The city has a $43 million deficit, created by using money from pension, water and sewer funds to balance the books, the Los Angeles Times reported. Compton could become the fourth California city to file for protection under Chapter 9 of the U.S. bankruptcy code.
San Bernardino filed for bankruptcy last week, and Stockton in the central Valley and tiny Mammoth Lakes had already done so.
In Compton, a $1.1 million water bond falls due Aug. 1. Treasurer Douglas Sanders told the city council at Tuesday night's meeting the city's financial difficulties are the worst he has seen in his 20 years in Compton.
"We are in some very critical issues, so by Aug. 1, y'all need to decide what's going to happen -- make the bond payments, default on them or go into bankruptcy," he said.