The Stockton City Council on Tuesday is expected to take what would be an initial step toward bankruptcy, according to published reports.
If bankruptcy ultimately happens, Stockton would be the nation’s largest city to fall into Chapter 9 protection, according to the Stockton Record.
The council is expected to decide whether it will launch the process of engaging the city’s major creditors in a 60-day mediation period required by a new, labor-backed California law that is designed to help cities dodge bankruptcy.
Stockton, which has a population of 290,000 and is located in the Central Valley about 80 miles east of San Francisco, was hammered by the housing bust.
A Chapter 9 filing would follow the footsteps of Vallejo, about 70 miles away, which emerged last year from three years in Chapter 9.
Stockton’s City Council has twice — in mid-2010 and mid-2011 — declared a fiscal emergency, enabling it to take drastic measures with its union employee groups, according to local reports.
In June, the council adopted a $603 million city budget after cutting $37 million.
