Wednesday, June 27, 2012
Stockton, CA: Help Us Congress! We're Going Broke!
American mayors in major cities are demanding progress. Mayors are trying to revitalize their communities and the Congress is relativity screwing up with funds to help! The Republican controlled House of Representatives are delaying votes on the job/infrastructure and student loans bills. The Democratic Senate has went to bat on these issues only to have filibusters from Senators John Barrasso (R-Wyoming), Jim Inhofe (R-Oklahoma), Mike Lee (R-Utah), Rand Paul (R-Kentucky) and Jim DeMint (R-South Carolina).
The Republicans won't vote on any bill without domestic austerity cuts. The Democrats won't concede to spending cuts to domestic programs. The Democrats are trying to wake up the public by saying the Republicans are intentionally trying to destroy the economy to get back into power.
Stockton, California, a community that's between San Francisco and Sacramento is going to be filing for bankruptcy if the Congress doesn't pass federal funding for the city.
California legislators have worked all they could and now Governor Jerry Brown is calling upon Congress to step in to prevent the city from being literally broke.
With nearly 300,000 people, Stockton could become the first American city with a major population to ever declare bankruptcy. According to the Associated Press, to plug next year's anticipated $26 million shortfall, the proposed budget would suspend payments for debts and legal claims, reduce payments for retiree medical benefits, further cut some pay and benefits, and increase revenue through code enforcement and parking citations.
The unemployment rate has doubled in Stockton over the past decade and now hovers around 16 percent. One-fifth of residents live below the poverty line, and the city has twice topped Forbes magazine's list of "America's most miserable cities."
Under a bankruptcy filing, officials would retain power over day-to-day city operations and staffing, but a judge would take over all decisions concerning the city's debts, said Robert Benedetti, professor of political science at the University of the Pacific in Stockton.
The judge would decide which creditors should be paid, how much and in what order. He would make allowances for expenditures needed by the city to function, and it would be up to city officials to decide how to spend that money.
"One of the reasons a city might want to go the bankruptcy route is that they don't want a situation where they have to pay out debts and have to close the police or fire department," Benedetti said. "Filing for Chapter 9 means you're asking the court to protect you against lawsuits from people who hold your debt."
Stockton's bankruptcy would make it the largest city by population to file for Chapter 9 protection, according to Jim Spiotto, a Chicago bankruptcy lawyer who tracks such cases. He said Bridgeport, Conn., was the largest city to file for bankruptcy, which it did in 1991, followed by Vallejo, Calif., which filed in 2008.