The city council of Vallejo, California voted last night to declare bankruptcy. Will the state of California follow? It may be far-fetched now, but thinking the unthinkable occasionally has value.The problems facing Vallejo bear some comparison to those of the state in which it is located. Vallejo spends about 80% of its budget on personnel costs, more than the state's share. But California is locked into extremely generous labor contracts which not only offer high salaries and benefits to groups such as prison guards (many of whom earn six figures with overtime -- not bad for a job which does not require college) and bureaucrats, but which promise generous retirement benefits, including gold plated health care for life. Years ago, a study concluded that state employees were paid about 30% more than their private sector counterparts for jobs of comparable skill level and responsibility. And California state employees are not widely renowned for the competence or hard work. To say...(Read Full Post)