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Stockton faces end of mediation, weighs bankruptcy

3:14 AM, Jun 26, 2012   |    comments
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FRESNO, Calif. (AP) - Officials in Stockton, Calif., are struggling to keep the city from going into bankruptcy.

Stockton is millions of dollars in debt and it has the nation's second-highest foreclosure rate.

Council members met Monday to discuss the financial plight. The city had until 11:59 p.m. to reach a deal with creditors under a new state mediation law designed to help municipalities avoid bankruptcy.

Stockton spokeswoman Connie Cochran says those negotiations were confidential and that nothing would be announced at the deadline.

To avoid bankruptcy, any deal would have to result in sufficient savings to make the city solvent.

In case mediation efforts fail, Stockton's city council is set to vote tonight whether to adopt a special budget to close the city's projected $26 million deficit in case the city has to file for bankruptcy protection.

(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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