31st March 2010
As California cities and counties struggle to fulfill the generous pay and pension commitments that they made to public employees during flush economic times, some politicians have taken comfort in a usually forbidding word: bankruptcy. Top officials in Los Angeles and San Diego have raised the B-word in recent weeks, and almost everyone is paying attention to developments in Vallejo (population 117,000), on the edge of the San Francisco Bay Area. The blue-collar port city filed for bankruptcy in May 2008, after it couldn’t pay its bills. Now, observers are watching to see whether Vallejo—the biggest California city to file for bankruptcy so far—offers a road map out of the mire.