City leaders and labor unions have reached and agreement that may prevent the city of Vallejo from becoming the first in California history to declare bankruptcy due to a budget shortfall. Vallejo has been hit hard by the national mortgage crisis, and rising labor costs make up an increasing part of its budget. Both sides say that they are committed to doing whatever it takes to ensure the city's economic viability.
See "Vallejo Strikes Deal to Avoid Bankruptcy", Terence Chea, February 28, 2008