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A bankruptcy judge has ruled that Vallejo, Calif., can void its union contracts now that it has declared bankruptcy. The city and its unions agreed on big raises back during the real-estate bubble, on top of pension increases it had given earlier in the decade. What does that mean? I'm not sure. Maybe it can only cut down the payscale it's paying its employees. Maybe it can go farther and whack its pension benefits, going back down to 2.5 percent per year instead of 3. It could also serve as a warning to public-sector unions around the state that local governments have a new weapon in their arsenal.
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