Central Valley

Stockton Proposes bankruptcy Plan

Official seal of City of Stockton

Official seal of City of Stockton (Photo credit: Wikipedia)

Council proposes plan that would give the City Manager authority to file for Chapter 9 protection, if the mediation process fails.


(Stockton, CA) – On Tuesday, June 5, 2012, the Stockton City Council will consider a contingency plan to be followed should the City and a sufficient number of its creditors be unsuccessful in reaching an agreement that prevents insolvency and restores the fiscal health of the City. The contingency plan will be presented at the regularly scheduled Council Meeting. The public session begins at 5:30 p.m.

The City and its largest creditors have been engaged in confidential mediation that began two months ago. The mediation allows the City to work with creditors to restructure debt and agreements under a process determined by state legislation which became effective January 1, 2012, AB 506. The legislation provides for a 60-day period of negotiations with an option to extend for an additional 30 days. The City and most mediation participants recently extended the mediation period through June 25, 2012.

“We remain hopeful that we can reach an agreement with a sufficient number of our creditors to get our fiscal house in order,” said Mayor Ann Johnston. “However, we must have a plan for any possible outcome to protect the health, safety and welfare of our community and maintain basic services. Without significant fiscal relief, the General Fund will be out of money by June 30, 2012.”

The state constitution requires cities to adopt a balanced budget by July 1 of each year. The majority of the City’s budget is not impacted by the City’s fiscal crisis. The total budget of $521 million includes $366 million in restricted funds, which cannot be used to resolve the General Fund crisis. The $155 million General Fund provides for services such as police, fire, libraries, parks maintenance and administrative functions. This funding comes from property tax, sales tax, utility users tax, business license tax and other sources, all of which have experienced significant declines for the past four years.

The City Council has addressed $90 million in deficits over the last 3 years and is faced with a $26 million deficit in the fiscal year that begins July 1, 2012. The Council believes that any further service cuts will endanger the health and safety of the community.

The contingency plan that the Council will consider will allow the City to continue to operate, should the City be faced with insolvency by the end of the fiscal year, which is June 30, 2012. The proposed plan would give the City Manager authority to file for Chapter 9 protection, if there are no other options to balance next year’s budget. The plan allows the City to provide day-to-day services until a long-term plan of adjustment can be negotiated and approved, should bankruptcy protection become necessary.

“This City has been in business for over 160 years and we will continue to be in

business,” continued Mayor Johnston. “We will come through the AB 506 process or chapter 9 with a financially sustainable future. Even though we have inherited this mess, we are committed to doing everything in our power to leave this City better, stronger and healthier.”

information provided by the city of Stockton, CA

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Bilingual Weekly News brings you community news in both English and Spanish, covering information such as Stockton News, San Joaquin News, Latino News, Hispanic News, Mexican-American News, Bilingual News, Government News, Political News, Arts News, Tracy News, Manteca News, Lodi News, Modesto News, Stanislaus News, Education News, Stockton Unified School District, San Joaquin County Office of Education, Health News, Environmental news, and much more!



  1. Pingback: STATE OF THE CITY 2011-2012 « Bilingual Weekly - June 1, 2012

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