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发帖数: 29846 | 1 By VAUHINI VARA
Stockton, Calif., will take the first step toward a possible bankruptcy
after the city council decided late Tuesday to launch a special mediation
with unions, creditors and others that cities in California must undergo
before pursuing a Chapter 9 filing.
While one council member opposed a resolution to pursue the mediation, also
known as a "neutral evaluation," six voted in favor of the move. The city
also passed resolutions to suspend certain debt payments and conduct an
investigation into what caused the fiscal crisis that has brought this city
of 290,000 in the agricultural Central Valley to the brink of insolvency.
"Right now we're a city that, frankly, has hit the wall," said Stockton
Mayor Ann Johnston, toward the end of more than five hours of discussion and
presentations on the matter. "We're looking at a financial situation that
is so bad that we see no way out of it than to begin this process."
The development came after City Manager Bob Deis last week said Stockton "is
or likely will become unable to meet its financial obligations" because of
lower tax revenue and escalating costs of providing retiree benefits and
paying down bond debt. The city faces a budget deficit of up to $38 million
for the fiscal year ending in June 2013.
In pursuing mediation, Stockton will become the first test case of a new
state bankruptcy law signed by Gov. Jerry Brown last year, which requires
cities to hire a mediator to help them negotiate with creditors, unions and
other parties on bankruptcy alternatives before considering a Chapter 9
bankruptcy protection filing.
Starting the mediation doesn't necessarily mean Stockton will go bankrupt.
The process is meant to prevent bankruptcies by helping cities pursue other
options, which Ms. Johnston said was her preference. Earlier in the meeting,
several community members urged the city not to resort to bankruptcy. |
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