Officials in Stockton said Tuesday that mediation with creditors has failed, meaning the Central California city is set to become the largest American city ever to declare bankruptcy.
City Manager Bob Deis said officials were unable to reach a deal to restructure hundreds of millions of dollars of debt under a new state law designed to help municipalities avoid bankruptcy.
Monday marked the three-month deadline for negotiations.
“Unfortunately we have no comprehensive set of agreements with our creditors that would eliminate the deficit and avoid insolvency,” Deis said at a City Council meeting. He said, however, that the city was still negotiating with some creditors and could reach deals with as many as one-third of them.
“We think Chapter 9 protection is the only choice left. If we get any agreements, those will be honored in Chapter 9,” Deis said.
The Council was expected to vote later Tuesday on a special bankruptcy budget to plug next year’s anticipated $26 million deficit, and city lawyers could file for Chapter 9 protection in court as soon as Wednesday.
this doesn’t surprise me at all…
Stockton was floored by the bursting real-estate bubble…property values dropped massively out there (I knew communities that saw 50-70 *percent* drop in prices)
Add to that California’s Prop 13 (thank you governor Reagan) limiting property tax revenues to 1.5% of assessed property value (assessed when property changes hands), and you have a recipe for a massive drop in revenues for the city, as homeowners sell/foreclose/leave their underwater mortgages.
Stockton is one of the highest-crimerates in the region as well, making for greater police and emergency-services requirements as well.
Who’s gonna pay for those workers and their services? no tax revenue, no way to raise more (thanks Grover Norquist and Ron Paul)
Oh well…..
“It’s no longer IOKIYAR….It’s OK If You’re A Republican, but IOKBYAR–It’s OK BECAUSE You’re a Republican.” — Me
thought when property was sold that had been in 13 it was now assessed and taxed at a new value not 1.5%. That only corp. property stayed near it’s old tax value because Calif. corp. wrote the law. I agree with everything else your saying I live near Stockton and have watched some of the worse people running that city.
I’m for them filing but then this county is poor also.