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24/7 Wall St.: The Best- and Worst-Run Cities in America

Worst-Run Cities

3. Stockton, Calif.

Population: 296,367
Credit rating: Caa3, negative outlook
Violent crime per 1,000 people: 14.08 (8th highest)
Unemployment rate: 20.2% (the highest)

Last year, Stockton was unable to fund its pension liabilities and make debt service payments. As a result, it became the largest city in U.S. history to file for bankruptcy. The city had been especially hurt by the recession. Its unemployment rate for 2011 was above 20%, while more than 5% of homes were in foreclosure — both among the highest rates for any large city. Just before the bankruptcy filing, Moody’s downgraded the city’s credit rating to account for the likelihood of a default. Moody’s noted, “The Caa3 rating level assumes losses to bondholders will be greater than 20%. The negative outlook reflects the high likelihood that losses could exceed our estimates.” Not only have the city’s creditors been affected, but so have city employees and retirees. According to NPR, the city may cut health benefits to reduce its $417 million in unfunded liabilities.
(iStock)

More From 24/7 Wall St.:
America's Best- and Worst-Run States
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The opinions expressed are solely those of the author and do not necessarily reflect the views of Comcast.

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