California cities going bankrupt

This transcript is automatically generated

This was not a Cadillac plan it was a -- plan relentlessly.

Jury is benefits saying that the average hard working Stockton resident.

Who pays for those benefits with their taxes.

Will never have.

Tough times in Stockton California -- that city the largest one ever to file for bankruptcy and city officials are saying it was tough.

But necessary stopped and is one of three cities now to declare bankruptcy in the state.

According to vice mayor Kathy Miller public safety employees were costing the -- on average more than a 150000.

Dollars each per year.

Vice mayor Miller is joining us down and she's on the phone welcome great to have you here today.

Well I stopped and -- of the options at this point isn't there any way to bypass bankruptcy.

and if there had been away we would have.

Certainly opted for at we.

Over the last three years the council made.

Really tough decisions.

We've reduced our workforce significantly.

-- cut pay and benefit that.

Either through negotiations with our employees or.

By declaring a fiscal emergency and imposing them and we just ran out of options it was nothing else to that we could do to protect the people that live here.

We thought we we heard about that -- a benefit package there and for those of employees.

How did get to that point where they were able to collect so much.

You know what happened incrementally over -- ten year period and not during the 1990 and stopped and not alone in this cities all across our state especially.

I'm really cramped up.

Enhanced pension.

And an increased benefit and one at the benefit that stopped and granted to its employees which ended up.

Really been.

-- largest single problem that we have financially is we granted.

Free.

Lifetime.

Medical benefits to our retiree while.

At that quite a perk there no doubt about that.

Average -- average -- it would never absolutely never -- so okay bankruptcy filing has taken plays the impact is going to be profound.

But certainly bankruptcy and of itself is not going to end the financial problems.

Of the city is that correct because certain you have to deal with this against the backdrop of high unemployment across the country as well as the foreclosures in your area.

Yes and you -- bankruptcy it will hopefully get -- some breathing space to renegotiate our long term debt with our creditors.

That will allow less -- at the economy recover to recover along with it without that.

We we simply can't recover we will never be able to get out from under that crushing debt.

One has a very tough decision for all of you and does certainly one that we're watching very closely.

A very difficult decision indeed and I know that you're going to do everything you can to move forward in positive ways.

-- Kathy Miller thank you so much for joining us today.

--

Source: http://video.foxnews.com/v/1734712126001/california-cities-going-bankrupt/

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