Stockton Bankruptcy In 2012
Stockton Bankruptcy In 2012, Stockton could become the largest U.S. city to declare bankruptcy after a deadline to make a deal with its creditors passed and the city’s mayor said Tuesday she did not believe a settlement had been reached.
Mayor Ann Johnston told KCRA-TV that a formal bankruptcy filing now appears “very likely.”
In the past three years, officials in the city that was slammed by the collapse of the housing market dealt with $90 million in deficits through a series of drastic cuts.
They eliminated one-fourth of the city’s police officers, one-third of the fire staff, and 40 percent of all other employees. They also cut wages and medical benefits.
To plug next year’s anticipated $26 million budget shortfall, a proposed budget to be considered Tuesday night would suspend payments for debts and legal claims; reduce payments for retiree medical benefits; further cut some pay and benefits; and increase revenue through code enforcement and parking citations.
The proposed budget includes no major service reductions, City Manager Bob Deis said.
“The whole purpose of filing Chapter 9 is to avoid an uncontrolled chaotic situation,” Deis said previously. “Bankruptcy provides the equivalent of a pause button. It retains services and provides structure so you don’t have a bunch of lawsuits.”
A formal bankruptcy filing could come as soon as Wednesday.
City officials did not immediately return a request Tuesday by The Associated Press for comment about the mayor’s remarks. City spokeswoman Connie Cochran has said the negotiations with creditors, which carried a deadline of midnight Monday, were confidential, and nothing would be announced until the City Council meeting Tuesday.
City officials say the river port city of 290,000 in the Central Valley has run out of options. In recent years, thousands of new homes mushroomed in Stockton, part of a suburban housing boom that attracted buyers from the San Francisco Bay area and beyond. (AP)
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