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Vital Signs

California Surfs Toward Bankruptcy

Beach Blanket Bankruptcy would be a great name for a 1960’s-style surf movie about California’s state and local finances.  Alas, although Frankie Avalon still is with us, the beauteous Annette has gone the way of fiscal solvency.

Already in recent years, four Golden State cities have declared bankruptcy: Vallejo in 2008, and Stockton, San Bernardino, and Mammoth Lakes in 2012.  The last is a small city of 8,300 that lost a lawsuit.  The other three cities fell into bankruptcy because of fiscal disasters.  Stockton, a gritty industrial and port city of 300,000 east of San Francisco, blew $68 million on the Stockton Arena for hockey, indoor soccer, and arena football.  In 2007 Stockton took out $165 million in pension obligation bonds, which is like paying off one credit card with another while hoping you’ll win the lottery.  Indeed, one consistent cause of fiscal foolishness for all three was pension problems.

Only the improving economy of 2013-14 precluded bankruptcy by Montebello, Atwater, and, looming like a CGI King Kong in a Hollywood remake, Los Angeles, population 3.9 million.  In 2013, right after Detroit declared bankruptcy, a warning for Los Angeles came from Dan Pellissier, president of California Pension Reform.  He told HuffPost Live, “I think your city of Los Angeles is probably two to three...

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