…Stockton’s finances collapsed along with its housing market, forcing city officials to slash $90 million in spending in recent years and a quarter of positions across agencies.
Despite the cuts, Stockton has not been able to avoid recurring deficits. Its revenue is weak and its financial troubles have been compounded, according to city officials, by generous pay and benefits for city workers and retirees and too much debt taken on by the city 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.
Many of the houses built and bought in that boom have been abandoned, repossessed and sold at deep discount as Stockton has been at the top or near the top of lists of housing markets suffering a glut of foreclosures in recent years…
As I’ve always maintained, the excessive formation of CFD’s (in this example, dozens of them encroaching on and occupying CA’s agricultural heartland) along with the subsequent bond selling and building on all that CFD-encumbered land (especially in the absence of nearby well-paying jobs) is what got the City of Stockton into the this mess to begin with.
After about 1998, almost ZERO cities and counties in CA made contracts guaranteeing a health benefit subsidy to non-sworn retirees and some did not even guarantee them to sworn retirees. This benefit is revocable at any time. Stockton can (and should) take away this benefit from all their current annuitants who were not guaranteed the benefit. And they likely will if they have not done so already.
The passing of the Mello Roos Community Facilities Act (MR) and its later implementation among cities and counties was THE catalyst which fueled rampant millenium-boom building boom everywhere in the state where there was any land at all to spare. The subsequent “bust” was both a byproduct of overbuilding (made possible by the MR bonds) in conjunction with “loose lending.” Today, most jurisdictions who approved these CFD’s don’t even have enough employees on staff to service their huge population influxes of recent years made possible by their creation of these CFD’s in conjunction with Big Development.
This was all prophesied by my SD City College RE professor in 1982 (just after the act had been signed by the Legislature). It turns out he was spot on.
