Isleton requests loan from Sacramento County to avoid bankruptcy. Will it pass?
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- Isleton requested $800,000 from Sacramento County to avoid bankruptcy by November.
- County staff recommend rejecting the loan due to budget limits and prior debts owed.
- City faces disincorporation as revenue cannot sustain services, debt, or loan repayment.
The city of Isleton, on the brink of bankruptcy, has requested $800,000 from the Sacramento County Board of Supervisors in an effort to keep the small city alive, but county staff has advised against the loan.
In August, Isleton City Manager Jon Kennedy sent a letter to the board requesting the funds to help the city recover from its financial disaster and help pay off the millions it owes in debt.
The city owes $4.7 million to multiple creditors, according to Kennedy. Earlier this year, a Sacramento grand jury report found the Isleton City Council and staff mismanaged its finances.
But due to the county’s own financial constraints, county staff has recommended the board reject the loan when it votes this week. The budget hearing begins Wednesday and is scheduled out until Friday.
Mayor David Kent said the loan request is “the most direct way to preserve the long term potential of Isleton with the least amount of disruption.” He added that Sacramento County is the city’s “parent authority” and must be there to assist.
Isleton’s $800,000 loan request would be paid back over 10 years with a six month deferment to “help ease cash flow concerns during this stabilization period,” Kennedy wrote. Currently, the city must pay off a $500,000 bridge loan and other debts, which, if not refinanced or altered, will possibly result in the city filing for bankruptcy by November, Kennedy wrote.
Isleton also owes $195,000 to the Employment Development Department to pay off unpaid taxes, penalties, and interest from June 2017 to September 2013. An additional $145,000 is also due to the Small Cities Organized Effort, a group of municipalities that support Northern California cities with financial risk management, according to its website.
“The city’s current cash flow is not in a state to be able to handle these debts appropriately at this time,” Kennedy wrote. “Each of these debts pose a unique and challenging impediment to the city’s ability to continue effective operations. Without refinancing or other assistance with these three major issues, the city may be forced to file bankruptcy or cease operations entirely.”
Sacramento County’s recommendations
Sacramento County’s current budget does not have room for Isleton’s $800,000 loan, according to a staff report. Regardless of the amount of the loan, any amount of money given to Isleton is not available to the county because of outstanding debt.
The report noted that these funds would need to be redirected. The money Isleton is requesting would be 50% of the county’s general funding revenue and is a “outsized fiscal request” for the city. The county’s report stated Isleton has yet to pay $600,000 for services provided by the Sacramento County Sheriff’s Office and the share of a previous city loan.
As a result, county staff wrote that it is “unlikely that Isleton would be in a position to repay the loan and fund required city services from available revenues over the 10-year term.”
“While a county loan would provide immediate cash flow assistance, it does not address the larger structural issue that a city of Isleton’s size is unlikely to generate sufficient tax revenue to sustainably fund city administration, debt service and service delivery,” the county’s report stated.
The report said bankruptcy or disincorporation are “very real possibilities with or without a county loan.”
Because of the city’s debt, city costs, like a Zoom subscription to host city council meetings, have been charged to Jessica Bigby’s card, the city’s finance director, according to previous Bee reporting. In January, Isleton aid off its entire fire department.
Isleton remains in political disarray, as its City Council voted out its previous mayor, Iva Walton, for attempting to speed up the permit process for her bar, Mei Wah Beer Room, according to previous Bee reporting.
Regardless of the vote, Kent said Isleton will be looking at Sacramento County for a solution.
“As far as I’m concerned, we need to continue to consult with them,” Kent said. “There may be another plan they can be involved in. As far as, speaking personally, I want the help and the oversight of the county and the state as we begin to recover. I think that can only help.”
This story was originally published September 2, 2025 at 3:04 PM.
