The Cautionary Tale of Vallejo

"'Vallejo was sort of the canary in the coal mine - the sickest patient goes first,' says Dean Gloster, an attorney representing Vallejo's unions. 'Even better-run cities are going to be facing similar issues as health care costs rise and the baby boomer generation reaches retirement age.'

A September report from the National League of Cities points to precarious fiscal conditions in cities across the nation, due to falling revenues from property, sales and income taxes and rising costs from inflation, energy, infrastructure, salaries, health care and pensions. 'Vallejo is significant in the sense that the reasons they are doing it are factors that are going to be in place in cities across the country,' says Chris Hoene, director of policy and research for the National League of Cities. 'You can see the Vallejo situation as something that cities across the country watch as a way to bring costs under control.'