The City of Stockton filed a petition for Chapter 9 municipal bankruptcy relief on June 28, 2012, and the petition was accepted onApril 1, 2013. Earlier this year, on February 25, the City of Stockton exited bankruptcy protection.

Stockton’s city manager declared that “We emerge from bankruptcy a renewed city, perhaps better prepared for our future than any other city in the State, with a new value system, a thorough understanding of our operations and finances, and the tools to maintain solvency and adjust to economic conditions for decades into the future.”

With that inconvenience out of the way, the Stockton City Council is proceeding to implement a “value system” similar to what brought it to bankruptcy in the first place. It is giving its most favored constituency –unions –a potentially costly monopoly… Read More

“Calpers argued that the California constitution’s guarantee of contracts shielded pensions from cuts in bankruptcy. The fund also asserted sovereign immunity and police powers as an ‘arm of the state,’ including a lien on municipal assets.” – Wall Street Journal Editorial, “Calpers Gets Schooled,” February 8, 2015

If you want powerful evidence ofcrony capitalismat its worst, look no further. In the Stockton bankruptcy trial, the pension fund serving that city’s employees threatened to seize municipal assets to pay pension fund contributions. They’ve made similar threats to other cities that protest against the escalating contribution rates. And they’ve made the cost to exit pension plans confiscatory. It is hard to imagine a bigger or more blatant example of collusion between business interests and government employees at the expense of ordinary private citizens.

In the Stockton bankruptcy case, judgeChristopher Klein’s ruling left… Read More