Maybe a tragedy of the commons? "Well, it's not my money being spent, why not give the unions a bigger pension"? Whereas in a private company there is always someone who wants the company to continue to be profitable.
* Lots of construction employees are mandated by unions to stay around (crane greasers I believe are an example) even though these employees do no work, and then managers have to be hired to manage more employees, etc.
* Sometimes employees are hired to do no work at all
* Highly experienced employees will be given menial jobs like coffee-fetcher sort of deal, but get paid very highly for it due to their experience.
* The MTA has no negotiating power, the unions and the construction contractors agree on a price and then give it to the MTA
That said, responsible city management which is unable to arbitrarily change the tax rate by law (the fabled CA requirement of 2/3 majority vote) would not enter into contracts that would put the city's solvency at risk, and yet they still do.
[1] The factors contributing to a local government's decision to file for relief under Chapter 9 typically are varied and complex. From the information that has been made available to date, it appears that Stockton and San Bernardino's bankruptcy filings were driven by some similar factors including: long–term imbalances in revenues and spending, reduced tax revenues associated with the downturn in the economy, some constraints to reducing expenditures in the short term, and increasing costs to provide retiree benefits. Additionally, substantial borrowing appears to be a factor in Stockton's filing, and prior budgeting practices, such as borrowing from internal funds, appears to be a contributing factor in San Bernardino's case. By contrast, the bankruptcy filing by Mammoth Lakes appears to be driven by a single significant event—a recent legal judgment that required it to pay an amount more than twice its annual General Fund budget. -- https://lao.ca.gov/reports/2012/localgov/local-government-ba...