If Stockton is unable to re-structure and re-negotiate its debt during negotiation, it would become the largest municipal bankruptcy in U.S. history. Therefore it isn’t surprising that the Central Valley city is garnering national attention.

The New York Times published a story over the weekend about the city’s debts, and specifically its pensions.

In California, a public employee’s pension is hallowed, untouchable ground. In Vallejo, which at one point set the standard for municipal bankruptcy, the city never went after vested pension rights. And that aborted attempt to restructure the city’s significant debt is largely attributed to CalPERS threats and promises of untenable legal bills and federal appeals. There, the city negotiated all sorts of restructuring of debt, but never stopped making its required contributions to CalPERS

However, the economic downturn has continued in the four years since Vallejo declared bankruptcy. And, as the New York Times writes, “if such issues were not addressed in Stockton, they were likely to come up elsewhere soon.”

From the New York Times:

When the city manager of troubled Stockton, Calif., had to tell city council members why it was on track to become the biggest American city yet to go bankrupt, it took hours to get through the list.

There was the free health care for retirees, the unpaid parking tickets, the revenue bonds without enough revenue to pay them. On it went, a grim drumbeat of practically every fiscal malady imaginable, except an obvious one: municipal pensions. Stockton is spending some $30 million a year to pay for them, but it has less than 70 cents set aside for every dollar of benefits its workers expect.

Read the full article here.