Reuters: Bankruptcy News: Stockton jobs outlook brightens despite fiscal woes

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Stockton jobs outlook brightens despite fiscal woes May 3rd 2012, 23:05 By Jim Christie SAN FRANCISCO | Thu May 3, 2012 7:05pm EDT SAN FRANCISCO May 3 (Reuters) - While the city of Stockton, California is attempting to stave off bankruptcy, its local economy is perking up and leading all other metropolitan areas in the state in terms of job growth. The Business Forecasting Center of the University of the Pacific in Stockton estimates a 5 percent increase in payrolls in the Stockton region for the 12 -month period ending in March. Jeff Michael, the center's director, said the city's economy is finally starting to recover from the knock-on effects of the area's dramatic housing crash. The region has "clearly joined the recovery," he told Reuters on Thursday. Local job growth will run at about 4 percent this year and about 2 percent annually through 2016, he said. Stockton entered into negotiations with its creditors in March in an attempt to avoid becoming the largest U.S. city to file for bankruptcy. Stockton, which has a population of roughly 292,000 people, has suffered years of declining revenue brought about by the housing market crash and is facing a deficit of as much as $38 million on its general fund budget for the coming fiscal year beginning on July 1. But the worst for the local economy seems to be over. "We finally found a bottom in the real estate market," Michael said. He said Stockton won't return any time soon to the kind of home-builders' boomtown it was during California's overheated housing market of the last decade, but its economy will generate solid payroll gains to help reduce its unemployment rate affected by jobs lost in the housing area. STILL A STRATEGIC LOCATION "Nothing about the recession changed the fact that this is a strategic location," he said about the c ity, which is around 85 miles ea st of San Francisco. Payroll gains will be propelled by a major medical complex for the state's prison system that is under construction and by the local farming industry and warehouse and trucking companies, Michael said. The jobless rate for Stockton and surrounding San Joaquin County s tood at 16.7 percent in March, compared with 18.1 percent a year earlier. California's March unemployment rate was 11.0 percent, compared with a national average of 8.2 percent. Although the local economy is gathering steam, Michael said there will be a lag in revenue in filling the city's coffers. He added that he does not expect Stockton to win sufficient concessions from its creditors during mediation to help bolster its battered finances. "If I had to bet, I'd bet the city would probably enter bankruptcy," Michael said. "The problem is too deep and too complex and involves too many parties to reach a negotiated solution in a few months." Stockton spokeswoman Connie Cochran said she could not comment on talks between the city and its creditors, noting they are confidential. But she said "The goal of the mediation is to avoid bankruptcy. That's been our goal all along." (Reporting By Jim Christie, Editing by Tiziana Barghini and Diane Craft) Link this Share this Digg this Email Reprints

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