Stockton Said to Plan Default Vote as California City May Face Bankruptcy

The City Council of Stockton, (3654MF) California, will be asked to vote next week to default on some of its bonds and take the first steps toward bankruptcy, according to a person familiar with the council’s agenda.

City Manager Bob Deis has told council members that he intends to put an item on their agenda for a Feb. 28 meeting that would ask them to approve mediation with creditors as the first step required under a new state law before the city can seek bankruptcy, according to the person, who wasn’t authorized to speak about the matter because it is still confidential.

Deis also will ask the council to agree to default on municipal bonds beginning March 1, to suspend cash payments to employees who’ve accumulated unused vacation and sick leave, and to begin an investigation into the causes of the city’s fiscal issues, the person said.

Stockton, an agricultural center of about 292,000, is fighting to avert California’s biggest bankruptcy since Vallejo in 2008. The city has shrunk its payroll, including a quarter of the roughly 425-member police force. Twice since 2010 it has declared a state of fiscal emergency to force cuts on public employees.

Deis has scheduled a meeting with reporters tomorrow to “provide background information and answer questions from the media related to the city’s fiscal status,” according to a statement from his office distributed today. The briefing at City Hall, which would normally be closed tomorrow, is to prepare for the Feb. 28 meeting, according to the statement.

Deis and members of the City Council didn’t respond to repeated telephone calls for comment today.

-- Editors: Pete Young, Ted Bunker

To contact the reporters on this story: Michael B. Marois in Sacramento at Alison Vekshin in San Francisco at

To contact the editor responsible for this story: William Glasgall at

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