Stockton Considers Filing For Bankruptcy Protection
STOCKTON (CBS13) — Money troubles for the city of stockton are now so bad, city officials may be forced to file for bankruptcy.
Administrators at City Hall were keeping quite Thursday, but one councilman was willing to speak out against the idea.
Dale Fritchen 100 percent opposes any effort to move Stockton into bankruptcy.
“It’s horrible. It’s devastating,” he said of the idea. “We do not need this black eye. We’ve had enough black eyes. We’re starting to see light at the end of the tunnel.”
But city administrators are examining the possibility of filing for Chapter 9 bankruptcy protection. If it happens, Stockton would be the largest California city to go bankrupt.
Vallejo recently emerged from bankruptcy after filing in 2008.
Fritchen worries if Stockton follows suit, taxpayers be spending big bucks on attorney’s fees.
“It ends up racking up a lot of money. I anticipate it’s going be at least $20 million for Stockton because we are so much larger than Vallejo,” he said. “That’s $20 million that would go for police service, filling pot holes, other city service that will go to attorneys.”
But Stockton’s financial woes are no secret. At the start of the fiscal year, the city passed a more than $600 million dollar budget after making $37 million in cuts.
University of the Pacific political science Professor Robert Benedetti said there are pros and cons with municipalities filing for bankruptcy protection.
“The major pro is if you can’t pay your debts, a judge takes over the negotiations between you and your debtors and tries to settle those debts,” he said. “The disadvantage is it doesn’t wipe away your need to continue to work with those people later.
“Even after bankruptcy you still have to make contracts with public employees and order goods and services from local merchants.”
He also points out that Vallejo still hasn’t solved its pension problems.
“It’s not a decision that most people would want to take,” Benedetti said. “On the other hand, if the money is simply not there and the creditors are at the door, there may not be another alternative.”
The city is holding a press conference on Friday to discuss its financial situation.