A Vallejo councilwoman warns Central Falls about Chapter 9August 15th, 2011 at 7:00 am by Ted Nesi under Nesi's Notes
Stephanie Gomes is a member of the City Council in Vallejo, Calif., which finally exited Chapter 9 last week more than three years after it first declared bankruptcy. With Central Falls looking to Vallejo for guidance in how the process works, Gomes wrote in to share her thoughts on what happened there:
The thing people don’t understand is how our employee unions dragged us through legal challenges that ultimately cost us both years and millions of dollars – we’ve spent approximately $11 million in legal fees.
Our unions challenged our solvency, whether we were hiding money, demanded we pay them from restricted funds, and ultimately fought us on whether we could tear up our CBAs [collective bargaining agreements]. We prevailed on these challenges, but it was costly and completely unnecessary.
We proved legally we could have restructured our employee contracts (94% of our general fund), but failed to do so in a meaningful way because of a lack of political will. We even gave raises to employees in bankruptcy! (I was in a minority against an employee-union-funded/supported majority.) Now the majority is asking for a sales tax increase to make up for what they failed to do in bankruptcy.
I recently gave a talk to a local taxpayers association on an “inside look” at our bankruptcy that you might be interested in. I have my speech transcript and a link to a video of the speech, with Q&As afterwards where I had our former city manager come up and enlighten people on a few outstanding questions. It’s at StephanieGomes.com.
I understand Rhode Island has different laws than California, but I certainly hope you all don’t get mired in legal battles or political games.
(photo: Associated Press/Eric Risberg)