A sign offering deals to vacant apartments in Stockton, Calif. Stockton officials continue to grapple with the city’s financial plight, struggling to restructure millions of dollars of debt threatening to turn the city with the nation’s second highest foreclosure rate into the largest American city to file for bankruptcy. (AP Photo/Ben Margot)

“STOCKTON, Calif. — Stockton in central California is set to become the largest American city ever to declare bankruptcy.

“City Manager Bob Deis said officials were unable to reach a deal to restructure hundreds of millions of dollars of debt under a new state law designed to help municipalities avoid bankruptcy.” – AP article in the Harrisburg Patriot-News

What happens when bad decisions made by elected “public servants” make bad financial decisions. The news out of Stockton, California this week will send shock waves through many communities: Municipalities which have made illogical decisions based on anticipated grants and continued property tax increases.

In Stockton, “Stockton’s financial bleeding was caused by a variety of factors. Two were self-inflicted: agreeing to unsustainable retiree health care commitments and to unsustainable labor contracts. The city also set itself when the economy was hot. Acting as if the housing boom would remain forever, the city invested in major downtown construction projects that included the arena, ballpark and marina. When the recession hit, property tax revenues dried up. Unemployment soared. And the debt to build all those downtown projects became a financial albatross.” Click here to read more about Stockton’s path towards bankruptcy. – The Stockton (CA) Record

You will notice in the “path towards bankruptcy” series that the council meetings are streamed online: the Stockton city council meetings are video recorded; microphones are used by the councilors so that those attending the meeting can hear what is being discussed; and decorum, respect and civility are maintained throughout the meetings. Though an article in the Los Angeles Times states, “Recent council meetings have been boisterous and contentious. Tuesday night’s meeting was quieter, with an evident sadness on faces in the packed audience. Many residents said they were there mostly to hear for themselves that the day so long expected had finally come.” The article reinforces that “Stockton indulged in during better times, but have now helped put the city in the red.”

But even with online recordings and minutes of council meetings, “Some residents were unaware their city was bankrupt.”

There’s an interesting National Public Radio report about the contributing reasons for the bankruptcy; there are more interesting reader comments.