Stockton, California is the Largest U.S. City to Go Bankrupt

The day has finally come.



(Stockton, CA) - On Tuesday, June 26, 2012, the Stockton City Council approved a Pendency Plan proposed by the City Manager, 6 -1. The Pendency Plan is essentially the budget and the plan that is followed for the day-to-day operations of the City while in bankruptcy. It identifies what expenditures will be reduced or suspended. The City will continue to pay employees, vendors and service providers. The focus of the City’s plan is the restructuring of above market pay and benefits and unsustainable long term debt. Adoption of the Pendency Plan assumes the City will file for protection under chapter 9 federal bankruptcy laws before July 1, 2012.

The overall proposed expenditure plan was originally presented on May 15, 2012, and amounted to $521 million for all funds; the General Fund, which is $155 million of the total budget, has a $26 million deficit. The General Fund was to be balanced by either deep service reductions, reductions in financial obligations through the AB 506 confidential mediation process, or by filing for chapter 9 bankruptcy protection.

The City Council has addressed $90 million in budget deficits over the last three fiscal years, primarily through reduction in employee compensation and program and service reductions. The City is already insolvent on a service basis and continued service reductions would harm the health and safety of its citizens." (continue reading)

Another article: Stockton to file for bankruptcy, will be largest U.S. city to fail (LA Times)
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