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Stockton, California, is on pace to become the largest municipality in the country to file for bankruptcy, a move that could happen by week's end after the city council cleared the way for it during a Tuesday budget vote, the Associated Press reports.
The working-class port city of 290,000 thrived on credit in boom years, investing in flashy projects like a new sports arena, a hotel, and a promenade, kicking off the good years with a Neil Diamond concert, according to the Los Angeles Times. But the city’s fall with the 2009 financial crisis was a staggering one that has left the central California community reeling, deep in debt and with the second-highest foreclosure rate in the country. As city fire chief Gary Gillis told the paper: "All that's left is sadness."
The budget approved by city council suspends debt payments and reduces employee pay and retiree benefits, small measures compared with earlier desperate attempts to remain solvent. Since 2009, Stockton has cut $90 million in spending by slashing the police department by a quarter, the fire department by a third, and 40 percent of all city employees, the New York Times explains. The city entered state-mandated negotiation with creditors in March.
Stockton is the seventh municipality to file for federal bankruptcy protection this year. It’s an expensive process; the last California town to do so, Vallejo in 2008, spent millions on attorneys and advisers.