Vallejo Files For Bankruptcy To Deal With Budget Shortfall

VALLEJO, Calif. (AP) - The city of Vallejo has filed for bankruptcy protection to deal with a ballooning budget deficit caused soaring employee costs and declining tax revenue.

The San Francisco Bay area suburb of about 120,000 residents is
the largest California city to declare bankruptcy.

Mayor Osby Davis says the city's attorneys filed papers seeking Chapter 9 bankruptcy protection in federal court in Sacramento on
Friday.

The City Council voted to authorize the city manager to file for bankruptcy on May 6 after months of failed negotiations with its public safety unions.

Some officials blame the financial crisis on labor contracts they say provide overly generous pay and benefits to the city's police officers and firefighters.

(Copyright 2008 by The Associated Press. All Rights Reserved.)

AP-NY-05-23-08 1354EDT


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