Bankruptcy rumors fly around Compton
Shae Collins | 7/18/2012, 5 p.m.
At a recent city council meeting, comptroller Steven Ajobiewe told council members that at its current cash consumption rate, Compton will run out of money to make its payroll on Sept. 1.
The city has already accumulated a $43 million deficit and depleted a $22 million reserve.
"I have $3 million in the bank and $5 million in warrants due in the next 10 to 12 days," said City Treasurer Doug Sanders. "By then, the council will have a decision to make: don't pay the bonds, default on them, or have a serious talk about bankruptcy."
However, the meeting ended without any discussion on filing bankruptcy.
In addition, credit rating agency Standard and Poor (S&P) threatened to cut the city's BB credit rating. S&P gave Compton 90 days to produce an audit report. If the city does not make the deadline, S&P may withdraw or suspend its ratings on as much as $70 million in city bonds.
According to City Clerk Alita Godwin, the mention of bankruptcy came up at the council meeting; however, filing is not currently on the council's agenda. Despite the rumors and the deficit, the city of Compton is far from bankruptcy, she explained.