During the boom times, the city eagerly began development projects to improve the area, transforming the waterfront and refurbishing several buildings that had fallen into disrepair. City officials lured a Sacramento restaurateur to open an upscale bistro, in part by offering space in a historic downtown building rent-free for five years. But the restaurant struggled and closed after just two years, and the space has sat empty and shuttered for the past year.

Image Credit... The New York Times

In 2007, after Washington Mutual shut down operations in an eight-story building here, the city bought the space for $35 million, reasoning that the price was a bargain, less than the cost of construction. Officials planned to move out of the crumbling old City Hall building and into the Washington Mutual building, but it soon became clear that the city did not have the money for the move.

“The city was very aggressive in trying to take advantage of the boom and got completely swept up in those times — not unlike its citizens,” said Jeffrey Michael, the director of the Business Forecasting Center at the University of the Pacific. “It’s a combination of bad luck and bad management. If they’d been more prudent, you might still be cutting back 20 percent of the staff, but maybe you wouldn’t be dealing with the brink of bankruptcy.”

The city consented to a wide variety of bond agreements that have contributed to its increasing debt, but officials say that generous retirement health benefits and the increasing costs of maintaining them also threaten to cripple the city with insolvency. The city estimates that it will pay $9 million in retiree health care benefits in the 2012 fiscal year, and that the amount will double over the next 10 years.

Much of the harshest criticism of the current city administration has come from the police union, which has accused Mr. Deis of manipulating numbers. The union paid for billboards that proclaimed “Welcome to the 2nd most dangerous city in California: Stop laying off cops!” and included a running tally of murders in the city and Mr. Deis’s telephone number, against a background depicting spatters of blood. Mr. Deis accused the union of harassing him after it bought a house next door to his. The union said the purchase was an investment and not intended to antagonize Mr. Deis.

“Things have just gone from bad to worse,” said Kathryn Nance, an executive board member of the police union and a Stockton native. “There’s just nowhere to cut anymore, and the whole city is suffering.”

But Ms. Nance and other union officials say they believe that the city has more money than it is letting on and criticized decisions to give raises to several top city workers and spend millions on outside consultants and lawyers to help with the fiscal crisis.