Debt-ridden Stockton extends negotiations with creditors
The city of Stockton and its creditors have agreed to extend mediation required before a municipal bankruptcy for an extra 30 days.
The port city of about 292,000 teeters on the edge of becoming the nation's largest city to file for bankruptcy protection. On March 27, Stockton stopped payments to creditors and entered a confidential mediation process under AB 506, a new California law designed to slow municipal bankruptcies by forcing all parties to the table. Under this law, the bargaining has a 60-day limit, unless all parties agree to extend it for another 30 days.
“This is a good sign,” Stockton Mayor Ann Johnston said in a statement released by the city on Monday. “It means that our creditors understand our fiscal circumstances and it indicates that they believe that it is worth the investment of time and resources to work toward a solution.”
Stockton’s general fund faces a $26-million budget shortfall come July 1 — the fourth year the city has had a multimillion-dollar budget deficit.
The city's plight has been blamed on the economy, accounting errors — and possible criminal misbehavior. The state controller is investigating the fiscal practices and record-keeping of Stockton.
In the meantime, Stockton is negotiating details of its general fund out of the public eye, since those decisions are part of the confidential negotiations with creditors.
— Diana Marcum in Fresno
Photo: Expensive waterfront redevelopment projects have not brought promised prosperity to the urban core of Stockton, where numerous shuttered buildings hark back to the city's better days. Credit: Luis Sinco / Los Angeles Times