April 25 (Bloomberg) — Stockton, California's plan to fully pay employee pensions after leaving bankruptcy may lead to more unfilled potholes and unpaved streets, according to a Sonoma County citizens' group that lobbies for increased spending on roads.
Save Our Sonoma Roads filed a brief yesterday ahead of a May 12 hearing where Stockton will seek approval of its plan to pay some creditors less than they are owed while meeting pension obligations to municipal employees. Bankrupt California cities may struggle to pay for road maintenance unless they can cut pensions, Save Our Sonoma Roads said.
"If pensions cannot be impaired in a bankruptcy proceeding, the ability of many local governments to function will be called into question," the group said in the filing in Sacramento, California, in support of Franklin High Yield Tax Free Income Fund, which is opposing Stockton's debt plan.
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