Calif. town is recovering from bankruptcy The one sector that lost jobs last month was the public sector. Federal, state and local governments shed 14,000 last month, and 280,000 jobs in 2011 as they tried to make up for massive budget shortfalls. CBS News correspondent John Blackstone takes us to one California city that went bankrupt four years ago. Working-class Vallejo, California is a hard-pressed city that could teach a lesson in civility and economics to communities across the country. In 2008 it was in financial ruin. Phil Batchelor was hired as city manager to clean up the mess. We had $6 million to satisfy $382 million worth of claims. And the process began," he said. The process was bankruptcy. Foreclosures were up. Tax revenues down. The city still reeling after the Navy abandoned a shipyard there. Eighty-percent of the city budget was its ballooning payroll. Fire Chief Paige Meyer heard all the criticism You're overpaid and your pensions are too big. That's what some of the public says," Blackstone asked Meyer. "Nobody cared what I made when they were making double what I made," he said. They suddenly cared when they didn't have a job. City employees and city officials were at each other's throats. "There were some people, probably on both sides, who kind of enjoyed the fight," said Batchelor. Batchelor, an expert in fixing broken cities, would take the city manager job only if the fighting stopped. When people in Vallejo stopped blaming each other, they recognized something important -- that police and firemen do necessary and dangerous work, and police and firemen started remembering why they do the job in the first place: to help others "We could kick the dirt and feel sorry for ourselves," Meyer said, "But we're not victims, That's just not how we're built. Instead what happened with us is we started trying to find ways to do more with less. Much less. Nearly half the fire department was laid off and 3 of 8 fire stations closed. "Where before they made 10 runs per shift, now they're almost making twice that," said Batchelor. The police force was cut in half, the thin blue line stretched ever thinner. At any given time just six cops cover the city of 120,000. And at City Hall almost half the building is empty. The hard times are far from over in Vallejo. But there is a vision and a plan. "We're on the comeback trail," said Batchelor. We're rebuilding  Rebuilding as a community that has learned to compromise and sacrifice together.