City of Stockton to File for Bankruptcy?

Russ Steele

California City News has the story. If it happens it will be California’s biggest bankruptcy since Valleyjo in 2008. All eyes will be on Stocton as the city seeks to get out from under it’s out of control pensions, an unpaid for stadium, and a little used new convention center.

California’s new municipal bankruptcy law could be put to the test in its first trial, as the rumor mill is churning that the city of Stockton is preparing to file for bankruptcy. You may recall that under AB 506, a city is now required to deal with a “neutral evaluator” for at least 60 days before seeking bankruptcy court protection. That being said, this mediation process can be avoided if a municipality declares a financial emergency.

It is being reported that Stockton will take the first steps toward seeking bankruptcy protection from its creditors at its next council meeting on Tuesday, February 28th. Mayor Ann Johnston reportedly commented, “Stay tuned.” The Record reports that “While city administrators remained silent on any plans, it became an open secret Wednesday. The Downtown Stockton Alliance board of directors in a public meeting discussed the city’s bankruptcy timetable.”

Is this the first of many dominoes to drop? More cities in California are waiting to see how Stockton escapes it’s crushing pension debt. Stay Tuned!

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About Russ Steele
Freelance writer and climate change blogger. Russ spent twenty years in the Air Force as a navigator specializing in electronics warfare and digital systems. After his service he was employed for sixteen years as concept developer for TRW, an aerospace and automotive company, and then was CEO of a non-profit Internet provider for 18 months. Russ's articles have appeared in Comstock's Business, Capitol Journal, Trailer Life, Monitoring Times, and Idaho Magazine.

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