Stockton On Verge Of Becoming Largest City To Enter Bankruptcy

STOCKTON (KCBS) – Stockton leaders have approved a series of emergency fiscal steps they hope will allow the city to avoid bankruptcy.

The embattled Central Valley city will soon become the first to test a new California law governing bankruptcy for municipalities. That state law paves the way for Stockton to go into mediation with its creditors.

The Stockton City Council also voted to suspend payments on $2 million in debt for the rest of this fiscal year. Many residents who attended Tuesday night’s council meeting blasted city leaders, saying that they need to help the city live within its means.

KCBS’ Chris Filippi Reports:

However, City Manager Bob Deis said that Stockton did not get into financial trouble overnight.

“It’s not one mistake, or one decision, but an accumulation of decisions and mistakes over 20 years (that got the city into trouble),” said Deis.

If the eventually seeks Chapter 9 protection, Stockton would become America’s largest city to go bankrupt.

(Copyright 2012 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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