Pensions must be paid versus creditors?
It seems these government jobs have better benefits than the private sector. With cities and the postal service drowning in debt, you would think there would be an end to the madness at some point? Either you need more revenue/taxes, or you need to cut salaries and benefits. A private business does not get to run this way, or they go out of business.
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Stockton California to enter bankruptcy
The people of Stockton, California, will feel financial fallout for years after a federal judge ruled to allow the city become the most populous in America to enter bankruptcy.
But the case is also being watched closely because it could answer the significant question of who gets paid first by financially strapped cities – retirement funds or creditors.
Stockton, a city of nearly 300,000, has tried to restructure some debt by slashing employment, renegotiating labour contracts, and cutting health benefits for workers.
Library and recreation funding have been halved, and the scaled-down Police Department only responds to emergencies in progress. The city crime rate is among the highest in America.
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The potential constitutional question in the Stockton case is whether US bankruptcy law trumps a California law that says money owed to the state pension fund must be paid.
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