The Californian city of Stockton is set to become the largest US city to declare bankruptcy¹.

加利福尼亚州斯托克顿市将成为美国最大的破产城市。

Mayor Ann Johnston told the city council which endorsed² the move it was "the most difficult and heart-wrenching decision" they had ever faced.

But she said it had to be done to begin the recovery process.

The river port city of 290,000 - which lies 90 miles (144km) east of San Francisco - suffered badly during the US housing market crash.

Filing for Chapter 9 bankruptcy protection would allow the city to hold some of its creditors³ at bay while still paying for basic services like its police and fire department.

Drastic cuts

The city is facing a projected $26m budget shortfall and a bankruptcy filing could come as early as Wednesday.

The housing boom was good to Stockton. Flush with property tax, the city developed its waterfront, with a new marina and sports complex, and negotiated generous pension and healthcare benefits for city employees.

But in the past three years, officials in the city have dealt with $90m (£57m) in deficits⁴ through a series of drastic cuts.

They eliminated one-fourth of the city's police officers, one-third of the fire staff, and 40% of all other employees. They also cut wages and medical benefits.

Stockton's unemployment and violent crime rates now rank among the top in the nation. One in every 195 Stockton homes filed for foreclosure in May, according to RealtyTrac.

More than 15% of the population of Stockton is unemployed⁵ - nearly double the national average.

City buildings have been repossessed and "Out of Business" signs are a common sight.

City Hall was due to move into a new building, but since Stockton has run out of money, the new building has been repossessed.