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Small town hit by housing crisis
St Petersburg News.Net
Tuesday 22nd July, 2008
The mortgage crisis has hit the small town of Vallejo, near San Francisco.
While the non-profit Vallejo Neighborhood Housing Services are trying to work with lenders to stave of foreclosures, the housing bust and credit crunch has made it hard for the town to balance its budget.
Vallejo's closely watched Chapter 9 bankruptcy filing in federal court in Sacramento may be a warning sign to other cash-strapped municipalities.
Vallejo's lawyers say the city faces a $17 million deficit and cutbacks in public services for the fiscal year which began on July 1st.
When the mortgage crisis struck last year, the weak housing market throttled Vallejo's revenue growth to 3%, while labor costs for the city's police officers and firemen rose 11%.
Vallejo has cut 87 jobs and slashed funding for parks, a library, a senior citizens' center and other public services
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