Heed the warning
Irresponsible spending and economic hard times have pushed another governmental body into the financial abyss.
Stockton, Calif., is the latest canary in the coal mine.
How many other governmental entities across the country will learn from Stockton's example that the time to address their financial issues is before they spiral out of control?
A city of nearly 300,000, Stockton was hit hard by the housing crisis. There is no doubt that Stockton made dramatic budget cuts to avert bankruptcy, reducing spending by $90 million over the last three years. Cuts included reductions in pay and benefits for all employees and public safety operations like police and fire.
Among the causes of Stockton's financial problems are unsustainably generous pensions and health benefits for retired city workers. Now those retiree benefits are being cut, just as the city also is preparing to default on bond payments for various public works projects throughout the city.
This collapse will mean real hardship for many people. But once the money runs out — and money really does run out — there is no alternative to collapse.
States like Illinois can't file bankruptcy, even if they are effectively bankrupt. They just don't pay their bills. Other governmental entities, including municipalities like Stockton, have no choice but to bite the bullet.