On Tuesday, Stockton is expected to take the first steps towards bankruptcy, and it’s a step that the city manager says is necessary to get the city back in the black.
By declaring their intent to file for bankruptcy, the city will have the ability to suspend some of its payments to creditors, and negotiate new terms for debt service. However, the discussion of bankruptcy has already had an effect on the city. The same day that the city manager announced the process, the credit rating agency Moodys dropped the city’s credit rating to Baa1, or a step below investment grade.
Before the city can tackle next year’s financial troubles, it must get through the rest of this year, which will require $15 million of inter-fund transfers.
From the Record Net:
City Manager Bob Deis said Friday that he is seeking broad authority to keep Stockton out of bankruptcy court and to track down those who have led the city to financial ruin.
Deis’ aggressive approach includes suspending certain debt payments to investors and renewing Stockton’s fiscal emergency for a third straight year.
Deis will seek approval of his multipronged approach at a 5:30 p.m. Tuesday meeting of the City Council.
Read the full article here.