by Nicole Gelinas
August 27, 2013
New York State’s distressed cities and towns can’t afford to pay their future obligations. Many localities have promised to pay pensions to their workers or to cover their health-care costs, once they retire—but haven’t put enough money aside to keep those promises. New York municipalities in fiscal trouble could benefit from something closer to California’s freewheeling approach to its own cash-strapped cities. Bankruptcy brought the town of Vallejo the supreme advantage of “being able to reject its collective bargaining agreements,” as bond analysts at Standard & Poor’s note. If Governor Andrew Cuomo wants to prevent New York cities from going bankrupt he should learn from California’s bankrupt cities. They have been able to do something that New York’s similarly distressed municipalities haven’t: reduce retiree health-care liabilities and get out of bad contracts.