Despite a California law requiring cities that are insolvent to enter into mediation with creditors, Stockton took another step toward bankruptcy this week when its council authorized city manager Bob Deis to file Chapter 9 if mediation talks break down. At least one insider in the talks, the head of the local police union, seemed to think a filing was inevitable, given Deis' negotiating stance:
"Just looking at what he's asking for, I feel pretty confident he'll file bankruptcy as soon as they give him authority," Steve Leonesio said.
His remark was echoed by a city council member privy to negotiations, who said, "There's no hoping for the best anymore."
That the city might still end up in bankruptcy after three months of negotiations is not surprising when you consider its extreme fiscal plight, including some $400 million in unfunded liabilities for retiree health care. At the time perks like this were granted,no city lawmaker bothered to calculate the costs.
Still, despite the city's plight its unions have resisted concessions. The city's police union, for instance, is currently suing Stockton to force it to make payments for unused sick time and vacation time to retiring officers, even though the city claims that having to pay the $300,000 owed to 20 officers would plunge Stockton into bankruptcy.
The Cliff Notes version of Stockton's plight is contained in this chart below, from city budget documents, showing projected expenditures and revenues miles apart.
That the city might still end up in bankruptcy after three months of negotiations is not surprising when you consider its extreme fiscal plight, including some $400 million in unfunded liabilities for retiree health care. At the time perks like this were granted,no city lawmaker bothered to calculate the costs.
Still, despite the city's plight its unions have resisted concessions. The city's police union, for instance, is currently suing Stockton to force it to make payments for unused sick time and vacation time to retiring officers, even though the city claims that having to pay the $300,000 owed to 20 officers would plunge Stockton into bankruptcy.
The Cliff Notes version of Stockton's plight is contained in this chart below, from city budget documents, showing projected expenditures and revenues miles apart.
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