Sonya Hamasaki, CNN, June 27, 2012
The California city of Stockton approved a special budget Tuesday night, paving the way for it to become the largest American city to declare bankruptcy.
“Unfortunately, we have no comprehensive set of agreements with our creditors to offer you . . . that would eliminate the $26 million budget deficit and avoid insolvency,” City Manager Bob Deis said at a council meeting.
The city council approved the pendency plan on a 6-1 vote, meaning Stockton will file for protection under Chapter 9 federal bankruptcy laws before Sunday when the new fiscal year begins.
The plan is essentially a new budget for the city of about 291,000, spelling out day-to-day operations under bankruptcy.
Last year, Jefferson County, Alabama, filed the biggest municipal bankruptcy in U.S history. In December, the county was $4.2 billion in debt.
The largest previous municipal bankruptcy case was filed in 1994 by Orange County, California, which owed approximately $1.7 billion to creditors.
[Editor’s Note: According to this website, Stockton is 22.9% non-Hispanic white, 11.5% black, 20.7% Asian, and 40.3% Hispanic.]