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Stockton, California Seeks a Financial Fresh Start in Bankruptcy

The economy has taken a serious hit on a lot of people. But it’s also hit the 290,000 people in Stockton, California pretty damn hard.

Tonight the city council is voting on filing bankruptcy to try and give the city a fresh financial start under a chapter 9 bankruptcy.

Like big airlines and companies, sometimes cities find themselves in a difficult spot as well. Consumers who contemplate bankruptcy are so worried about a perceived stigma surrounding bankruptcy.

Stockton, California Seeks a Financial Fresh Start in Bankruptcy

Stockton, California neighborhood. Photo credit: Inman News

So are we to suddenly think less of dear Stockton, California and the hard times the municipality is facing or applaud them for taking action to try to deal with the situation and move forward.

The Stockton, California bankruptcy will mark the largest city to file bankruptcy. A record, but apparently a needed record since the city has been unable to turn their economic slip around.

Lost tax revenue and a wave of foreclosures have injured the city budget. Facing a significant shortfall and unsuccessful negotiations with major creditors, not many options are left.

The community got off to a rocky start with an early struggle with its finances. According to a book written by Cove Martin in 1959:

The founders attempted to form a local government in 1849. They quickly found themselves in a mess.

A seven-member council formed and began passing city ordinances. The council hired a doctor to fight rampant dysentery and other ailments.

The crisis arose when the founders accrued $1,500 in debt, but learned they had no authority to levy taxes. Each of them were personally liable.

The fledgling Stockton government floundered for months as the city’s muddy streets fell to lawlessness and daily murders. City leaders tried again and legally founded Stockton in July 1850. – Source

One commenter, Guy LaFarge clearly lays the blame for the cities problems at the feet of public service employees:

“Blame the police and fire personnel. Back in the day, they were paid a decent, strictly-middle class wage and benefits package. Now, they’re upper middle class, some even lower upper class thanks to over-time and other perks. And who spends less time doing their actual job than firemen? How many hours a week do they actually spend putting out fires? The rest of the time it’s shopping for groceries, taking Sparky the dog to Herbert Hoover Elementary, rescuing little Fluffy from a tree, exercising or polishing their trucks. What a scam…and you tax-payers are being taken for a ride, whether a truck ever leaves the station or not!”

Stockton did find it’s budgets so strapped that they laid off 25 percent of its police force. The crime rate skyrocketed.

Stockton, California Seeks a Financial Fresh Start in Bankruptcy
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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