On Monday, the City of San Bernadino approved $1M in pay hikes. The city filed bankruptcy on August 1 of last year.
San Bernadino is forced to grant these pay hikes on account of its city charter that dictates “pay
for safety workers must be tied to salary levels for 10 similar-
sized California cities, all of which are wealthier than San
Bernardino.”
This probably sounds like a silly rule (and you’d be right) but San Berdoo can not overturn the city charter because the city council will not vote to do so. Why, you ask? I’m guessing it might have something to do with the fact that certain city council members “have received
campaign contributions from police and fire unions in past
elections. They argue that police and firefighters would leave
San Bernardino if they were not paid wages similar to other
cities.” (CA has the highest unemployment rate in the country.)
San Bernadino’s bankruptcy is a test case for how to handle union strongarmed pensions in a municipal bankruptcy. Do these cushy extravagent union worker pensions take precedence over bondholders and other debtors when these cities are in financial distress?