Stockton is making steps towards bankruptcy and the city is expected to formally begin the process on Tuesday. If the council members do decide to enter Chapter 9 protection, Stockton will become the largest municipality in history to actually declare bankruptcy.
The city has been hard hit by the housing collapse that left many municipalities seeking ways to limit expenses. In Stockton, which is a national leader in foreclosures, the cuts have come often and deep. In each of the last two years, the city has declared a fiscal emergency, which allowed them to force concessions from employee unions. However, bankruptcy could open up their health benefits for negotiations as well.
However, the potential cost of the bankruptcy could be three times as much as the $7 million paid by Vallejo, which had previously set the record for the largest municipal bankruptcy in the nation.
From the Record Net:
The City Council on Tuesday is expected to take its first step toward filing for bankruptcy in a dramatic move to remedy Stockton’s crippling finances.
If bankruptcy ultimately happens, Stockton would be the nation’s largest city to fall into Chapter 9 protection.
While city administrators remained silent on any plans, it became an open secret Wednesday. The Downtown Stockton Alliance board of directors in a public meeting discussed the city’s bankruptcy timetable.
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