Stockton Calif. on brink of bankruptcy

Sacramento BeeFebruary 28, 2012 

STOCKTON – For a city already reeling from a fiscal crisis, crime and the devastating effects of the housing meltdown, a damning rebuke last year came in cold type. Forbes magazine – for t he second time in three years – labeled Stockton as America's "Most Miserable City." "This is the equivalent of bayoneting the wounded," protested Stockton City Manager Bob Deis, who was then new to his job.

Today, Stockton is trying to avoid becoming America's largest city to go bankrupt. And its city manager is laying the blame on a history of fiscal ineptitude, accounting errors and disastrous governmental decisions.

The Stockton City Council is to vote tonight to suspend $2 million in annual municipal bond payments and seek up to 90 days of mediation to settle its debts with creditors without winding up in bankruptcy court.

Battered like an accident victim in a hit-and-run, Stockton again finds itself grousing weakly over how it wasn't supposed to be this way.

This was the town that had remade itself as a destination for equity-rich homebuyers from San Francisco, who fueled a residential building boom that tripled home values from 1998 to 2005. This was the place that did something with its underserved waterfront, when the city issued revenue bonds to finance a $127 million events center, including an arena, baseball park and waterfront hotel.

These days, overwhelmed bureaucrats are getting finger-wagging lectures from people such as Yolanda Flores, an accountant whose downtown tax preparation business is off by half because of the collapsing regional economy.

Flores used to serve customers from Stockton's surging construction and real estate sectors. Now her clients have homes in foreclosure, and many need tax help in accounting for penalties and fees for cashing out their retirement accounts.

"It's just bad management," she said of the self-inflicted fiscal wounds enumerated last week by Deis. "If the city is running its household this way, I wouldn't want to be in that household. How much is this going to cost us?"

Read the complete story at sacbee.com

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