Stockton, CA faces midnight deadline to avert bankruptcy... UPDATED

◼ If Stockton, home to a population of 292,000 about 85 miles east of San Francisco, fails to win concessions in the talks to close a $26 million shortfall for the fiscal year beginning on July 1, City Manager Bob Deis will soon seek protection from creditors with a rare Chapter 9 bankruptcy filing. - Reuters

On Tuesday evening the city council will vote on a so-called pendency plan budget crafted by Deis to guide the city's finances during bankruptcy proceedings.

The plan would suspend $10.2 million in debt payments and reduce spending on employee compensation and retiree benefits by$11.2 million. It will also probably trigger rating agencies to further downgrade the city....

Stockton's finances collapsed along with its housing market, and despite slashing $90 million in spending in recent years and cutting a quarter of positions across its agencies, the city's finances cannot shake recurring deficits due to weak revenue.

Stockton's financial troubles have been compounded, according to city officials, by generous pay and benefits for city employees and retirees and the city taking on too much debt when it enjoyed a home-building boom in the early part of the last decade that transformed it into a distant bedroom community for the San Francisco Bay area... More at the link.

UPDATE: ◼ Stockton, Calif. to take up bankruptcy budget plan - Reuters

A bankruptcy filing by Stockton is a "high-probability event," Gregory Lipitz, a vice president and senior analyst at Moody's, said on Monday.