Another US City Mulls Bankruptcy Due to Soaring Wages and Pensions

Tim Reid, Yahoo! News, November 13, 2013

A resort town in California warned on Tuesday that it will run out of money by March due to burdensome salary and pension costs and could join other U.S. cities that have recently filed for bankruptcy protection.

A bankruptcy filing by Desert Hot Springs, a city of 26,000 about 110 miles east of Los Angeles, would make it the third California city along with San Bernardino and Stockton to seek court protection from creditors.

San Bernardino and Detroit–the biggest U.S. city to seek Chapter 9 protection–are likely to set precedent on whether retirees or Wall Street bondholders suffer the most when a city goes broke.

The problems in Desert Hot Springs came to light last week when a new finance director reviewed the city’s records and discovered a $3 million shortfall in its budget of $13.5 million. Amy Aguer, the interim director of finance, did not have details on how the shortfall occurred but said it was the result of higher-than-expected pension and salary costs, especially in the police department, and overly optimistic estimates of revenue.


Desert Hot Springs, which is near Palm Springs, filed for bankruptcy in 2001 after losing a multimillion dollar lawsuit and still servicing $9.7 million of bond debt issued to fund its exit from Chapter 9 bankruptcy.

In a report issued last week, Aguer said bankruptcy was a real option under consideration, although on Tuesday she expressed hope that the city could avoid that fate this fiscal year.

Aguer said nearly 70 percent of the city’s budget was consumed by police costs, most of which were spent on salaries and pension payments to the California Public Employees’ Retirement System, or Calpers.


[Editor’s Note: Desert Hot Springs is 53 percent Hispanic, 34 percent white, and 7 percent black.]

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  • D.B. Cooper

    Well, well, oh mother eFFing well!!
    Look who is the Desert Hot Springs Chief of Police.
    I had a suspicion Affirmative Action was involved in chief selection, so I did some digging.

    • Pelagian

      that would make a gang banger cower in fear

    • Blue-eyed Devil

      She looks like a butch lesbian.

      • Jefferson

        She is a dyke. If it looks like a duck and quacks like a duck than it’s duck. Her being a left wing lesbian, she most likely has an extreme hatred of White males.

    • Nice Guy


    • Alexandra1973

      Is that an effeminate-looking man or a masculine-looking female?

      (Either way you lose.)

  • Whitetrashgang

    Public Unions or blacks, who is the biggest destroyer of cities?

    • So CAL Snowman

      Blacks in a landslide, come on.

      • Whitetrashgang

        Okay a public union made up of only blacks?

        • Strider73

          We have a “winner”!

        • Jefferson

          Detroit has the Blackest union teamsters in the country. And well all know what happened to Detroit.

          • Ella

            This explains most African nations.

  • Blue-eyed Devil

    Let these fiscally irresponsible morons go belly up.

  • Sick of it

    “Editor’s Note: Desert Hot Springs is 53 percent Hispanic…and 7 percent black.”
    “Aguer said nearly 70 percent of the city’s budget was consumed by police costs”

    Reality strikes again!

    • Sloppo

      Perhaps the Mexican flag-wiavers will try to get Mexico to bail them out.

    • Greg Thomas

      Desert Hot Springs has a mexican problem. Once mexicans surpass the 50% threshold, you can be sure that failure and dysfunction will follow.

      • Sick of it

        I saw the reality of what you just said when I lived in Texas. Parts of Texas are like the third world and I’m not just referring to the people living there.

      • WR_the_realist

        Yup,. And when blacks pass the 30% threshold, again failure and dysfunction follow.

  • Sensitivity Training

    We all know where this is headed. In 20 years, Whites won’t be allowed to earn over the average Diversity wage, and White death taxes will be at 100%.

    The Desmond Tutu Tax Justice Act

    • Jesse James

      When it gets that bad it will be time to pile up all your belongings when you go and go out with a funeral pyre that will darken the skies. Leave not one stone atop another. Scorched earth and ashes is all we should leave them.

  • Spartacus

    “Editor’s Note: Desert Hot Springs is 53 percent Hispanic, 34 percent white, and 7 percent black.”


    This explains everything.

    • Whitetrashgang

      They need more blacks, the blacker the berry the sweeter the juice.

  • The director of finance did not have details on the $3 million budget shortfall.

    I’m going to guess “corrupt greaseritos with their hands in the till”. That’s a no-brainer for a city that’s 53% Mexican.

    • cablegirls

      Largely under-the-table economy (the Hispanic component) = city revenue shortfall.

      • And sky-high demands on the police and courts imposed by Mexican crime. I guess it’s good a city in that area doesn’t have to worry about winter snow removal and the extra road maintenance burden imposed by repeated freeze-thaw cycles, or they’d really be screwed.

        • Ella

          The Libs better hope for a global warming winter!

  • WR_the_realist

    Notice how they say “Wall Street bondholders”? I have news for you. Most of those bonds are held by pension funds. It’s the pensioners who will get wiped out. I won’t grieve overmuch for the public employee pension funds, as overgenerous pay and benefits to government employees is what created the mess.

    • I shifted the money in the “bonds and mortgages” account in my 401(k) plan when the mortgage meltdown was just beginning; bonds were just along for the ride. With the current wave of municipal bankruptcies, nobody in their right mind has any exposure to the bond market.

      • Ella

        I always stayed away from bonds like the plague.

  • Ella

    Bribing your voters can carry a price tag at the end. I can imagine the political promises to pay out a 90% retirement in which only city government workers can receive in this work force and then, displaced onto the tax payer to pay.

    • Bribing voters is genuinely what they’re doing, too. Add to this the racial angle: as a group, public-sector workers tend to be much less white than those in the private sector. Beating up white-owned private pensions in order to provide lavish retirements to blacks and browns is just another form of “gibs me dat”.

  • Willowville

    Which ethnic groups have traditionally been associated with the Police and Fire Departments? They paid themselves lavish salaries and pensions and now the up and coming generation is saddled with the pension costs.