How Stockton Went Bust: A California City's Decade of Policies and the Financial Crisis that Followed
July 1, 2012
This report from California Common Sense cites three main factors contributing to the city’s bankruptcy:
- The housing bust and financial collapse decimated the city’s property tax (and related) revenues. This problem was made worse by a skyrocketing home foreclosure rate.
- The real estate bubble encouraged large spending increases, ambitious redevelopment initiatives, and unsustainable compensation packages for city workers.
- The proceeds from Stockton’s 2007 bond offering were given to the California Public Employees’ Retirement System (CalPERS), which was overexposed to the real estate and stock markets. The original pension obligation bond money is now worth less than $100 million while the city owes $248 million.