Compton officials talking about possibly filing for bankruptcy
Officials in the financially struggling city of Compton have begun publicly discussing the possibility of filing for bankruptcy, following on the heels of Stockton, Mammoth Lakes and San Bernardino.
Treasurer Douglas Sanders told the council Tuesday night that the city has $3 million in the bank and $5 million in bills to pay.
"We are in some very critical issues, so by August 1, y'all need to decide what's going to happen -- make the bond payments, default on them, or go into bankruptcy," he told the council. "...For the 20 years I've been here, this is about the worst I've seen."
The city controller told council members that the city should be able to make payroll through Sept. 1.
The city's financial issues have been a potent political issue for more than a year. The general fund has accrued a deficit of more than $42 million, and the city has consistently fallen behind on payments to vendors, including its sheriff's contract.
More recently, the city's independent audit firm refused to sign off on the annual financial statements and quit, after Mayor Eric Perrodin wrote a letter to the state controller's office alleging fraud might have contributed to the city's financial issues and asking for an audit.
Following the auditors' actions, Standard & Poor's put the city's lease revenue bonds on credit watch.
"Should we fail to receive sufficient independently audited financial information from the city, we could withdraw or suspend the ratings in accordance with our procedures for withdrawal or suspension," S&P said in a statement.
The city had hoped to acquire a line of credit to help with its cash-flow problems but has been unable to because of the fraud allegations and the issues with the auditors.
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