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.
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.
Compton Mayor Eric J. Perrodin also said he brought unspecified charges of "waste, fraud and abuse of public monies" to California officials, and had met with auditors from both the state and Los Angeles County. He told the city council that at one point in its past the city had overspent legally set limits on certain programs by $17 million but would not elaborate. Neither the state nor county has started an audit or investigation, city officials said.
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.
http://www.reuters.com/article/2012/07/18/us-compton-idUSBRE86H09U20120718
Still more evidence that we need to raise taxes and build a choo choo!
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.
Compton Mayor Eric J. Perrodin also said he brought unspecified charges of "waste, fraud and abuse of public monies" to California officials, and had met with auditors from both the state and Los Angeles County. He told the city council that at one point in its past the city had overspent legally set limits on certain programs by $17 million but would not elaborate. Neither the state nor county has started an audit or investigation, city officials said.
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.
http://www.reuters.com/article/2012/07/18/us-compton-idUSBRE86H09U20120718
Still more evidence that we need to raise taxes and build a choo choo!