"This basically is the equivalent of the pause button," Deis told the council. "It provides you a breather to adopt a budget and maintain services during this next year. It doesn't guarantee success in the long term. That's going to require some negotiating and some give-and-take."

Dale Fritchen, the only one of seven council members to vote against the plan, said he wasn't convinced there was no alternative.

"I think it's going to hurt Stockton more than it will help Stockton," Fritchen said. "For heaven's sake, I hope I'm wrong."

In February, the city began a process during which it is required by state law to review its finances with help from a "neutral observer" who is picked in cooperation with creditors. That review is similar to a mediation process in which creditors have a right to participate, according to the law, passed last year at the request of California labor unions.

Salaries for current workers and benefits for them and former employees account for about 68 percent of the city's general fund, the city said.

Service Cuts

The city has cut services so much the past two years that "public safety is at a crisis level," officials said in a June 5 fiscal report. Unemployment, at 15.4 percent in April, was almost double the national average, according to the U.S. Department of Labor.

Stockton ranked third in murders last year among large California cities, behind Los Angeles and Oakland, according to FBI data.

The collapse of the housing market left Stockton to contend with mounting retiree health-care costs and eroding tax dollars in the wake of the recession, amid accounting errors that overstated municipal revenues. One in every 195 homes in Stockton's metropolitan area received a foreclosure filing in May, the fifth-highest rate in the U.S., according to RealtyTrac Inc.

Creditor Talks

Negotiations with creditors began on March 27 and were extended to June 25. The California Public Employees' Retirement System, the largest U.S. pension fund, and San Francisco-based Wells Fargo & Co., the nation's biggest home lender, and bond insurer Assured Guaranty were among at least 18 creditors involved in the talks.

Last year, three municipalities entered bankruptcy, including Jefferson County.