Fresno On The Verge Of Bankruptcy?
The recent bankruptcy filings of three California cities have U.S. investors worried that Fresno could be next to go down this road, according to a major Wall Street financial house.And San Jose might not be far behind.
Vikram Rai, strategist with Citigroup Inc., said bond investors are increasingly asking about the financial health of Fresno out of concern that the city will seek court protection from its debt obligations and that millions of investment dollars will be lost.
Stockton, San Bernardino and Mammoth Lakes have filed for bankruptcy protection this summer.
"Investors worry about contagion," Rai told the Bee. "Many California cities are in a tough situation."
Fears about Fresno in the trading world were reported in Citigroup's investment strategy report, which this month said that "the harsh spotlight (of potential bankruptcy) has shifted to Fresno."
There are serious problems in the city of San Jose, California – insolvency due to bloated government, pension obligations, and environmentalists pressuring the city to overspend on job-killing policies.
Soaring Employee Costs
The city has seen general revenue increase 19% while the average employee cost has soared 85% despite a 28% reduction in the workforce. This should come as no surprise, given that eighty-six government employees are paid over $100,000. Their jobs titles include “electrician,” “administrative officer,” “program manager II,” and “instrument control supervisor.”