Stockton nears crucial deadlines to avoid bankruptcy

STOCKTON -- Stockton officials continue hoping to strike a deal with creditors allowing the city to avoid bankruptcy.

If today's mediation deadline comes and goes, the Stockton City Council on Tuesday is prepared to consider a special budget covering a projected $26 million deficit. That would result in the city's lawyers filing for Chapter 9 protection as early as Wednesday, making Stockton the largest U.S. city to resort to that action.

Confidential negotiations have stretched past midnight in recent days, City Manager Bob Deis said. In the past three years, officials eliminated one-fourth of police officers, one-third of fire staff and 40 percent of all other employees. They also cut wages and medical benefits.