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Stockton bankruptcy: 'All that's left is sadness' for city

June 27, 2012 |  6:11 am


This post has been corrected. See note at the bottom for details.

With the city of Stockton moving to become the nation's largest city to seek protection under the U.S. Bankruptcy Code, Tuesday night's City Council meeting was quiet, with an evident sadness on faces in the packed chambers.

Many residents said they were there mostly to hear for themselves that the day so long expected had finally come.

For at least a moment, blame and anger seemed to be set aside.

LIVE CHAT: Will other cities follow Stockton into bankruptcy?

"All that's left is sadness," said Gary Gillis, who grew up in Stockton and served as fire chief until he retired.  "Stockton has the most good, solid, down-to-earth people you'll ever meet. And now things are going to get even harder for many of them."

The working-class port city -- from where many of California's agricultural exports set sail -- lived largely on credit during economic boom times. The city borrowed millions of dollars for ambitious, eye-catching projects in the mid-2000s. Up went a sports arena, hotel and promenade. The city booked a Neil Diamond concert as a kickoff to better times. Houses in sprawling tracts sold quickly and with high mortgages.

When the bust came, few places fell as hard as Stockton. It has the second-highest rate of foreclosures in the nation. Property tax money dried up.

In a desperate effort at solvency, the city made $90 million in drastic cuts over the last three years, including reducing the Police Department by 25%, the Fire Department by 30%, and cutting pay and benefits to all employees.

As of July 1, the city will still face a $26-million shortfall.

The city has stopped making bond payments, and City Manager Bob Deis said he expected to file bankruptcy papers immediately.

Still, some, such as Rev. Dwight Williams of the New Bethel Baptist Church, tried to stay positive.

"It's in our DNA to take the bitterness of lemons and make sweet lemonade," Williams said. "We remain optimistic and we will continue to take care of one another, but I think most people around here would laugh if you said Stockton was going to be bankrupt."

[For the Record, 8:54 a.m. June 27: An earlier version of this post did not make clear that Gary Gillis has retired as fire chief.]


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-- Diana Marcum

Photo: Stockton Mayor Ann Johnston, left, gestures during a meeting of the City Council on Tuesday. Credit: Ben Margot / Associated Press