Mayor of Stockton tries to avoid city bankruptcy
A snow cone vendor pushes his cart down the street in Stockton, California. The city may become the largest municipality to declare bankruptcy.
David Brancaccio: The city of Stockton, California, population 291,000 is trying to avoid becoming the biggest U.S. city to go bankrupt during this economic downturn. The new city hall there has already been repossessed by Wells Fargo Bank and negotiations aimed at avoiding a bankruptcy filing are working up against a June 25th deadline, with a key vote today.
Ann Johnston is the mayor of Stockton. Good morning Mayor.
Ann Johnston: Good morning.
Brancaccio: So you've been working with your City Manager and the City Council to try to avoid a bankruptcy, what are the challenges that are still left to keep this thing at bay?
Johnston: Well the real challenges are getting all of our creditors to come to an agreement outside of bankruptcy that will relieve us of the financial situation that we're in.
Brancaccio: I know that you could probably write an extended treatise on the answer to the following question, but give me a sense of it. What do you blame for being in this predicament? Was it the collapse of housing values maybe?
Johnston: The housing market certainly was the nail in the coffin because we went from having 3,000 single family home permits every year down to 150. A whole lot of things stopped dead in the water.
Brancaccio: Now obviously you work extremely hard to avoid bankruptcy, but if it should come to that, are you going to be able to guarantee your citizens levels of public safety?
Johnston: Yes, of course. And we've been cutting millions from our budget, much of that has come from police and fire and other services. And so, we're at the point where we can't cut anymore for the health and safety of our citizens. So that's why we are looking to our creditors and the rest of the world out there to help relieve us in this situation.
Brancaccio: Well, best of luck on keeping the negotiations at a place that benefits the citizens of Stockton. Mayor Johnston, thank you very much for this.
Johnston: You're welcome, thank you, have a good day today.