As mediation with the city's creditors fails, the California city of Stockton looks set to become the US' largest ever city bankruptcy. The city with the second largest foreclosure-rate in the nation has seen its property taxes and other revenues decline while retiree benefits drained city coffers, according to the SF Chronicle [3]. The city manager, Bob Deis, spoke to a special council meeting tonight, noting (via Bloomberg):
- *STOCKTON CREDITOR TALKS FAILED TO END CRISIS, OFFICIAL SAYS
- *STOCKTON CITY MANAGER SAYS TALKS ON DEBT WON'T AVOID INSOLVENCY
- *STOCKTON CITY MANAGER SAYS BANKRUPTCY `THE ONLY CHOICE LEFT'
and in an earlier interview with Cavuto, the city manager said:
"Right now, we have hit the wall.
I mean, we have done all the cutting we are going to do.
We are going to run out of cash. We need to make some hard decisions so that we can restructure our finances and go forward."
and went on in a Bloomberg story to add:
"The whole purpose of filing Chapter 9 is to avoid an uncontrolled chaotic situation, bankruptcy provides the equivalent of a pause button. It retains services and provides structure so you don't have a bunch of lawsuits."
Paging Ms. Whitney for a told-you-so-dance...