Vallejo, Calif. Files for Bankruptcy

The Vallejo, Calif., City Council voted late Tuesday to file for bankruptcy.

The city council unanimously approved the decision, saying it didn’t have enough money to pay its bills, which several reports say is due in large part to the San Francisco suburb’s failure to get any concessions from police and firefighters unions. The municipality is also seeking concessions from the International Brotherhood of Electrical Workers.

According to Bloomberg.com, Vallejo is the first local government in California to seek bankruptcy protection, an action prompted by an anticipated $16 million deficit for the coming fiscal year, which starts July 1. Desert Hot Springs, Calif., sought bankruptcy protection in 2001, following a $6 million judgment against the municipality.

The Mercury News reported that the Chapter 9 bankruptcy would cost Vallejo $750,000 to $2 million in legal fees, but would enable the city to continue to offer necessary services while receiving temporary protection from creditors.

The Mercury News reported that the city could be broke by the end of the current fiscal year.