Monday, March 10, 2008

Could Tracy be the next Vallejo?

Vallejo, known to valley folks as the place of Six Flags Marine World, could also be the first city in memory to declare bankruptcy. The question to ask on this side of the hill is, could it happen here?

Tracy isn't even in the neighborhood of bankruptcy now. The numbers speak for themselves. But if finances aren't handled well the next several years and deficits mount, the city could certainly end up on that block. There are several lessons of Vallejo's financial death spiral that can be applied to Tracy:

First, Vallejo never readjusted its economy after the naval base there closed in 1996. Tracy's equivalent of that base is the one-two punch of the Tracy Defense Depot and Lawrence Livermore National Laboratory. While the depot has received awards for being one of the government's best installations, the lab is cutting some 900 jobs in the first part of this year. That'll have a big effect on the scores of Tracyites who take home an LLNL paycheck. Tracy's survival long-term depends on bringing in high-paying employers, not just more chain restaurants and strip malls.

Vallejo also paid too much for its city and public safety employees. Its city manager earns more than $300,000 a year and its police and fire department workers earned a base salary between 10 and 15 percent higher than their Bay Area counterparts. You can't keep overpaying people and not expect it to bite you later, and Tracy needs to learn that lesson.

Vallejo also let its downtown rot from the inside out. The area is filled with vacant businesses and crime. Tracy must continue to invest in its historic downtown and drive investment and building inward — not to the outlying areas that will sap vitality from the city's core.

The most pressing lesson, though, is planning ahead. Tracy has built up its rainy-day fund, which should see it through a few bad years. But Tracy faces a prolonged downturn, as its fortunes have been disproportionately tied to the housing market. That adjustment needs vision and a willingness to break with the recent past.

1 comment:

Anonymous said...

great post, jon. Your brief history of Vallejo's city government was something I hadn't heard before.

Also - the current recession should make us all think about diversifying Tracy's economy. thanks for the reminder.