Vallejo's bankruptcy shows the economic reality San Bernardino now faces

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In July, San Bernardino decided to declare bankruptcy. Now San Bernardino faces a new economic reality of budget cuts and more budget cuts until the city can get its finances back in order.

It will be painful. Just ask the people of Vallejo, the Bay Area city that went bankrupt four years ago.

After bankruptcy, Vallejo’s city government got small fast. Street maintenance in the bayside community of 116,000 all but ceased; fire stations closed; fewer cops patrolled the streets.

Ann Smith has lived in Vallejo for a few years and said it’s still that way.

"People call 911 and are told there won’t be a police officer out because they have to focus on life and death emergencies," Smith said.

Smith volunteers with a neighborhood watch group. On a drive through Vallejo, she pointed to cameras the city installed on a lamppost that points toward an alley.

"There was a lot of drug and gang activity in this alley, and so they put up the camera to discourage some of the activity," Smith said.

Ann Smith isn’t counting on more Vallejo cops on the streets anytime soon — she said the city can’t afford them. The year before the bankruptcy, Vallejo spent 75 percent of its $80,000 budget on police and firefighters.

Dan Keen, Vallejo’s 15th city manager in 17 years said something had to give.

"We had compensation structures, benefit structures, that were not sustainable, that were really expensive and growing in expense every year to the point where the city was hemorrhaging a lot of red ink," Keen said. "Then on top of that, we went into the biggest recession since the ‘30s."

When Vallejo slipped into bankruptcy in 2008, Keen had a ringside seat. He was working as the city manager for Concord and later Napa.

"I think all of us in this profession were concerned about what was happening in places like Vallejo, and then Stockton and now San Bernardino," said Keen. "Some of the problems that are happening in these cities are problems we recognize exist in a majority of California cities."

Bankruptcy helped Vallejo win deep concessions from its employees quickly.

"Was it a good thing? I would never say it was a good thing," said fire chief Paige Meyer. "I think cooler heads, calmer, better decision-making on the front side of it to avoid bankruptcy, that would probably be everybody’s preference. Post-bankruptcy though, I think what happened in this city is you got younger overnight."

Chief Meyer is in his early 40s and has a young command team, too. Together, they’ve changed how they operate. Saving lives remains the priority; saving buildings, less so.

Meyer said that in the past, it wasn't unusual to see a Vallejo firefighter with the face of their helmet badge melted, their goggles on the front melted down.

"We believe that our duty is to fight fires early on," Meyer said. "That being said, when you cut your resources in half in a 55-square-mile area, you have to realize that you don’t have the backup you had before."

Soon Vallejo firefighters won’t spend hours on cleanup at the scene of a fire. Chief Meyer wants to give that job to private companies so firefighters can focus on emergencies. He used federal grant money to reopen a firehouse and hire back firefighters, too.

Bankruptcy also brought changes to the Greater Vallejo Recreation District, even though it operates separately from the city. Vallejo pays the agency to run its parks and pools.

General manager Shane McAffee said that saved the parks. "Finances started being bad and the city was looking to lay off 20 policemen at the time. I’m fully convinced that instead of laying off 20 policemen, they would have just shut down parks and pools."

When Vallejo went bankrupt, it pulled funding for the recreation district, but McAffee said his agency’s board was ready. It deferred park maintenance, pared back recreation programs and used reserve money to keep pools and parks open. Shane McAffee said he believes Vallejo voters appreciated the effort; they’ve just approved a tax to pay for park maintenance and other city services. He hopes the city will be more cautious from here.

"When times are good, you have to resist that temptation to give it all away. You know, you have to look at a long-term and what’s reasonable, and prepare for the unexpected," McAffee said.

Vallejo city manager Keen predicted that California cities will shift to modest benefits and pay for municipal employees, "Because it’s what’s going to be needed to sustain cities and services — and it’s what the public will demand of us."

That’s the lesson of Vallejo, and Keen warns that the cities that don’t learn it now will likely learn it later — when they start cutting budgets like crazy to stay out of bankruptcy.

Vallejo's city finances

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