LOS ANGELES — The city of Stockton, Calif. can continue on its path toward exiting bankruptcy after receiving the green light from voters to raise its sales tax by three-quarters of a cent.
Stockton residents voted by a 53% margin in favor of the ballot measure to increase the sales tax to 9% from 8.25% on Tuesday.
City officials have said that without the increase, the city would be unable to fund its bankruptcy exit plan, and it would also be unable to pay its current operating costs, resulting in further staff and service reductions.
Officials have estimated that the new tax will bring in about $14 million in the first fiscal year, and $28 million per year in the future.
About 65% of the new revenue will go toward public safety programs and the rest would be used for bankruptcy recovery and restoring the city's finances.
The tax will go into effect on Jan. 1, halfway through the city's fiscal year.
The Central Valley city of 300,000 declared bankruptcy in June 2012, after struggling to recover from the housing downturn and years of fiscal emergencies. In October, the city council approved the proposed bankruptcy exit plan, which still needs to receive approval from U.S. Bankruptcy Judge Christopher Klein.