Friday, June 27, 2008

Meet the Wagners (of California)

Public finance wonks should read the personal letter that is the only public objection thus far to the bankruptcy pending in federal court of Vallejo, California filed by former city employee Mr. George Wagner and his wife. You need to deconstruct it on several levels. They may not realize it, but their one page letter really sums up the financial dilemma for all of local public finance in America. There will be more formal objections filed for sure, but I bet Mr. Wagner's personal appeal has a weight unto itself.

The really sad thing is that the City of Pittsburgh wishes its pension funds were in as good a shape as Vallejo's. The stock market turmoil in recent months must be pushing down Pittsburgh's already depleted pension fund. You have to wonder how much stress it can handle before winding down to a pay as you go system.

Note that the Wagners makes specific mention of their health benefits, the cost of which must be accounted for systematically in California. Go read the City of Pittsburgh's financial reports and see if you can find what the total health care liability is. At least there is no need to worry about Pittsburgh seeing its health care reserves drain away due to the stock market declines of late.


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