Vallejo’s Bankruptcy ‘Failure’ Scares Cities Into Cutting Costs
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When Vallejo, California, filed for bankruptcy in 2008 after failing to win union pay cuts, Councilwoman Stephanie Gomes said officials around the U.S. would have their eyes trained on the city of 120,000.
She was right. The lesson they’ve taken from the two-year-old case, which has cost Vallejo $9.5 million in legal fees and made it a nationwide symbol for distressed municipal finances, is that out-of-court negotiations yield better results.