, only the bondholders in San Jose have the legal right to force tax increases on property owners in the city, even in the case of bankruptcy, so they'll get theirs out of yours.

As for great public schools in Tracy, did you move here before or after there were STAR test scores for schools?

ertion
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July 01, 2012
I wonder if this column is written by ol' Mr. Maththews. It seems to have his common sense. I especially liked this flat-out statement:

"A lavish water park that would rely on the city’s general fund dime should not be on the agenda at a time the city is trying to cut every ounce of spare flesh it can."

Indeed. Such a foray would be inadvisable in the best of times (let private enterprise do it and take the risk), and incomprehensible at this point, given city finances.

You cannot ask city employees, including police and fire, to make concession after concession, then kick them in the face by throwing money at something like this, something so unneccessary.
rayderfan
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July 02, 2012
But then again, fiscal responsibility is not one of this city manager's strengths, unless he's talking with employees and their pay and benefits. Other than that, he wants to spend, spend, spend.
RedHotChilliPeppers
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June 29, 2012
These articles are so trite.

"ambitious dreams" is not going far enough.

Recall from critical thinking class...

For pete sake, ambition is the American dream.

You telling us the Tracy Press has no "ambition"?

Instead of innuendos, why not put the facts on paper?

They financed the entire city, including the parking garages, while unemployment doubled.

Hope that helps!

rosa62
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June 30, 2012
Don't worry. You can bet our Mayor, Council and City Manager won't learn a thing from Stockton's experience.
behonestguys
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June 30, 2012
I couldn't agree with you more Rosa62. I hope that what happened in Stockton is a wake-up call for our City Council that government's job is to govern - not to get into ventures that are within the purview of the private sector, such as an aquatics center containing lazy rivers, water slides and all the Knotts Berry stuff.


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