Effort to Block Municipal Bankruptcies is Back

I previously wrote about AB 155 (DeSaulnier, D-Concord), which would have prohibited municipalities from declaring bankruptcy without first obtaining approval from the California Debt and Investment Advisory Commission.  AB 155 was sponsored by unions hoping to prevent another “Vallejo” situation from occurring.  Fortunately, AB 155 got bogged down in committee and was going no where fast.  Unfortunately, the provisions in AB 155 have now been resurrected into SB 88 in a “gut and amend.”

As I stated previously, I believe such a bill is completely unnecessary. I think the bankruptcy court’s recent decision in Vallejo throwing out the IBEW contract actually supports my position. Although the court threw out the IBEW contract, it did so only after an exhaustive analysis under applicable law. It’s hard to imagine that a “commission” stacked with partisans could do a better job than the bankrtupcy court at such an analysis. While you may disagree with the court’s ultimate conclusion, I think even unions would be hard pressed to deny that they got a fair hearing.  I doubt the same could be said of any proceeding before a “commission” of politicians.

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