Bankruptcy looms for Calif. city deep in debt

A banner proclaiming Stockton as an All-America city hangs from city hall in Stockton, Calif., Feb. 29, 2012. / AP Photo

(CBS/AP) FRESNO, Calif. - Stockton in California's Central Valley is facing a moment of decision on whether to become the biggest American city to file for bankruptcy, as the deadline for talks with creditors approaches late Monday.

City Manager Bob Deis says officials are still hoping to reach a deal that would restructure millions of dollars of debt under a new state mediation law designed to help municipalities avoid bankruptcy.

Meantime, the Stockton City Council is scheduled to decide Tuesday whether to adopt a special budget in case of a bankruptcy declaration. The city would stop debt payments, reduce pay and benefits and increase parking citations, CBS Sacramento station KOVR-TV reports.

Deis says Stockton's lawyers could file for Chapter 9 protection in court as early as Wednesday.

City officials have promised that if they file for bankruptcy and adopt a special budget, there will not be cuts to services like the police and fire departments.

Stockton's property taxes and other revenues have significantly declined in recent years, while expensive investments and generous retiree benefits have drained city coffers.

Gold chain theft spree in Stockton, Calif.

"I think Stockton's struck with bad luck," resident Vi Bahn told KOVR-TV.

People are already dealing with high crime, high unemployment and high foreclosures.

"It makes me think our leader is not doing his job or her job and that we're spending money on stuff that's not needed right now," resident Jonathan Wallace told KOVR-TV.

While officials admit some mistakes were made in the past, they say they're still paying for those mistakes, coupled with the still lingering crash of the economy, drastically shrinking property taxes and overly generous retirement plans.

"Frankly," said Wallace, "I don't know what to expect."

[TJphoto]

All across this Nation we have a Government that takes care of itself first before it ever even thinks about taking care of the people that elects them into office. Compare the salaries of civil servants to the private sector. The math doesn't add up. The Kerry/Simpson Commission warned of this in the early 1990's. It's about to hit the fan! We as the electorate allowed this to happen by not standing up.

[abi_jah]

Now you know why Democrats run everything into bankruptcy just like our President is trying to do at the national level. Anytime you have Democrats in charge ie California, New York, etc you'll find their cities and states run out of other people's money. They are too stupid because all the do is tax and spend. Liberalism is a mental disorder.

[TJphoto]

Let me get this straight. It's OK for George W. to double the debt from 5.5 trillion to 11 trillion because he is a a republican. I guess it's OK to borrow and spend rather to tax and spend. Either way you (& I) are still in the hole. Figure it out buba! It's simple math.

[abi_jah]

Now you know why Democrats run everything into bankruptcy just like our President is trying to do at the national level. Anytime you have Democrats in charge ie California, New York, etc you'll find their cities and states run out of other people's money. They are too stupid because all the do is tax and spend. Liberalism is a mental disorder.

[zarnon61]

Can't declare bankruptcy and get rid of student loans, but a city can do it and jettison it's pension and health benefits. Not saying the scorched Earth tactic isn't necessary sometimes but why are individuals restricted this way?

[jacktar7]

The steps California must take to resolve its problems are simple:

1. Elect Republicans to the state legislature.
2. Allow off-shore drilling for oil (that alone would solve all the budget problems in time).
3. Rescind laws allowing public employees to unionize. Franklin Delano Roosevelt (FDR) strongly opposed it, and he was right. We can't afford these unions. FDR was especially opposed to militant tactics of unions being used against the government.
4. But continue to pay good, reasonable salaries to government employees, and provide them with good pensions. You get the people you pay for, and if you don't pay them properly, the whole community suffers.

[FormerUSMCSergeant]

"I think Stockton's struck with bad luck," resident Vi Bahn told KOVR-TV.
--

No.

Stockton is struck with bad management as are a plethora of cities.

[smittyc]

Pretty sorry story, feel sorry for the residents of Stockton. The article leaves me shaking my head on how the guy in the oval office sleeps at night, we have a standing 50 billion we send out in foreign aid each year and the anointed one has added over 50 billion in direct foreign aid to that each year he is in office. Whatever happened to charity begins at home.

[TJphoto]

Keep watching Fox News. Now search "Kerry/Simpson Commission" Just because they say they are "Fair & Balanced" doesn't make it so. Try going to college. It's an enlightening experience.

[kaylag04]

If only they'd made the rich pay their fair share!

[margieboy]

Stanton is a pigsty. People who live there now forget that when they moved in they displaced agricultural businesses as well as horse owners and dog kennel owners. Then they complained that the horses and dogs were diminishing the quality of their cheap-@$$ particle board on concrete slab tract homes in which they raised their juvenile delinquent/petty criminal/gangbanger to murderer kids and now they're complaining that they need the paramedics and police department that had to be created to control the mess they made. I remember Stanton when it was a haven FROM suburban blue collar low class white trash. It's been dead to me for a long time.

[venusvegasvada]

Just hold on a little while longer there Stockton. They just ran a story saying that real estate was going for way over market values in Orange County! The good ole' days are coming back! Just hang in there a little longer and your problems will be over!