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Learn from their mistakes
Jul 13, 2012 | 665 views | 0 0 comments | 9 9 recommendations | email to a friend | print
“California tumbles into the sea

That’ll be the day I go

Back to Annandale”

– Steely Dan

“My Old School”

It seems that an earthquake won’t be the end of California.

Rising costs are pushing its cities to the fiscal brink.

“Throughout the state, local governments are slashing services to avoid bankruptcy. For some, it’s too late,” according to a story Thursday in the Los Angeles Times.

“San Bernardino on Tuesday became the third California city to seek bankruptcy protection in the last month, and, while no one expects the state to be consumed by municipal insolvencies, other cities teeter on the abyss.”

How did these California cities reach this predicament?

The writers said, “Once rare, turning to bankruptcy has become a painful but enticing option for cities whose labor costs and municipal debt far outpace anemic tax revenues. The Bay Area city of Vallejo began the current trend in May 2008, filing for Chapter 9 bankruptcy protection because, city leaders said, salaries and benefits for its public safety workers were eating up too much of the general fund.”

Much of the blame can be placed on the foreclosures and home mortgage collapse, when these cities saw their property tax valuations take a colossal nosedive.

When added to the public sector union demands and high salaries and costs of doing business in California, plus the relocation of many private firms to more tax friendly states, it has resulted in this financial crisis, which has officials considering all the possibilities, including privatizing and regionalizing services.

One mayor’s advice to other cities on the financial precipice? Don’t do it.

“It takes an enormous toll on everyone,’’ he said. “And you have the stigma of being a bankrupt city. How do you come out of being labeled a bankrupt city to one that is a desirable place to live?”

So, Beeville and Bee County officials, take note. The Eagle Ford Shale oil and gas boom will not last forever.

Don’t blow through all the higher sales tax receipts and vastly improved property tax rolls. Everything in this world is cyclical, and the good times will be followed by lean times.

It’s understandable to want to reward and retain valuable employees, and purchase long-needed machinery and equipment, but our local governmental entities need to save some for a rainy day – even though we currently are enjoying a bountiful supply, both literally and figuratively.

No one wants to see our prosperous region of South Texas facing California-sized problems of insolvency, litigation and bankruptcy.

– Chip Latcham
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