VALLEJO, CA - The City council of Vallejo approved a financial plan last week to exit its landmark bankruptcy, which the City declared two years ago, according to Reuters.

Vallejo was the largest city in California to declare bankruptcy, rare for U.S. governments. In 1994, Orange County in California declared bankruptcy, the biggest-ever U.S. municipal bankruptcy.

Vallejo's bankruptcy filing prompted some analysts to predict similar bankruptcies by local governments across California, especially given generous benefits for public employees.

Local governments, however, have tackled fiscal problems by raising revenue with fees and taxes and by cutting payroll and programs. Many are also clamping down on pension and retiree health expenses, according to the news source.