The ruling earlier this week by Judge Steven W. Rhodes, who is presiding in Detroit’s bankruptcy case, that public pensions are not protected from cuts could alter the course of bankrupt cities like Stockton and San Bernardino, Calif., that had been operating under the assumption that pensions were untouchable, according to analysis by Mary Williams Walsh of the New York Times.
Stockton’s bankruptcy case, for instance, is further along than Detroit’s, and until Tuesday it seemed likely to leave public pensions fully intact. Stockton sought bankruptcy protection last year and has already filed a plan of debt adjustment with the bankruptcy court in Sacramento. Its plan, which is subject to court approval, would leave city workers’ pensions unchanged. (A new state law does permit Stockton to provide smaller pensions to workers hired after Jan. 1.)
Opponents of that plan have raised concerns that it would not save enough money. They point to the city of Vallejo, Calif., which spent three years in bankruptcy, emerged in 2011 without touching its workers’ pensions, and is again having trouble balancing its budget.