Another California city on verge of bankruptcy?

Bankruptcy is hitting many people, even cities.

In May, Vallejo, CA became the second city in California history to file for bankruptcy. Now, the small towns of Rio Vista and Isleton, on the other side of Solano County, are teetering on the brink of bankruptcy, according to a recent San Francisco Chronicle story.

T-Shirts of the Recession

Rio Vista's approximately 7,000 residents are seeing the city deal with a $900,000 deficit in its $6.6 million general fund. The deficit has been trimmed to $160,000 after city officials cut programs, closed City Hall for a day a week, laid off four employees, froze salaries and didn't fill about 20 vacant positions, leaving city staff at 40 instead of the 61 who had worked there.

The death of an 855-home development is the main reason for the downfall, along with falling property and sales taxes, fewer building fees and less money from the state. The developer started construction of its development, called Hearth and Home at Liberty, and sidewalks and streets are already built. Shea Homes plans to restart building when the economy turns around.

City Manager Hector De La Rosa told the Chronicle he's confident the city can survive through the end of the fiscal year in June without filing for bankruptcy.

"We're hopeful, but we are not out of the woods," De La Rosa said. "If we make any more cuts things will really start falling through the cracks."

If the housing boom starts again in California, developers are ready to start building in Rio Vista. The city has given the preliminary OK for two more housing developments -- a 750-home development and a 2,200-unit neighborhood.

While Rio Vista expects it won't have to file for bankruptcy, the nearby town of Isleton is $1 million in the hole.

I used to work as a reporter and editor covering Solano County, and it was often easy to send a reporter there to do some fun, quirky story on the small towns and the odd and interesting things going on there. Isleton has a crawdad festival that draws huge crowds each year, and Rio Vista has a bar that is worth the drive to see various mounted animal heads.

But to bring in some income, these cities may want to get away from relying on the housing market to bounce back and instead look to an income stream that's more dependable. It's an issue I covered in Rio Vista years ago and that got the community up in arms: Prisons. Building a state prison in one of these Delta towns would, unfortunately for some, bring continued business.

Aaron Crowe is an unemployed journalist in the San Francisco Bay Area. Read about his job search at www.aaroncrowe.net