California suburb filing for bankruptcy

SAN JOSE, Calif., May 7 (UPI) -- Higher costs for public safety and lower revenues due to the economic downturn have led officials in Vallejo, Calif., to vote in favor of filing for bankruptcy.

The city council voted unanimously late Tuesday to pursue Chapter 9 bankruptcy in the face of a $16 million budget deficit in the fiscal year starting July 1, The San Jose Mercury News reported Wednesday. The decision follows months of negotiations aimed at convincing council members opposed to the move that there is no other solution, the newspaper said.

The San Francisco Bay area suburb has spent months of talks between city officials and representatives of public safety employee unions and the International Brotherhood of Electrical Workers, aimed at avoiding bankruptcy, the report said.

After the talks failed to produce a long-range fiscal plan, Vallejo's top administrators recommended bankruptcy as the only remaining option.

Mayor Osby Davis said he "turned over every rock he could to find a solution" but the city is no longer able to pay its debts.

In addition to increasing labor costs, the city has been hurt by the housing crisis, lower property values and state raids on local coffers, the newspaper said.