Will the Courts Save State and Local Governments from Themselves?

Mike Shedlock notes that Central Falls, Rhode Island (the municipality that recently fired all of its public school teachers) has gone into receivership:

Receivership was the smart choice for Central Falls. Notice the pension fund has $4 million, with liabilities of $35 million. Hopefully the Superior Court judge does the correct thing and voids the union contracts and pension obligations.

Then let’s hope that city after city chooses the same route.

[…]

Unions bought politician’s votes with thug tactics tantamount to extortion. Politicians were all too willing to go along to get elected.

In final analysis they both deserve nothing. However, I would generously settle out of court right now for 20 cents on the dollar.

While strategic default may increasingly look like a good alternative to strapped state and local governments, I can’t help but wonder if that’s just wishful thinking. Judge’s pensions, at least here in Illinois, get paid from the same fund and on the same terms as other public pensions.

4 comments… add one
  • PD Shaw Link

    Of course, states can dust off sovereign immunity and keep judges out of their affairs. There are rights and there are remedies. The right to be paid wages and pensions from the state can be rendered illusory I believe.

  • steve Link

    Sigh, it must be the fault of the unions. That must be the only reason states are in trouble. All union members are thugs. Absolutely. The third grade teacher across the street from us regularly goes out and beats up old ladies.

    “Its high school, where 96 percent of its 800 students live in poverty, was targeted for a state-ordered reorganization because of consistently low scores and graduation rates.”

    Sounds like an incredibly poverty stricken city. Anyway, why shouldn’t they default on other items, like loans and bonds? Why single out teacher and union pensions? Why not just write, “Unions suck” 500 times? You should write your own post on this. It would make more sense.

    Steve

  • Andy Link

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