A judge has authorized the city of Stockton's bankruptcy filing, making it the largest city in U.S. history to go bankrupt, second only to Vallejo, which filed for bankruptcy back in 2008. After nearly a year of waiting since filing for Chapter 9 bankruptcy, Stockton will now begin to restructure its massive outstanding debts, which include a $26 million deficit and $900 million in pension debt.
The city has been plagued by rising crime rates but cut its police force by 25 percent in an effort to curb spending, as well as chopping the fire department by 30 percent and overall city staff by 43 percent. The judge presiding over the case noted that law enforcement is stretched so thin that police can respond only to crimes in progress, which paints a post-apocalyptic scenario for our neighbors to the east.
City manager Bob Deis told the Chronicle that despite having very little left to cut, the restructuring will hit Stockton's already depleted workforce, services and retiree benefits. It's unclear how the decision will affect the city's astronomical pension debt owed to CALpers, but bond creditors who may only receive 17 cents on the dollar are agitating that the pension debt, traditionally protected from bankruptcy fallout, be laid open.
