Adviser: Oakland Bankrupt Thanks to Pension Benefits

Friday, 07 May 2010 08:03 AM

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
Experts say a wave of municipal bankruptcies may soon hit, and one expert says Oakland already is effectively belly-up, thanks to excessive public pension obligations.

That’s Mike Shedlock, a registered investment adviser at Sitka Pacific Capital Management in Sonoma, Calif.

“The party is over for Oakland, whether its city council is willing to admit it or not,” he wrote on BusinessInsider.com.

“As always, union contracts and pension benefits drove the city into the ground.”

Shedlock cites a San Francisco Chronicle story which explains that Oakland voters will likely face a November referendum for higher taxes to cut a $42 million deficit by 50 percent.

Even if voters approve the taxes, Oakland will face an even bigger budget crisis within months, the Chronicle reports. Soaring retirement costs will widen the city's projected deficit to $58.7 million by July 2011.

The city’s biggest problem is its overly generous Police and Fire Retirement System (PFERS), Shedlock says.

He notes that in the Chronicle story, City Administrator Dan Lindheim acknowledges, "PFERS is locked in stone. It's impossible to change."

Says Shedlock, “That is one hell of an attitude to take when the city you are running is bankrupt.”

Oakland isn’t the only city in California that’s in deep financial trouble.

“Los Angeles is facing a terminal fiscal crisis: between now and 2014 the city will likely declare bankruptcy,” former mayor Richard Riordan wrote in a Wall Street Journal opinion piece.

© 2014 Moneynews. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
Privacy: We never share your email.
 
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

NY Times Declines to Endorse Cuomo in Primary, Cites Corruption

Tuesday, 26 Aug 2014 21:45 PM

The New York Times declined on Tuesday to endorse Gov. Andrew Cuomo in the Democratic primary next month because he has  . . .

Report: Obama Seeking Global Climate Deal Without Congress

Tuesday, 26 Aug 2014 22:25 PM

President Barack Obama is working toward an international agreement that would pressure countries to cut fossil fuel emi . . .

Reporter: NSC Didn't Say American Killed in Syria Was With ISIS

Tuesday, 26 Aug 2014 20:31 PM

When the National Security Council announced the death of American Douglas McAuthur McCain in Syria, it left out a major . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved