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Court Rules Stockton, Calif., to Enter Bankruptcy

Posted by feww on April 2, 2013

Stockton the most populous city in the U.S. to enter bankruptcy

U.S. Bankruptcy Judge Christopher Klein has ruled Stockton, Calif., (population: ~ 300,000) to enter bankruptcy.

The judge while making the ruling said: “I don’t know whether spiked pensions can be reeled back in … There are very complex and difficult questions of law that I can see out there on the horizon.”

stockton-calif
Image shows shuttered businesses in Stockton, California June 27, 2012. Credit: Reuters/Kevin Bartram

Stockton’s crime rate is among the top 10 cities across the nation (violent crimes per 1000: 14.5). The police department says it only respond to emergencies in progress!

“It’s apparent to me the city would not be able to perform its obligations to its citizens on fundamental public safety as well as other basic government services without the ability to have the muscle of the contract-impairing power of federal bankruptcy law,” Judge Klein said.

Stockton owes the California Public Employees Retirement System (CalPERS) nearly $1 billion to cover pension liabilities.  The city also issued $165 million in bonds in 2007 to maintain payments to CalPERS as its revenue from property taxes plunged during the recession, reports said.

At least two dozen other Californian cities are financially strapped including San Bernardino, San Jose, Compton, Fairfield, Watsonville, Atwater, the report said.

  • Located about 90 miles (144km) east of San Francisco, the city was hit hard during the US housing market crash.
  • Stockton’s unemployment rate (~ 20%) and violent crimes rank among the highest in the U.S.

San Bernardino. The city of San Bernardino became the third California city in two weeks to file bankruptcy protection in the face of a $45-million budget shortfall, reports said.

Atwater. The small Central California city of Atwater (Pop: ~28,000) has declared A fiscal emergency, which could translate to the state’s fourth municipal bankruptcy this year, said a report.

North Las Vegas, Nevada. The Nevada city of North Las Vegas, described as “ground zero for foreclosures” was officially declared as a disaster area on June 23.

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