So the Chief Bankruptcy Judge overseeing Stockton’s Chapter 9 case refused to allow city retirees to thwart the City’s elimination of fully-paid medical premiums.
It could not be otherwise. For two reasons.
First, the outrageously generous plan was so unaffordable.
It had swelled to a (depending on which actuary you believe) $540 or $560 million obligation. Even after the city reduced the benefit, and cut the debt to $417 million, the cost was still the largest of all the debts crushing the city. For that reason alone, it was unconscionable for retirees to try to force the city to keep paying out their bonanza. Had they prevailed, the city would have had to cut its fire department to seven guys with squirt guns.
Seriously, a retiree victory would have put a long-term hurt on city services and the quality of life for all Stocktonians, all so 1,100 privileged people could continue to enjoy their fabulous free medical.
The second reason is equally irksome. Had retirees prevailed the case would set a precedent that special interests can usurp the right of cities to make the very most important financial decisions. A precedent that would have encumbered cities across the land. In other words, they would have screwed things up for all American cities. Did Stockton’s retirees think of that?
It is unfortunate that the city promised Stockton’s retirees more than it could deliver. But that’s what it did, and now it is facing reality. The court did too: a city has the right to give the store away, and the right to take it back.