When Stockton, Calif., filed for bankruptcy last year, the stage was set for a precedent-setting battle with Wall Street over whether bondholders or retired public employees should pay the price when a local government goes broke, but under the terms of recent settlements, bond insurers who are backing about $240 million in city debt will accept a "haircut" of as much as 50 percent on some bonds, Reuters reported yesterday. Retirees will keep their full pensions, though 1,100 of them will lose their retiree health insurance. Stockton voters today are likely to approve a sales tax increase that could all but seal a surprisingly speedy end to the city's bankruptcy case. Massive cuts to Stockton's budget will remain. The sales tax increase will raise about $300 million over 10 years and likely enable the city to emerge from bankruptcy early next year.
