| SAN FRANCISCO, June 28
SAN FRANCISCO, June 28 A group of California
taxpayers went to court on Friday to demand a greater role in
how the city of Stockton would raise taxes to exit the
bankruptcy it filed a year ago.
The group asked the U.S. Bankruptcy Court in Sacramento for
official committee status so its members could see details on
Stockton's plan for increasing its sales tax. If granted this
status, the group could also participate in talks about the
city's plan to adjust its debts.
Stockton officials aim to file their debt-adjustment plan
with the bankruptcy court in September following a vote by the
city council on a sales tax increase.
Stockton's city manager wants the council to hold a vote
next month on putting a ballot measure to voters in November
that would ask them to raise the city's sales tax to 9.0 percent
from 8.25 percent.
If approved by voters, the increase would go into effect
next April and raise revenue to help Stockton exit bankruptcy,
put more money into public safety programs and hire more police
officers to help tackle crime in a city that ranks among the 10
most dangerous U.S. cities.
According to a draft of the tax plan, the increase would
raise about $219 million over 10 years for public safety
Over the same time, about $112 million in proceeds would
fund the city's exit from bankruptcy. The effort would get a
larger share of revenue initially as police staffing ramps up.
The taxpayers group wants more details on how the revenue
would be allocated and it is concerned Stockton's creditors
could press for a bigger share, which would set back plans for
hiring more police officers.
"Creditors will no doubt seek as large a recovery as
possible leaving taxpayers with significantly reduced health,
safety and welfare services," according to an exhibit attached
to the taxpayers group's court filing.
A city of about 300,000 residents in California's Central
Valley, Stockton is the biggest U.S. city to have filed for
bankruptcy and is trying to impose steep losses on its bond
insurers and bondholders to restructure it finances.
The U.S. municipal debt market is watching to see if the
Stockton prevails or its so-called capital markets creditors can
convince the bankruptcy court to have the city cut its pension
spending as part of a plan to exit bankruptcy.
Stockton has refused to cut pensions, saying it is
prohibited by state law, and that its employees have suffered
several years of pay and job cuts while its retired workers are
losing subsidized medical coverage.