by Calculated Risk on 5/07/2008 09:34:00 AM

From Bloomberg: Vallejo, California City Officials Vote to File for Bankruptcy

Vallejo, California's city council voted to go into bankruptcy, saying the city doesn't have enough money to pay its bills ... because it ran out of money amid the worst housing slump in the U.S. in 26 years.

The city of 117,000 is facing ballooning labor costs and declining housing-related tax revenue that have left it near insolvency. ... The area has been one of the hardest hit in Northern California by the housing market slump. Home prices in Solano County, where the town resides, dropped 19 percent in January from the year before, according to DataQuick ...