In California: City of Compton may declare bankruptcy by September: officials

◼ The City of Compton, a city of 93,000 people located on the outskirts of Los Angeles, must decide by September 1 whether to seek bankruptcy, according to its two most senior financial officials. - Reuters

Such a move would see it join a growing number of deficit-hobbled California cities that have used the filing to restructure onerous debt loads.

Compton, which has an accumulated $43 million deficit and has depleted what had been a $22 million reserve, will run out of cash to make its payroll on September 1 at its current cash consumption rate, city comptroller Steven Ajobiewe told the city council during a July 17 meeting.

"I have $3 million in the bank and $5 million in warrants due in the next 10 to 12 days," said city treasurer Doug Sanders. "By then, the council will have a decision to make: don't pay the bonds, default on them, or have a serious talk about bankruptcy."
The city council adjourned at 11 pm without discussing a potential bankruptcy filing....

A bankruptcy filing would follow one by San Bernardino, which on July 9 became the third California city this year to seek restructuring of its liabilities. Earlier, Stockton and Mammoth Lakes also said they would file....

Unemployment is worse in Compton than San Bernardino, he said, although both have seen property taxes fall precipitously due to rising home foreclosures.

Unlike San Bernardino, which has a large unfunded liability to pay its employees' pensions, Compton years ago increased its property tax to fund its workers' pension obligations, said Perrodin, and the retirement program is fully funded.

"Those other cities that went bankrupt all had huge pension liabilities that they couldn't meet," said the mayor. "Even so, we're in pretty dire straits."