California City declares bankruptcy

to be able to reconfigure labor and pension contracts. See "Vallejo one of few cities to use Chapter 9," from the San Francisco Chronicle.

DC is fortunate because compared to most cities, it has a stream of revenue from income taxes-personal and business-that most cities do not have. Most cities are reliant on property taxes. Even there, DC does well because it has both commercial property taxes coming from a strong real estate market, and relatively high valued residential properties.

Still the money must be spent wisely, creating value, rather than destroying it.

Right now, most of the jurisdictions in the region forecast deficits. And in Montgomery County, which spends 80% of its budget on personnel, labor unions are fighting reductions in salaries and layoffs. See "For the budget beast, it’s always feeding time," from the Gazette.

DC has a soft freeze on hiring new personnel and filling open positions, although it may not be public.