Investors holding some $6 million in lease revenue bonds issued by Chowchilla, California, will be paid no later than Monday despite the small San Joaquin Valley town's technical default on the debt, a city official said on Friday. Chowchilla's fiscal troubles come during a tense time in California, the most populous US state, over public finances at the state and local levels and as some analysts predict rising defaults by issuers of municipal debt.
State and local governments are contending with brutal slumps in revenue. California's state government, for instance, may face a budget shortfall of about $28 billion through mid-2012. Governor Jerry Brown will present his plan to plug that gap on Monday. The $117,000 payment is the second and final payment on the debt for this year.
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