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County staff also recommended denying the loan. Supervisors agreed, but Hume noted they are leaving room for continued talks.
SACRAMENTO COUNTY, Calif. — Sacramento County supervisors rejected the City of Isleton’s request for an $800,000 loan Wednesday, a decision that city leaders said could push the small Delta community closer to bankruptcy.
Supervisors said the risk of using county funds at this time was too high.
“They are in a pretty significant tailspin right now,” said Sacramento County Supervisor Pat Hume. “If they choose to disincorporate, whatever outstanding debt does not go away, it now transfers over to the responsibility of the residents of Isleton.”
County staff also recommended denying the loan. Supervisors agreed, but Hume noted they are leaving room for continued talks.
“We are keeping a door ajar,” Hume said. “I will work with our staff and the City of Isleton staff to try and flush out what the financial future of Isleton looks like. They did receive a state grant to hire on [an] auditor to basically go back and rebuild their financials for the last however many years. That is a positive thing, that is going to give us a good picture.”
For Isleton residents, the city’s financial problems, with debt around $4.7 million, go beyond numbers on paper.
“Living in town, just taking it one day at a time, know, it’s affecting us slowly, obviously, but over time it takes its toll,” said Isleton resident Matthew Velasquez.
Interim City Manager Jon Kennedy told ABC10 that leaders are modeling three paths forward: stabilizing cityhood through Chapter 9 bankruptcy and financial restructuring, pursuing preservation without bankruptcy if possible, or considering disincorporation through the Local Agency Formation Commission.
Statement from Jon Kennedy, Interim City Manager:
“We appreciate Sacramento County’s engagement and Supervisor Hume’s practical approach. While the loan decision wasn’t a surprise, we’re rigorously modeling three paths: (1) a stabilization plan that preserves cityhood, potentially via Chapter 9, through tight cash management, expense controls, aligning revenues and rates, stabilizing insurance coverage, and restructuring obligations; (2) a preservation path without Chapter 9 if feasible through negotiated workouts and interagency partnerships; and (3) potential disincorporation through LAFCO, including how essential services would be provided. We owe residents an honest picture of the tradeoffs, and our north star is continuity of essential services.”
Supervisors pressed Isleton officials for a clearer plan.
“The question that I have and you don’t need to answer now, but please take it back to your council is, what is going to change?” said Sacramento County Board Chair Phil Serna.
“We are going to reverse this legacy of shame, noncompliance and isolation,” said Isleton Mayor David Kent.
County leaders said they will continue working with Isleton but want to see more concrete steps before committing taxpayer dollars.
WATCH MORE ON ABC10 | Isleton owes $4.7M, seeks loan to cover back taxes and insurance
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