City of Stockton will suspend bond payments to avoid bankruptcy

http://www.sacbee.com/2012/02/24/4288696/city-of-stockton-will-suspend.html

Hoping to stave off the ignominy of becoming America's largest city to declare bankruptcy, Stockton officials are planning on suspending $2 million in bond payments and are seeking mediation with the city's creditors.

Deis said Stockton's $20 million budget deficit could double or worse if the city doesn't take dramatic actions. He said Stockton is reeling financially due to severe fiscal miscalculations, including approving generous public employee benefits in the early 1990s and failing to anticipate devastating impacts of the mortgage crisis on city tax coffers.

Deis, who came to Stockton from Sonoma County in 2010, charged that the city effectively created an unsustainable "ponzi scheme" when it approved benefits, including health care for life for city employees with as little as month in service time. As a result, the city manager said, Stockton faces an obligation of as much as $450 million in unfunded retirement costs.

Read more here: http://www.sacbee.com/2012/02/24/4288696/city-of-stockton-will-suspend.html#storylink=cpy

Read more here: http://www.sacbee.com/2012/02/24/4288696/city-of-stockton-will-suspend.html#storylink=cpy