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Judge rules Stockton, Calif., to enter bankruptcy: Associated Press Business News - MSN Money


SACRAMENTO, Calif. (AP) - A judge accepted the California city of Stockton's bankruptcy application on Monday, making it the most populous city in the nation to enter bankruptcy.


U.S. Bankruptcy Judge Christopher Klein said the bankruptcy declaration was needed to allow the city to continue to provide basic services.
"It's apparent to me the city would not be able to perform its obligations to its citizens on fundamental public safety as well as other basic government services without the ability to have the muscle of the contract-impairing power of federal bankruptcy law," Klein said.

The city of nearly 300,000 people has become emblematic of government excess and the financial calamity that resulted when the nation's housing bubble burst.
Its salaries, benefits and borrowing were based on anticipated long-term developer fees and increasing property tax revenue. But those were lost in a flurry of foreclosures beginning in the mid-2000s and a 70 percent decline in the city's tax base
The city's creditors wanted to keep Stockton out of bankruptcy — a status that will likely allow the city to avoid repaying its debts in full.

They argued the city had not cut spending enough or sought a tax increase that would have allowed it to avoid bankruptcy.
Matthew Walsh, an attorney for the bond holders, declined to comment after Monday's ruling.

Attorneys for the city said the city's budget and services had been cut to the bone.
"There's nothing to celebrate about bankruptcy," said Bob Deis, Stockton's city manager. "But it is a vindication of what we've been saying for nine months."
The Chapter 9 bankruptcy case is being closely watched nationally for potential precedent-setting implications.
The $900 million that Stockton owes to the California Public Employees' Retirement System to cover pension promises is its biggest debt. So far Stockton has kept up with pension payments while it has reneged on other debts, maintaining that it needs a strong pension plan to retain its pared-down workforce.
The creditors who challenged Stockton's bankruptcy petition are the bond insurers who guaranteed $165 million in loans the city secured in 2007 to pay its contributions to the CalPERS pension fund. That debt got out of hand as property tax values plummeted during the recession, and money to pay the pension obligation fell short.

Legal observers expect the creditors to aggressively challenge Stockton's repayment plan in the next phase of the process.
By 2009 Stockton had accumulated nearly $1 billion in debt on civic improvements, money owed to pay pension contributions, and the most generous health care benefit in the state — coverage for life for all retirees plus a dependent, no matter how long they had worked for the city.
 

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a.k.a. "Mean Pair"
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Judge rules Stockton, Calif., to enter bankruptcy: Associated Press Business News - MSN Money


SACRAMENTO, Calif. (AP) - A judge accepted the California city of Stockton's bankruptcy application on Monday, making it the most populous city in the nation to enter bankruptcy.


U.S. Bankruptcy Judge Christopher Klein said the bankruptcy declaration was needed to allow the city to continue to provide basic services.
"It's apparent to me the city would not be able to perform its obligations to its citizens on fundamental public safety as well as other basic government services without the ability to have the muscle of the contract-impairing power of federal bankruptcy law," Klein said.

The city of nearly 300,000 people has become emblematic of government excess and the financial calamity that resulted when the nation's housing bubble burst.
Its salaries, benefits and borrowing were based on anticipated long-term developer fees and increasing property tax revenue. But those were lost in a flurry of foreclosures beginning in the mid-2000s and a 70 percent decline in the city's tax base
The city's creditors wanted to keep Stockton out of bankruptcy — a status that will likely allow the city to avoid repaying its debts in full.

They argued the city had not cut spending enough or sought a tax increase that would have allowed it to avoid bankruptcy.
Matthew Walsh, an attorney for the bond holders, declined to comment after Monday's ruling.

Attorneys for the city said the city's budget and services had been cut to the bone.
"There's nothing to celebrate about bankruptcy," said Bob Deis, Stockton's city manager. "But it is a vindication of what we've been saying for nine months."
The Chapter 9 bankruptcy case is being closely watched nationally for potential precedent-setting implications.
The $900 million that Stockton owes to the California Public Employees' Retirement System to cover pension promises is its biggest debt. So far Stockton has kept up with pension payments while it has reneged on other debts, maintaining that it needs a strong pension plan to retain its pared-down workforce.
The creditors who challenged Stockton's bankruptcy petition are the bond insurers who guaranteed $165 million in loans the city secured in 2007 to pay its contributions to the CalPERS pension fund. That debt got out of hand as property tax values plummeted during the recession, and money to pay the pension obligation fell short.

Legal observers expect the creditors to aggressively challenge Stockton's repayment plan in the next phase of the process.
By 2009 Stockton had accumulated nearly $1 billion in debt on civic improvements, money owed to pay pension contributions, and the most generous health care benefit in the state — coverage for life for all retirees plus a dependent, no matter how long they had worked for the city.
"Those poor peeps":rolleyes: Coming to a city near yours.
 

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Thats a shame. Thats what happens when you spend money like a drunken sailor on the backs of the tax payers and you don't own a printing press. I am certain they could have avoided this my passing progressively steeper tax rates and making the rich pay there fair share.

Of course the forums self proclaimed financial genius R&J will be here shortly to explain to all of us how the insane pensions and benefits they voted themselves from the cities coffers, put there off the backs of the taxpayer, had nothing to do with any of this. What moron! Not hard to see how governments get there asses in a sling with morons like that working for them. Have another shot of KOOL AIDE R&J.

Just one of the first dominos on a long string. Just a matter of time when Calif follows the same course of action.



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They'll be taxing CalFresh to pay the CalPers retirees soon. I don't have any of compassion for the overpaid takers.
 

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Liberal greed at it's finest. Spend Spend Spend. Figure out a way for someone else to pay for it later.

The whining and crying over the loss of astronimical benefits will be deafening.

Just like the multi billion $$ rail system still scheduled to happen. Too many people have been paid off with political contributions to axe the project. It has to happen no matter how far from practical it goes.
 

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Liberal greed at it's finest. Spend Spend Spend. Figure out a way for someone else to pay for it later.

The whining and crying over the loss of astronimical benefits will be deafening.
Whats deafening is the silence of the Marxists on the boards here. I can't believe R&J hasn't chimed in with the real cause of all this. The rich bastard's refusal to pay their share. Not to sure how many fat cats live in Stockton since the Barkley's of "The Big Valley"moved out. But none the less, its the all the fault of rich fat cats. Oh, and Bush's



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Colts fan & Stoker owner
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Coming to a city near you.
 

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Red Blooded American
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I'm so old that I can actually remember when folks took the government jobs for the security. hil:) hil:)
 

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Marine Organism
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I'm so old that I can actually remember when folks took the government jobs for the security. hil:) hil:)
Security, benefits, and retirement.
 
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