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Compton considers bankruptcy amid money woes

July 18, 2012 12:00:00 AM PDT
First it was San Bernardino. Now, the city of Compton is looking at the possibility of filing for bankruptcy.

Though nothing has been decided for certain yet, Compton's city treasurer told the City Council Tuesday night that the city may need to start considering or at least discussing the option of bankruptcy, because the city currently does not have enough money in its bank account to pay all of its bills next month.

The city is looking at a $43 million deficit, which is quite a substantial number for a city of about 93,000 people. But a decision to file for bankruptcy is not one to be taken lightly, even though San Bernardino did just shock residents with its seemingly snap decision to do so.

The other two California cities that filed for bankruptcy this month took much longer to consider their decisions.

Compton's mayor is reportedly more optimistic than its financial staff that the city can avoid bankruptcy, but at Tuesday's City Council meeting, which was broadcast over the Web, the city's treasurer outlined the financial reality that he and the city are looking at.

"So now, we're at some very critical issues," said Compton City Treasurer Douglas Sanders. "By Aug. 1, y'all need to decide what's going to happen. Make the bond payments, default on them or go into bankruptcy."

According to Reuters, unemployment is worse in Compton than it is in San Bernardino. Compton is also facing a sharp decline in property taxes as a result of all the home foreclosures.


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