Bill would require state's consent in city bankruptcies

Bill would require state's consent in city bankruptcies
http://www.timesheraldonline.com/news/ci_12389273

Last year's Vallejo bankruptcy filing stirred nationwide discussion on when and how a city should seek fiscal protection. A year later, who should have the power to decide the path to bankruptcy is getting attention statewide. The city's Chapter 9 filing prompted labor-backed state legislation aimed at requiring local governments to get advance approval from Sacramento for any bankruptcy filing. Authored by Assemblyman Tony Mendoza, D-Norwalk, AB 155 is backed by co-author Sen. Pat Wiggins, D-Santa Rosa, who represents Vallejo. Wiggins discouraged Vallejo's bankruptcy petition in the weeks before the Vallejo City Council's unanimous blessing of the move. AB 155 isn't the first attempt at such state control. More than 13 years ago, legislators last batted around similar bills in the wake of Orange County's 1994 bankruptcy filing. Former Gov. Pete Wilson ultimately vetoed such legislation in 1996. A former San Diego mayor, Wilson cited concerns of state liability if a state committee rejected a local government's bankruptcy plan. The Assembly Committee on Local Government held the latest bill's first public hearing on April 23. Across the state, city and county officials have voiced concerns over the proposed legislation. Supporters have included state labor groups, some of whom sponsored the bill. A key issue in the Vallejo bankruptcy fight is the ability of a city to undo employee union contracts in court if it can prove that they either led to the fiscal emergency, or that they hinder a city's ability to recover. Bankruptcy Judge Michael McManus has held that Chapter 9 permits a city to void such contracts in certain cases…. A California State Association of Counties representative said reasons for seeking bankruptcy protection can vary, and some might require swift action during fiscal emergencies, which the proposed legislation likely would delay. Vall! ejo Mayo r Osby Davis also strongly objects to the bill, though its passage would not affect Vallejo. "For you to pass a bill like this is a slap in the face to every official elected locally," Davis told legislators. "I have to say, why don't we call this bill what it is -- it's an attempt by labor to do in legislation what they could not do in bankruptcy court."…