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Economic Crisis leading to domestic US Crisis?

Here is a good article in the Wallstreet Journal on cities letting go scores of police and fire-fighters. Part of the future scenario that becomes more gloomy is with less of these people going around, crime rates will most likely increase, both as a side product of the need for money and also because less people to provide this regulation.

Having said that, I never knew they were paid so well!

VALLEJO, Calif. — When the economic crisis deepened this fall, this city already was losing scores of police and firefighters because it could no longer afford the rich salaries and benefits it offered after the Sept. 11, 2001, attacks. Now, with crime on the rise and tax revenue sinking, this San Francisco Bay area city faces more cuts in police and fire department budgets.

It is a scenario being closely watched by the many other California municipalities that offered the same lucrative pay packages — and that now face the same fiscal pressures.

With a slowing economy and housing prices in decline — cutting into tax revenue — Vallejo, a bedroom community of about 120,000 without a big sales-tax base, is running out of options and has targeted public-safety budgets that in the past were off-limits to the budget ax.

The main factor driving away police officers in Vallejo is the same one that helped drive the city to file for Chapter 9 bankruptcy in May: a costly campaign to improve security in a post-9/11 world that backfired. Since the filing, nearly 40% of its police force has either quit or notified the city of plans to quit.

“Everyone is watching to see how this shakes out,” said Marc Levinson, Vallejo’s bankruptcy attorney and a partner at the Sacramento office of Orrick, Herrington & Sutcliffe law firm.

After Sept. 11, California municipalities moved to increase wages and benefits to attract police officers and firefighters. Vallejo joined a consortium of cities in the region, including Oakland and San Francisco, that used each city’s salary and benefit increases as a guide for labor contracts.

Before that, in 1999, state lawmakers had adopted a measure called “3% at 50” that allowed local and state police officers and firefighters to retire at 50 years of age with 3% of their highest annual salary — multiplied by the number of years served. The legislation granted thousands of public-safety workers a retirement payout of 90% of their former salaries for life. The benefit, bolstered by post-9/11 recruiting, swiftly became a major staple for most California cities.

Those full-natured benefits created a bidding war among Northern California cities, and Vallejo negotiated lucrative wage increases with police and firefighter unions to stay competitive. Three years ago, the city agreed to a 20% pay increase between 2007 and 2009; an average police officer now makes $121,000. When benefits are included, the number rises to more than $190,000. By 2007, 80% of Vallejo’s budget was dedicated to police and firefighters.

As tax revenue plummeted, Vallejo’s finances buckled under the pressure of the labor contracts. Retired Vallejo employees are owed almost $220 million in unfunded pension and retirement-health benefits.

“We did a bad job of long-term forecasting,” said Craig Whittom, Vallejo’s assistant city manager. “We made agreements that were beyond our means.”

Recently, Vallejo’s city council preliminarily approved a package of cuts to close its budget shortfall, including a 10% salary cut for the city manager, and city employees will take two unpaid days off before June 30.

With budget cutbacks and salary concessions staring at them, many of Vallejo’s officers have turned to retirement or are seeking employment with surrounding municipalities.

Jason Wentz is typical. A Vallejo native and a 12-year veteran of the city’s force, Mr. Wentz, plans to join another police force in Northern California.

“People on the street know we are scaling down,” said Mr. Wentz. “The high-crime neighborhoods are used to seeing more patrol cars, and they notice the ramp-down.”

Vallejo’s Police Department is down to about 120 from 150 police officers in January, and it expects an additional 30 or more to exit by year end. The city has cut law-enforcement community services and youth-service programs.

According to the FBI, the national average for sworn law-enforcement officers is 2.4 officers per 1,000 residents. In Vallejo’s case, there is one officer for every 1,000 residents. Vallejo reported nearly 500 assaults in 2008 through April, according to the latest numbers available, already approaching last year’s total of 687 assaults.

The ranks of the city’s firefighters have also taken a hit. Jon Riley, vice president of International Association of Fire Fighters union local 1186, said that after the city filed for bankruptcy the department lost 15 firefighters in one day. “I don’t think morale can go any further south,” said Mr. Riley.

Stockton, Calif., rocked by housing foreclosures, also is scrutinizing budgets for police and fire. Mark Moses, the city’s chief financial officer, said “we will not be able to manage with just cuts to libraries and parks.” In Santa Rosa, assistant city manager Michael Frank said the city is cutting about 20 police officers and will also cut some firefighting services.

In Sacramento, Police Chief Rick Braziel is grappling with how to cut 8% from the city’s $130 million police budget.

“Vallejo is not unique,” said Mr. Levinson.

Vallejo also finds itself in competition with Bay Area cities that can still afford to attract officers. Joe McCarthy, a Vallejo detective, says 10 surrounding cities have contacted him with job offers. He plans to leave soon.


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