Stockton California to file for bankruptcy, will be largest U.S. city to fail

June 29, 2012 by · Leave a Comment
Filed under: Economic News 

You may see this as a bad thing, but for too long different city governments have been growing their services too fast, based on growth expectations for tax revenues that were unrealistic.   Bankruptcy is very important, it allows someone to readjust and work with the creditors on an agreement that is sustainable and gets the debt levels to a point that is manageable.  If you do not take these steps and instead try and prop up a failing institution, it is a recipe for disaster.   The pain they take now will make it for much less in the long run.

I applaud the leadership for actually stepping up to their responsibility and doing what is necessary, actually leading.   This also gives them the opportunity to prioritize what services are most important and focus on making those programs work and either cut or work with local business to provide alternatives for other services people want but don’t need.    The United States as a whole will be forced through this process I believe.  Yes, it will be very tough but it needs to happen and I look forward to it because I know after it is over, we will be stronger for it.   I joke and tell people that if elected President, I would be the only happy one-term President because I would go in and do all the unpopular work that has been put off and then get beat because it was unpopular.   Atleast it would be done and I would explain the best I could on why I did it, just to make it harder for the “free lunch” candidate to sell them on cotton candy and unicorns.

LA Times – This Gold Rush-era port city, an epicenter of California’s agricultural exports, will become the nation’s largest city to seek protection under the U.S. bankruptcy code after its City Council on Tuesday stopped bond payments, slashed employee health and retirement benefits and adopted a day-to-day survival budget.

City Manager Bob Deis likened the process to cutting off an arm to save the body. He is expected to file bankruptcy papers immediately.  A Delta wind had scrubbed the Central Valley sky blue as residents gathered hours early for the 5:30 p.m. meeting.

Most knew what the night held; bankruptcy has been a long time coming. Stockton has been in negotiations with its creditors since late March under AB 506, a new California law requiring mediation before a municipality can file for reorganization of debt. It was the first use of the law, and policy analysts who watched its torturous and tedious progress have titled their report on it “Death by a Thousand Meetings.” Mediations ended Monday at midnight.

Recent council meetings have been boisterous and contentious. Tuesday night’s meeting was quieter, with an evident sadness on faces in the packed audience. Many residents said they were there mostly to hear for themselves that the day so long expected had finally come.

“It’s a seminal moment in this city’s history and I needed to be here,” said Dwight Williams, who runs a nonprofit housing organization. “I can’t just read about this in tomorrow’s paper. I need to hear for myself if there is some inkling as to where we go from here.” La Vonne Belli, 84, said she was there to hear what people had to say.

Click Here to Continue Reading

Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!